Chapter 6: Community Solar Asset Management

Project Readiness Questions

  1. What are the components of community solar operations and maintenance?
  2. What are the components of community solar asset management?
  3. How do you design an O&M plan?
  4. What strategies will you use to get your project to its peak performance?

Background

There is something so exciting and gratifying about solar development–watching a vacant piece of land be reshaped and turned into a solar generation facility. Yet, the very best developers know that true project success must be measured by how a system operates. Completed systems still only represent “potential” solar benefits. 

Operation is when developers have the opportunity to prove how closely their projects actually perform relative to original projections. And projects do not perform as projected without continuous management. Because asset management requires long-term and consistent follow-up and oversight, it can often prove to be one of the hardest parts of the community solar development process. 

Asset Management is defined as the process by which a community solar installation is overseen during its operation. The goal of asset management is to optimize performance, value, and lifespan of the solar system, while minimizing costs and risks. More specifically, solar asset management helps you:

  1. Improve investment performance
  2. Ensure lender and investor repayment
  3. Ensure benefits flow to LMI Communities
  4. Meet financial and code compliance requirements

install with skylights, people leaving

Asset management includes financial management, accounts payable, financial and regulatory compliance, subscriber management, monitoring and reporting, and maintenance and repairs

  1. Financial Management: Effective financial management is necessary to ensure a community solar project is profitable and sustainable. This includes budgeting, forecasting, financial reporting, and identifying cost-saving measures and revenue-generating opportunities, as well as filing annual taxes and making cash distributions to the investor members. 
  2. Accounts Payable: Accurate and timely billing and invoicing is essential to maintaining good relationships with subscribers. This includes generating invoices, collecting payments, and addressing any billing issues or disputes that arise.
  3. Financial and Regulatory Compliance: Compliance with financials and regulatory requirements is necessary to ensure the community solar project is operating legally and safely. Financial compliance includes providing all regular reports required to investors and lenders from operating agreements and loan documents. Regulatory compliance includes obtaining permits and licenses, adhering to safety standards, and complying with state and federal regulations.
  4. Subscriber Management: Subscriber management involves maintaining accurate records of subscriber information, responding to inquiries, and addressing any issues or concerns that subscribers have. This includes providing customer support and maintaining a user-friendly online portal for subscribers to manage their accounts. Some solar owners decide to hire outside vendors to perform these services.
  5. Monitoring and Reporting (part of O&M): Regular monitoring of the solar project's performance is essential to identify any issues or areas for improvement. This includes monitoring the system's energy production, equipment performance, and weather conditions. Reports should be generated regularly to track the solar project's performance and identify any trends or issues. This is typically a shared task between the solar owner and an outside Operations and Maintenance vendor.
  6. Maintenance and Repairs (part of O&M): Routine maintenance is necessary to ensure the solar project is operating at peak efficiency. This includes cleaning solar panels, replacing worn or damaged equipment, and repairing any issues that arise. A maintenance schedule should be established and adhered to in order to keep the system in good condition.

Operation & Maintenance (O&M) is a component of Asset Management. O&M refers to actual technical system monitoring and reporting, and maintenance and repairs of solar systems. The primary goal of O&M is to perform all necessary tasks to ensure that systems perform as productively as possible for as much time as possible, which increases revenue and LMI benefits. Most solar owners perform all the asset management tasks internally, except for O&M. O&M requires a technical team to perform daily system monitoring, respond to any alarms, perform regular maintenance inspections, and make any necessary repairs to ensure that assets are operating at their best.

Great asset management requires a comprehensive approach to overseeing solar assets throughout their lifecycle, from acquisition and installation to operation, maintenance, and disposal. As such, in this chapter we outline the specific components of community solar asset management and how to make a solid asset management plan. 

Action Items

  1. Learn the components of Community Solar Asset Management by watching this video
  2. Decide whether to perform asset management in-house or outsource the work. It is common for smaller and newer community solar developers to outsource O&M and Subscriber Management, but it is not typical to outsource the other asset management activities. This is because no other company ever counts the numbers more accurately and consistently than the owner. As such, we do not recommend outsourcing any other asset management functions beyond O&M and Subscriber Management.
  3. Put together a spreadsheet of key asset management tasks by category. You can start from this template. 
  4. Build the tool required to track system production. See the production tracking template.
  5. Learn more about accounts payable and set up your billing system. Refer to the invoice template. You should consider both an internal billing system for the solar company and the subscriber billing system. To learn more about billing to subscribers, please see the Subscriber Management Plan resource. 
  6. Prepare a scope of work for operations and maintenance and seek bids from vendors. Once the installation is complete, if the solar company that completed the installation did a good job and has capacity to perform O&M, it can be beneficial to choose them for O&M because they know the system, but this is absolutely not a hard and fast rule.
  7. Regardless of whether you perform subscription management in-house with internal staff or hire a vendor, you will need to prepare a Subscriber Management Plan. The plan should detail the strategies for customer marketing, acquisition, invoicing, collections, and customer retention.  

