Involving asset managers in the entire lifecycle of a solar project could be the most effective way to make the most of their expertise and maximise the value of their assets when planning a solar project.
This was a key point raised at a panel on asset managers, held this morning at Solar Media’s Solar Finance & Investment Europe event in London. The panel’s moderator, Declan O’Halloran, managing director at Quintas Energy, used the metaphor of a poker game, involving investors and developers, into which asset managers ought to be dealt.
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“One of the errors we see in the solar industry is not [involving ourself] enough in the poker game,” agreed Fernando Casas Garcia, head of operations and asset management for new energy at Gresham House. “We’re still siloed. We’re looking at one deal, on IRR, based on assumptions. I believe the asset managers can add a lot of value by participating in those conversations and closing the circle.
“We have the experience to operate these assets [and] to deal with multiple problems, and I believe that we can add a lot of value by being invited into that poker game.”
Carlos Javier, managing director at Elgin Energy, took this involvement a step further, saying that Elgin’s developers are integrated into the company itself, so there is a level of close collaboration that sidesteps a need for such a game.
“We’re not playing poker games, as you mentioned, because I’m selling the projects to myself,” said Javier. “I have to be sure that the development is actually realistic, and I need to make sure, as well, that they’re [building] it as per our plans.
“[We have to work] together with developers, and we know that development is an activity where you’re trying to minimise cost until you see real returns, and you’re willing to make real investments. Asset management has to be involved in the whole life cycle of a project.”
The asset manager of the future
The panel also discussed the ideal traits needed for an effective asset manager, and how these are likely to change in the future, considering that there are still returns to be secured in the European solar sector. Marta Valien, director and head of asset management at the Foresight Group, said that risk management remains a key priority.
“The best asset manager is who is focused on the risk; risk management for me is a key thing,” said Valien. “You need to be analysing different stages of the asset – ‘which stage is it at?’ – and learning what the industry is saying about [trends such as] curtailment.”
Garcia said that this awareness is part of a more active role for the asset manager of the future, saying that the position is “evolving in the market”.
“In the past, it was more [about] receiving news from one source and transferring to the asset owners and waiting for confirmation or approval. The role of asset management is becoming more active, [in] making decisions and looking after assets.
“I also believe that the solar industry is moving into a situation where it’s impacting the prices,” he continued, suggesting that asset managers with expertise in the solar sector could begin to have an impact on the European energy industry as a whole. “We are moving … to a level of penetration in the whole grid, where we are impacting prices – we’re seeing negative prices more and more – and as an asset manager we’re in the perfect situation to assess [this situation].”
Niklas Will, head of solar operations in central Europe at Encavis AG, said that asset managers ought to focus on power generation, rather than exclusively financial aspects of solar projects, as delivering reliable power remains the key priority for any solar project.
“As managers you have to be able or willing to fight losing battles,” said Will. “The thing you do most of the time is explain to somebody, who expects 100% performance, why they have 99%, or 90%, or 80%.
“The asset manager guarantees the KWh of the contract. Not the Euros – they will happen – but the KWh. For revamping and repowering, you have to look at what the project produces, and that’s the long game of the asset. With power purchase agreements (PPAs), the hedging can change from one year to the next … but the asset is there for 35 years, with technical and grid infrastructure, and that can affect our lives a lot more than price volatility.”
Solar Media is hosting its annual Solar Finance & Investment Europe event in London on 4 – 5 February 2025. This event annually attracts infrastructure funds, institutional investors, asset managers, banks and development platforms at the forefront of European renewables; the vast majority of which are responsible for billions in active and prospective investments in the Europe’s energy transition. For more details, visit the website.
