Renewable Energy Asset Management
I think we all woke up on the morning of President Trump’s trade tariff announcement and thought the same thing: “Well, that could’ve been worse!”
In a way, it’s a relief to finally know what we are up against. We can think about adapting now. I, for one, scratched my planned January acquisition of 1.2 Million units of foreign-made washing machines in favour of a “wait and see” approach. What can I say? I’m erring on the side of caution. (Just kidding, being Canadian, I can bulk buy foreign washing machines to my heart’s content. But can’t bring them to the US… NAFTA and all.)
I have been part of the fight for US Solar industry jobs, supporting SEIA in their lobbying efforts, writing about how solar companies should plan to handle the Section 201 Trade Case decision, and supporting industry growth in any way I can. Here’s what I’d like to know: what’s your optimal approach look like with these tariffs in place?
Some beneficiaries of this kind of protectionist measure are obvious, First Solar, Vivint, SolarPower, and SolarWorld all saw immediate stock jumps, and Jinko Solar announced plans to build a Florida plant almost immediately, but I’m a firm believer in the benefits of healthy competition as a whole, and this is our new reality. Here’s a hard truth for you: if cheap solar panels were/are the only thing keeping your business afloat, and the new solar panel trade tariff is all it takes to completely derail your business, then you’ve been missing something. Decreasing panel costs shouldn’t be the only efficiency that makes your business work. Panels can’t just get cheaper, your team has to get better.
I think solar developers, owners, and investors have been guilty of myopically focusing on panel costs at the expense of modernization and process efficiency.
DIAGNOSING BROADER OPERATIONS INEFFICIENCIES
If you read my recent article, Ten Questions to Ask Before the Section 201 Decision, you know to focus on processes, technology, and people. I promise you, there are efficiencies you’ve overlooked. I want to ask the same question posed in a recent GreenTech Media article: how do you continue to reduce costs, when the main resources your business taps, people, and tools, are becoming more expensive? You scale, while working to keep costs constant for lower per project OpEx, and you modernize.
Ask yourself where else you might be exposed. What is the state of your leases, your insurance, your contracts? Are you in breach?
BUILD YOUR TEAM, BUILD YOUR PROCESSES
We’ve been talking about risk management strategies for renewable energy for years. I feel like a broken record sometimes.
You should also probably review your forecasting assumptions, as well as your OpEx assumptions in particular. Have your soft costs gone up while your OpEx decreased? If growth through new sites is out of the question, then pursue progress and increase the profitability of your base. Study your project-level data, and find your contextual inefficiencies. Invest in new technologies to meet demand – I’m thinking Solar+Storage never looked so sweet.
You can scale your operations without adding new team members with the right software tools in your corner. What does your technology stack look like? Are you using dead weight programs, losing time to inefficiencies in your processes, or hiring the wrong people?
There has been so much speculation – buckets of it. While nobody really knows how the next four years will play out for the industry, I still wanted to get in on the fun.
If you have capital to spare, or longer term investment horizons, now might be a good time to go on a shopping spree and potentially take advantage of development projects that less competitive developers seek to get rid of. If new developments aren’t a viable growth driver for your business, then you might look to other technology stacks to support these goals. Better storage might help mitigate growing pains, or look at ancillary services for your projects.
There’s some agreement that the utility-scale segment of the market is likely to be most impacted, particularly in markets that don’t have supportive government mandates or incentives for PV and other renewables.
And standing at the pinnacle of the wild speculation bandwagon, I recently recorded a podcast with Nico Johnson of Suncast, and of course, we got to talking about the future of solar. We could just see it – ships laden with solar cells, all jockeying for position, firecrackers going off in the distance, come 12:01 am on New Year’s Day for the next 4 years.
There could be bloodshed.
We can help you find the efficiencies you need to thrive.