October 31, 2019

Renewable Energy Asset 101: Hiring the Right Asset Manager

by Aaron Peters

Hiring the right Renewable Energy Asset Manager

So let’s assume you’re a company that’s bringing your first wind or solar project into operation. You know you need to hire someone (often an internal employee) to manage your assets throughout their lifecycle.  But where do you start? What makes a good renewable energy asset manager anyways? 

  

So let’s talk about what an asset manager does, exactly, and what to look for in candidates. 

  

What does a renewable energy asset manager do? 

  1. A big part of an asset manager’s job in renewable energy is reviewing energy production and related metrics, and comparing that data to expectations or baselines.  
  1. It’s keeping abreast of maintenance, whether it’s reactive or preventative, and working with maintenance providers 
  1. It’s renewing and managing permits.  
  1. And it’s managing stakeholders—particularly landowners, partners, or debt providers—and issuing reports and payments to them, or creating invoices so they can bill their offtaker for the energy that was produced. 

  

On a really high level, with the help of others, an asset manager’s job is to manage the financial, contractual, and operational facets of a renewable energy asset. 

  

What is the value of having an asset manager? 

An asset manager’s true value, outside of making sure the project is running smoothly right now, is mitigating future risk. 

  

At the end of the day, could you lease land, develop a project, put in a PPA, and flip the switch on your turbines or solar panels without an asset manager? Yes, absolutely. But you would soon run into a lot of problems (whether it’s around equipment maintenance,or environmental curtailment agreements, or managing compliance, or stakeholder management)? That’s what the asset manager is for.  

  

As we all know, renewable energy projects are huge investments, and it’s the asset manager’s job to deal with the risks that may keep you from hitting maximum profitability. 

  

The first part of managing risk is accessing data and familiarizing yourself with it. If I need to make a decision on whether to roll a truck to a particular site, the first thing I need to understand is the gravity of that issue and its commercial impact. There may be a maintenance crew scheduled to visit the site in two weeks, but before I can decide if I should roll now, I need to look at data so I can see what’s going on and what the implications are. What are the chances it will break? Will one turbine go down? Will the whole project go down? What’s the gravity of those scenarios? That’s exactly the kind of analysis an asset manager will do to manage the risk of your project. 

  

Who does an asset manager work with?  

Asset managers work with accountants and bookkeepers, landowners, operations and maintenance (O&M) providers and engineers. 

  

Does an asset manager’s job change throughout the asset’s lifecycle? 

While the job doesn’t change throughout the asset’s lifecycle, certain issues are more acute than others at certain points.  

  

In the early stages, you’re still managing stakeholders, payments, and O&M, but you’re doing it for the first time. You’re transitioning between construction and operation, so you’re setting things up: you’re managing the lease and paying landowners for the first time, you’re creating an O&M schedule, and you’re setting up asset management software like PowerHub to oversee it all. 

  

In year two, you’re implementing and adjusting that setup. By year 10, you’re starting to think about the next phase of your project, like refurbishing or repowering. Depending on your financial setup, you may be going through refinancing. Funnily enough, a project’s year 10 is a blend of the early days (research or setting up new processes and approaches) as well as the routine work you’ve been managing up until now. 

  

What should you look for in an asset manager? 

You want to bring in an asset manager at least a month or two before you hit commercial operation.  This means that at the tail end of development, you can transition between your construction team and your asset management team. This is a pretty important part of developing renewable energy projects you know will be easy to manage.  Any later than that, and it might make the transition clumsy.  Any earlier might leave the asset manager with little to do. 

Look for organized, disciplined people who are good project managers, with experience running budgets and straddling the technical-financial-administrative dimensions of a project.  

How hiring an asset manager is different

Hiring an asset manager is very different from looking for a lawyer or engineer, where there’s specific training and skillsets to scan for. You want your potential asset manager to have technical acumen.  But you also need someone that can bridge where they don’t have expertise.  

  

It’s unlikely that you’ll find somebody who can fully handle the technical, operational, and maintenance tasks of the project…you would really require an engineering AND accounting degree to understand the technical and financial complexities of a wind or solar project. There aren’t a lot of people out there who can be engineers and accountants.  

  

Hopefully, your candidate has some comfort in one of those areas, and can find a way to bridge into the other.  

  

Given that the background of an asset manager isn’t consistent, the question becomes: what specific details of this company or this project would make a candidate more attractive? How do they fit the culture of the company? And importantly, which aspects of the work will be managed internally, and which aspects are given to third-party service providers?  

  

If I hired a third-party accounting firm to do financial management, I don’t need my asset manager to have those skills. But if I decide that accounting will be in-house, then it might be attractive to hire someone with an accounting background.  

  

Lastly,  it’s always valuable to hire asset managers who have previous renewable energy experience. While not essential, it gives them a headstart on the specific content and subject matter of this industry. They understand who stakeholders are, how are land agreements shaped, what obligations flow from the turbine supply contract.  Otherwise, this would need to be learned from scratch. 

  

Often you’ll see a non-technical, good project manager who is good at working in a team and managing stakeholders, and despite no technical expertise, they’re able to liaise with accountants and engineers. That’s an asset management dream. 

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