Commercial Management For Solar Power Plants
What is important for the commercial management of photovoltaic systems? Which tasks must be performed and what are the possibilities of yield optimization? Here you can get an overview of how you or your service providers can efficiently organize operations.
As the operator of a photovoltaic system, you are the entrepreneur of a power-generating business, for which good organization is crucial – otherwise, profitability will be impacted. Your financial accounting must meet legal requirements, deadlines must be followed, and you must always keep an eye on changing legal requirements.
Controlling must be optimally set up to be able to exploit existing potential for optimization and savings. An efficient short, medium, and long-term liquidity planning allows you to have your cash balance in view and makes you more immune to unpleasant surprises.
If you do not pay the necessary attention to commercial management, typical mistakes can occur: by withdrawing too much money during the high-yielding summer months, you might not have enough to pay back the amortization during the low-yielding winter months, for example.
If you invest too little in maintenance, this can backfire in the form of repair costs or downtime. Anyone who saves taxes in the first few years by means of special depreciation must bear in mind that higher profits in the following years are taxable. And those who do not build up reserves for repairs and dismantling may experience a bitter end.
Good commercial management for photovoltaic systems, on the other hand, can save costs, for example through active contract management, and thus increase the return on investment. You can also read about how you can improve insurance conditions, and how you can optimize financing.
Tasks of commercial management
1. Financial management
- Financial accounting, preparation of annual financial statements and tax support
- Short, medium, and long-term liquidity management, budgeting, and distribution management
- Financial controlling incl. key figure monitoring and reporting
2. Contract and risk management
- Deadline monitoring for compliance with legal regulations, compliance with notice periods and company law regulations
- Processing of warranty, guarantee, and insurance claims
- Tender for contract optimization of contracts, such as direct marketing or service contracts
- Audit of utility company accounting and direct marketing
- Comparison of risk profile with insurance contracts and ongoing optimization
- Coordination of claims settlement
3. Management of the photovoltaic company
- Commercial law management for the project company
- Support of the shareholders (reporting, shareholder meetings), necessary for more complex ownership structures, such as funds
- Communication with banks and service partners
Depending on your business knowledge and time available, you can take on many tasks yourself. However, some accounting tasks, such as the annual financial statements, may only be performed by tax consultants.
Alternatively, you can outsource the commercial management of photovoltaic systems either as a modular system or completely to service providers who are qualified and authorized for the respective tasks, or who are technically and organizationally set up in such a way that you can perform the tasks more efficiently.
External commercial management
In addition to technical services, there are also more and more offers for the commercial management of photovoltaic systems and entire portfolios. The advantage of a combined solution is that all tasks can be carried out effectively and professionally from one source.
It is easier for specialized service providers to keep up to date with the constantly changing conditions. They also have more comparative values at their disposal with which they can compare the key figures from your photovoltaic project. Calculating what savings potential there is and what the service means for your operating costs, is a good first step for outsourcing. Also think about the opportunity costs that can be saved if you have to do less yourself. Based on this, the services can be agreed upon as modular or fully comprehensive.
As a matter of principle, you should obtain several offers and ask for references. With some providers, you can integrate a performance-related component into the remuneration model. This reduces the ongoing fixed costs for remuneration and motivates your commercial manager if he or she is involved in additional revenues that are generated, for example through contract optimization.
Relatively few plant operators still outsource their operations to third parties, although the service advantages are obvious. Increasing automation can reduce the costs in the commercial management of photovoltaic systems. Thus, an adjustment not only takes place in response to steadily declining feed-in revenues, but it is also worthwhile for smaller photovoltaic systems and portfolios to make use of this service.
This article was prepared with the kind support of Mario Wulff, Head of Commercial Management, greentech GmbH.
To read the original version (in German): Kaufmännische Betriebsführung für PV-Anlagen