Value creation for renewable energy portfolio managers.

24th November 2020

For those working with renewable energy funds, it’s a high pressure role which requires strategic oversight as well as a close understanding of what’s happening on the ground. Gaby Amiel, CEO and co-founder of Sennen, examines the day to day challenges faced by portfolio managers and investment directors and offers a fresh perspective on how to ease some of those recurring headaches. 

As a former head of asset management for a renewable energy fund, I have lived the stresses and strains of portfolio management. There’s big pressure to prove your strategy is sound because it’s the key to raising more funds.  

A fund manager needs a tight handle on all aspects of their RE projects. The asset management team must answer questions from stakeholders and investors on asset performance, power prices, insurance, debt ratios and so on. Increasingly, you must also track data to prove ESG credentials.  

When things go wrong, the buck stops with you. That’s why, if an asset isn’t hitting expected returns, you need to understand quickly the root cause, assess the impact and what is being done about it.  

While the project portfolio keeps on growing, your team does not. As time is spread thinner, a responsive line of control and information to the assets is critical. In short, you need to discern what information is important, have it easily available and be able to rely on it. 

Realising untapped value 

Improving the efficiency of the portfolio is a key aspect of the role. Too often managers buy software that they are told will uncover technical issues that can easily be fixed and will boost output by a few percent. The reality is often that zero proven value is achieved.  

My recommendation would be to focus on efficiencies that can be made in the workforce and supply chain, from top to bottom. This is the low hanging fruit and a lot can be achieved with careful engagement. 

I oversaw a project to break down all the different services being provided across the portfolio (accounting, site management, ancillary maintenance, contract management, PPA tendering, HSE reviews etc). We lifted the hood on each service package to ensure it was being done in an efficient way by experienced teams who communicated well. While time upfront was needed to standardise our requirements and agree clear deliverables, it ultimately streamlined the process and cut costs by nearly 50%.

Boost fund performance 

The operational factors that can really move the dial on fund performance are O&M cost, asset management fees, insurance cost and power prices. Ensuring best value in these areas is far more likely to boost profitability than some undetected technical glitch that may or may not be fixable at a reasonable cost.  

Technology has an important and underrated role here. This process of re-thinking service delivery means you have more control over your asset data, but you need to have a system in place that allows you to see what’s happening across all services. You need to understand what your service providers are doing for you, decide if they are providing good value and ultimately have confidence in your own records to move to a new supplier if necessary.   

Having the right technology in place, that does all the organising for you, is immensely reassuring. Not only does it solve the day to day headaches of asset management but it offers you the hard data to enable strategic decision making.  

In practice this means your team can focus on what is important. They know when to renew insurance, tender a power sale contract or when a gearbox warranty is due to expire. (Missing a date like these can be seriously expensive). Equally they select the best performing service providers or shift to a more effective contract structure based on real evidence. In short, they can get on with the messy business of asset management.  

Get in touch here to request a data sheet and discover how Sennen can improve efficiency and portfolio value.

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