Solar assets management in Poland. How to take care of solar assets for investors.
Asset management in the solar industry in Poland is a relatively new topic.
However, new opportunities and challenges are knocking on our door. Infrastructure funds are investing in solar. Furthermore, prominent institutional investors want a piece of the market because it offers predictable income for the long-term future. With the considerable increase in spending on solar energy projects, new countries are investing in solar energy. „Old markets” in Europe, such as Spain, Italy, and France, are re-emerging. Solar farm owners in now face a new asset management challenge in different geographies. Having various regulatory and environmental challenges, not to mention other business models (subsidized, power purchase agreements (PPAs), purely commercial, etc.).
Solar farms in Poland?
The Polish market of PV farms is already third after Germany and Spain, with increases of many GW of solar farms each year and the ROI levels in the range of 12 to 15%.
Unlike in Germany or Spain, building and putting Solar farms into use is much easier and faster.
The payback time maybe 6 to 8 years with properly calculated investments and well-chosen energy contracts. Few other markets offer such incredible opportunities.
There are also signs of market consolidation and the participation of prominent players from the RES industry.
Energy prices are steadily going up, and this, of course, allows you to multiply profits by the value of investment assets.
Asset management for solar farms – WHO IS RES ASSET MANAGEMENT FOR?
The main customers are usually large State or privately-owned entities that need structures for proper supervision and management of solar power plants.
These are investment funds (with different investment approaches, i.e., investing in the short and long term), insurance companies, large State-owned or private companies, and listed companies. They all diversifying their investment portfolios. It is also more and more often private investors with solar portfolios above 10MW. (I have adopted the average value of the portfolio here because we also serve smaller private investors on this basis).
So what is „Asset management” for solar farms?
To be clear, the „asset manager” or asset management service is something different than O&M services (Operation and Maintenance) and General Contractor services. In Polish realities, these terms often need clarification!
The PV asset management process begins with the planning of investments in such assets and includes:
- preliminary determination of potential profits and risks
- determining the size of the planned investments in the photovoltaic portfolio
- selection of appropriate financial instruments for their purchase
- selection of proper legal and commercial structures (sometimes special purpose vehicles, occasionally a different type of commercial law entity) that will own the new RES investment portfolio
- checking photovoltaic projects or ready-made photovoltaic farms in terms of profitability and transaction security (conducting legal and technical due diligence)
- conducting the process of acquiring assets and incorporating them into the ownership structure with all relevant assignments of contracts and concessions
- supervision the construction of solar farms and their energy supply (management over General Constructor or subcontractors and design offices)
- Sale of energy in the form of PPA contracts, auctions, or other forms previously agreed with the Investor
- oversight over the company providing O&M services
- handling legal and tax aspects of the entire investment
- implementing transparent reporting for the Investor
- developing options for the development of the investment portfolio of solar farms, if these were the initial assumptions
Solar assets management in Poland – what does the asset manager pay particular attention to?
- Loss of energy generation produced and income
- Continuous improvement of processes and optimization of efficiency.
- Field greenery management, farm cleaning, regular services, and thermovision (correctly performed O&M services in short)
- Reduction of operating costs
- Financial restructuring/reengineering
- Legal and contractual renegotiations
- Adaptation and modernization of technology
- People management
- Balancing and selling energy
- Transparency of reporting to the Investor/Owner
- Clearly defined goals for the development of a given investment portfolio
- Determination of risks and potentials in solar assets (technical, economic, and, of course, political)
As an industry, we are at the forefront of our societies’ energy transition and electrification. More importantly, we contribute quite substantially to the fight against climate change. However, we must remember that the financial aspects of investing in energy from photovoltaic farms are fundamental. Returns in such assets must be a safe opportunity for economic and investment diversification for entities that decide to go into them.
Are you planning to build your solar farm in Poland or are you looking for a company that provides O&M services in this part of Europe?
Do you want to purchase a solar or wind farm project and need an efficient and professional audit / due diligence?