SOLAR COMPANIES ARE FAILING AT RISK MANAGEMENT. SEE WHY.
Things are changing. The renewable energy industry is at an interesting point. Regulations are getting more complex, portfolios growing, and technology continually evolving. Energy producers are making the jump from development and construction to operations and maintenance, and they're even beginning to think about mergers and acquisitions.
You should be thinking about maximizing your PV or turbine asset efficiency, and minimizing risk, and if you're not, you're setting yourself up for trouble, especially if you're working with a large portfolio.
So now you're wondering what risks you're facing, and what opportunities are in front of you. Well, here they are.
How can I find key project information?
Understanding what you own, and what its associated obligations are, is fundamental to good risk management. Without fast access to accurate information, how can you work, and make decisions, efficiently? How does management know what COD was on a given project so they can ensure warranty start times? Do they need to call a project manager dedicated to the project, or can they find this information in a centralized real-time repository?
How do I ensure my assets are compliant?
There are countless project milestones and covenants which require tracking and need to be assigned to project members. Compliance risk with lenders or government agencies is in jeopardy if these milestones are missed. How do you ensure that insurance certificates have been renewed annually or that debt coverage ratios are managed and reported to lenders at the appropriate time? Having these dates in calendars and Excel spreadsheets of team members in different offices and times zones makes systematic oversight difficult or impossible.
Here are 3 approaches our clients have adopted to help avoid these pitfalls
1. Front-end load contractual commitments and milestones
Before projects become operational, all commitments and milestones should be documented in a centralized and readily accessible location. Team members and managers need to be able to monitor these commitments to ensure they are completed, and completed on time. How does your organization ensure this is done? Too often, this is managed by a single person in isolation, when connecting to the broader team is a key success factor. Is this the most effective approach to protect your projects from the various risks and costs which would arise should an obligation not be met? Consider the cost of having your lawyer paper a simple technical default.
2. Manage issues in a predictable and repeatable manner
Having a standardized approach to tackle predictable issues saves times and ensures compliance. For instance, what are the tasks and subtasks that are required to manage a complaint from a neighbor, or an inquiry from a regulator? Mapping these out in advance will lead to a more systematic, repeatable, and, therefore, reliable process for ensuring team members know what steps should be taken to close out an issue. Be ready to answer the way regulators and stakeholders are expecting you to, and make sure you respond in this standardized approach all the time.
3. Have key information at your fingertips
Consider teasing out the key information needed frequently, and storing it centrally with broad access. Information, such as commercial operation dates, warranty end dates, project locations, landlord information, and lender report dates, are always in demand. Why not have them readily accessible, so that employees are not spending hours scrambling for this information when it’s required?
These are all opportunities to consider when transitioning projects from development to operation. Failure to do so could quickly lead to pain points and costs that could have been avoided. These are easy issues to manage for a small number of projects, but become costly and time-consuming quickly as portfolios grow both in size and complexity. A systematic approach to asset management could help you scale and reduce costs at the same time.