Should solar PV plant owners and investors handle asset management in-house or outsource it?
The answer depends on many factors, which are analyzed in the latest GTM Research report, Megawatt-Scale PV O&M and Asset Management: Services, Markets and Competitors 2014-2018.
But first, let's establish a few definitions. "Asset management" is a new buzz-phrase, popular on websites and in marketing brochures and sales presentations. The widespread usage of the term is rapidly draining its original meaning. But the new GTM Research report provides definitions and a framework of reference. In a PV context, "asset management" is defined as the ongoing management of financial, commercial, and administrative tasks necessary to ensure optimal financial performance of a solar PV plant or a portfolio of plants.
In contrast, the report defines operations and maintenance (O&M) as a set of activities, most of them technical in nature, which enable PV power plants to optimally produce energy. The supervision of these O&M activities is often called "technical asset management" when performed by a separate provider.
FIGURE: Asset Management and O&M Activities for Megawatt-Scale PV Plants
Source: Megawatt-Scale PV O&M and Asset Management: Services, Markets and Competitors 2014-2018
Of course, there is a degree of commonality between these worlds: asset managers must be technically skilled enough to oversee O&M activities, ensure they are executed correctly, and understand technical factors that influence asset performance. Conversely, a good O&M provider should have enough understanding of the financial impact of their operational decisions that they can drive the financial performance of the asset (for example, in the case of module cleaning and vegetation abatement schedules).
Given the differences in core competencies between asset management and O&M activities (i.e., financial vs. technical), they tend to be offered by different organizations, although some companies provide both. Of all the O&M providers profiled in the GTM Research report, 64 percent have a comprehensive suite of asset management activities, while 18 percent cover only a subset of this domain, and 18 percent are not actively pursuing asset management business at this time.
On the other hand, 50 percent of the independent asset management providers analyzed in the report offer O&M services as well. Examples include American firm Solarrus via its subsidiaries True South Renewables and MaxGen Energy Services (a recent acquisition), as well as European firm Greensolver via its subsidiary KBE Energy. Interestingly, asset management firm Wise Energy divested from O&M in 2014 by selling its stake in O&M provider TOPS Energy to Inditel.
Based on this diversity of strategies and on the example of other industries like wind power, where asset management and O&M vendors usually remain clearly distinct, GTM Research considers these two domains to be two distinct markets, with overlapping functional scope and provider landscape.
In the second part of this article, we will review key factors to consider when assessing the option of in-sourcing or outsourcing asset management and O&M.
For more information about O&M and asset management, including market size and forecasts, activities and strategies, costs, competitive landscapes, vendor services, and future outlook, please refer to the new GTM Research report Megawatt-Scale PV O&M and Asset Management: Services, Markets and Competitors 2014-2018.