Digital asset management can optimise renewables investment

Providers of renewables are facing a shift in the way they manage their operations, writes Ardian's Marion Calcine.

Marion Calcine
Marion Calcine, CIO, infrastructure at Ardian

Renewable energy is at an inflection point. Providers of renewable energy and holders of renewable assets are facing fundamental shifts in the way they manage their operations and investments.

In a non-subsidised world, models for operational monitoring and merchant risk management need to be nimble and efficient. They must rival those of traditional utilities, which have longstanding trading experience and knowledge.

The goals are two-fold: to optimise production to extract as many megawatt hours of clean power as possible; and to manage and hedge revenue exposure to stay on top of market dynamics and capture the best windows of opportunity. To accomplish this, investing in a powerful digital asset management system is table stakes.

These systems are crucial to remaining competitive and, over the longer term, to developing arbitrage strategies – to predict power prices and assess whether to inject electricity into the grid or store it in a battery. This in turn helps to resolve the key issue of intermittency.

It’s a new world

Ten years ago, most renewable projects benefitted from long-term subsidies. The end of subsidies across many markets means asset revenues and price risk must be managed through power purchase agreements and other revenue-hedging mechanisms.

This increases the urgency for investors and operators to manage risk efficiently. With the right digital risk management tools, investors can assess risk over as little as five days or across the operating life of an asset. This enables investors to: quantify the risk exposure of assets and portfolios in absolute and relative terms; make better-informed decisions on hedging strategies; guide portfolio construction strategies through the comparison of new investments’ risk profiles; and stabilise a framework and methodology that can be replicated for other infrastructure sub-sectors.

A digitised operating platform also provides full transparency into how assets within a portfolio are performing on a real-time basis. This automatically creates accountability with operations and maintenance teams and original equipment manufacturers.

Real-time monitoring and enhanced analytics provide insights into operations that cannot be captured at the single wind farm level. This leads to a range of positive goals, such as increased power output through optimised turbine performance; more accurate short-term forecasting; higher granularity and real-time information on operations and maintenance services; better maintenance scheduling; and predictive maintenance that anticipates potential failures.

Maximising revenue

An end-to-end renewable energy monitoring online platform also helps optimise revenue by providing a comprehensive view of the market value of assets while continually assessing the long-term value and performance across the portfolio. It allows investors to benchmark revenue generation against fully merchant plants; quantify assets’ risk exposure; identify medium to long-term hedging opportunities while guiding decisions on hedging policy and portfolio construction; and anticipate revenue potential from ancillary services.

Climate change is the defining challenge of our time and renewable assets provide an essential path to decarbonising the world. At the same time, the competitive landscape for renewables is shifting. Maximising returns and creating sustainable value for stakeholders are not mutually exclusive, but inextricably intertwined. The most successful renewables players of tomorrow are harnessing today’s most innovative digital strategies to set themselves apart.