The subscription manager (SM) is typically responsible for overseeing the entire lifecycle of a customer's subscription, including sign-up, billing, customer support, renewal or cancellation, and acquiring new customers when there is turnover. They ensure accurate and timely billing, provide responsive customer support, and use subscription analytics to optimize revenue and retention.

Subscriber acquisition and subscriber management are often the most overlooked items by solar developers. Having a good understanding of your budget and timeline for acquisition/ management are essential. Developers need to have a firm grasp of the project timelines and financials to make strategic decisions around subscription acquisition and long-term subscription maintenance/management. State regulations will also determine how your subscriber management strategy works. For example, some states have consolidated billing in place, in which solar companies can add community solar costs onto local utility bills, whereas in other states solar companies must send separate invoices to each individual solar subscriber.

  1. Learn about Subscription Management by watching this video
  2. Determine whether you will self-manage subscriptions or hire a 3rd-party manager. Consider the following:
    1. What experience does your organization have with any type of subscription management?
    2. Does your organization have experience in marketing or forming community partnerships?
    3. Do you have dedicated staff that can perform all management functions including monthly coordination with the utility, regularly bill/invoice customers, provide customer support, and sign up new subscribers? 
    4. What level of subscription (%) do you need to maintain annually to meet your project's financial goals or obligations?

The level of subscription management needed will depend on the size of the project, the cost of the solar installation, and the revenue generated by subscriptions. The specific target of percentage of cost will depend on the project's revenue goals, risk tolerance, and other factors, and should be regularly reviewed and adjusted as needed. If using a third-party, there will be an annual maintenance fee per kilowatt hour or subscriber. If taking on subscriber management yourself, there will be labor costs and costs around subscriber replacement that will be incurred. For more information on tasks covered under Subscriber Management, refer to the Subscriber Management Task List.

  1. Charge no upfront fees.
  2. Charge no cancellation fees.
  3. Bills should be available in multiple languages.
  4. Month-to-month terms provide the most flexibility and encourage participation across subscriber classes, while 1-year term limits may ensure that customers provide ample opportunity to understand the community solar program and its benefits.
  5. Inform subscribers of their expected savings.  Most community solar developers seek to provide at least 5% savings, and developers focused on delivering benefits for LMI customers often seek to save these subscribers 20%. 
  6. Require no credit checks for subscribers, as these discourage participation. Please note that some lenders will require credit checks – this will differ based on the lender.
  7. Use consolidated billing if possible, based on your region. If possible, work with the utility to provide a no-cost option for customers where savings is credited on existing utility bills. Try getting community solar payments incorporated into utility bills and avoid sending separate bills to customers for community solar subscriptions.
  8. Provide easy onboarding using automated systems for enrollment and bill pay and clear communication throughout the process.
  9. Engage subscribers with updates and news about their solar project.
  10. Use surveys to gather regular feedback on your program design.
  11. Keep customers informed about the progress of the community solar project, billing updates, and other important information through regular communication channels, such as email newsletters, social media updates, and community events.

The Low-Income Clean Energy Connector (formerly the Community Solar Subscription Tool) will connect income-qualified Low Income Home Energy Assistance Program (LIHEAP) households to community solar subscriptions with verified savings. 

EYES ON EQUITY

An asset management goal for community solar projects could be to continually achieve at least 40% participation by LMI households, but this requires a concerted effort. Partnering with local organizations, providing targeted outreach and education, and offering flexible subscription options provides greater equity and access to clean energy. Best practices for continually subscribing LMI households include:

  1. Immediate bill savings and no upfront costs encourage low-income participation.
  2. Provide communications in multiple mediums and languages. Limited online fluency and/or access, and language barriers (e.g., bills only being in English) can impede a customer’s ability to engage and can be barriers to participation for some LMI households. 
  3. Ensure that outreach materials match the needs of diverse communities, i.e., all collateral should be translated into relevant languages, in-person enrollment events should be held in order to bridge the digital divide,and developers/subscriber managers should have dedicated support staff able to answer questions in a sensitive and timely manner.
  4. Enable multiple methods for bill payment. Often in LMI communities, bills are paid by check and money order; this information will impact how the LMI community will engage in the program. Two systems (i.e., where the customer receives a utility bill and separate bill for their community solar bill) subscription can create barriers to participation if a household is unbanked or does not want to pay by bank account or credit card. 
  5. Design subscription plans to meet the needs of LMI subscribers and reduce barriers to entry, such as minimal initial costs, accessibility to renters, and immediate savings.
  6. Consider risk mitigation strategies that provide non-punitive termination options for low-income customers.
  7. Design programs to ensure consumers can monetize tax credits, rebates, and/or down payment assistance.
  8. When building financial models, take into consideration that it is more time-consuming and costly to be truly inclusive than anyone ever anticipates, so make sure to account for that in your expenses. If we want to provide the best and most LMI benefits for the longest time possible, we must become masters of the basic components of Asset Management and O&M. It is extremely important to be realistic in planning the budget, internal capacity, and time available for subscription acquisition and management functions. 

To learn more, read the National Renewable Energy Laboratory’s Implementation of Community Solar Programs for Low- and Moderate-Income Customers.

 

 

Additional Resources