By Nicolas Rossel, Senior Business Development Manager – Asset Optimization for EDF Renewables North America
U.S. energy markets are becoming increasingly competitive and solar project margins have become razor thin. Every investor knows that there are two ways to squeeze better returns out of an asset: find ways to boost revenues and find ways to cut costs. It’s a simple proposition, and EDF Renewables integrated solar asset optimization services can play a vital role in maximizing both.
In today’s highly technical energy markets, it’s not enough that the left hand knows what the right hand is doing – they have to be playing the same song, or you’re going to be leaving money on the table.
As energy markets grow in complexity, optimizing project returns requires an asset operator with a higher degree of financial sophistication and deep market expertise who can effectively coordinate with in-house O&M teams to drive profit maximization. The ability to reliably and competently deliver solar O&M is no longer sufficient. In today’s dynamic energy markets, the timing of O&M activities must be driven by a focus on enhancing returns. If a project’s commercial management and O&M are split across different service providers, at best the providers’ goals may not be aligned or synchronized. At worst, they may conflict and pit one provider against the other. Aside from the additional cost and hassle of relying on two service providers, this situation can easily result in lost revenue.
Perhaps the greatest value EDF Renewables’ clients derive from partnering with us is our extensive experience managing complex energy market transactions – expertise that often makes the difference between capturing additional revenue or missing out on market opportunities. Solar is increasingly being seen as a safe investment, and as returns have fallen, investors have moved further upstream in an effort to capture more value. While this can boost revenue, savvy investors will recognize the importance of partnering with a service provider that can optimize their asset’s performance.
Market forces are making the financial transactions related to the sale of energy much more intricate, and successfully coordinating and executing the three pillars of asset management – financial, technical, and commercial management – requires increasing sophistication.
Straightforward busbar power purchase agreements (PPAs) are being replaced by synthetic or virtual PPAs, contracts for differences, hedges, and merchant sales into real-time markets. Maximizing a project’s commercial value hinges on understanding the nuances of these transactions and adroitly managing the related risks, which can include:
- curtailment risk (emergency as well as economic)
- transmission constraints and basis risk
- risks related to the price of the project’s commodities
- energy
- for merchant projects, this includes LMP or nodal pricing
- renewable energy credits (RECs)
- ancillary services (voltage control, capacity and reserves)
- energy
A laser like focus on Revenue growth however, is only half the battle. Boosting margins by optimizing costs is critical, and a straightforward way to accomplish this is to streamline contracts for services related to running the project. Financial investor-owners typically retain both an asset manager as well as an operations and maintenance (O&M) provider.
This sets the stage for increased cost, for two reasons: First, using two service providers is more costly than engaging one – it’s simply more cost-effective and administratively efficient to eliminate overlapping scopes and deal with a single company. Second, traditional O&M providers don’t necessarily perform their services with profit maximization in mind, which creates the potential for missed optimization opportunities.
EDF Renewables has more than 35 years’ experience developing and operating utility-scale renewable energy assets in North America, where we have one of the largest solar development pipelines and we operate more than a gigawatt of commercial solar projects.
Our clients know that we manage the optimization of their asset portfolios with an owner-operator mind set. They consider us a trusted partner and rely on our broad experience working with multiple technologies across diverse markets. Another benefit we provide is the use of sophisticated data analysis and customized dashboards that quickly identify critical underperformance issues, combined with real-time drone inspections to spot physical or mechanical problems.
As energy markets grow increasingly complex, the ability to optimize a project’s returns will depend heavily on an asset operator’s ability to marry financial sophistication with a shrewd understanding of market dynamics – and to efficiently coordinate with an in-house O&M team to maximize profits.
Energy storage adds another layer of complexity and possibilities because it opens up the potential for energy arbitrage. Batteries can be strategically deployed to charge, and discharge based on prices in the real-time market. This ability to buy low and sell high can help optimize revenue streams from solar+storage projects.
EDF Renewables integrated solar asset optimization services offer a holistic, synergistic approach to maximizing return on your investment. Our experience and owner’s mindset mean that the decisions we make regarding the financial, commercial and technical aspects of your project are smart, coordinated, and focused on capturing value and maximizing profits.
Sponsored content by EDF Renewables North America
