by Stefano Cruccu

Two weeks ago, we visited Japan and had meetings with a large number of key market players, varying from EPCs and inverter manufacturers to technical advisers and investors.

The results of this visit served as valuable input for our Solar Asset Management Asia conference, that will take place in Tokyo from June 24-25, 2015 and we would like to share some of our findings with you:

O&M is still mostly M

The operations part, just like the financial asset management part of activities in the operational phase, is not very developed yet. Most companies that provide O&M services basically provide maintenance and monitoring services. We believe that the Operations aspect will soon become more recognized and valued as portfolios in Japan start to grow.

Increasing transactions & portfolios starting to grow

We believe Japan is just beginning a very interesting phase in which plants will start to be aggregated and portfolios will be consolidate. The liberalization of the electricity market in combination with the possibility to stock list PV funds will drive this phenomenon. As we’ve learned in Europe, this development will again drive the demand for professionalization of all kinds of technical and financial asset management services.

Standardization

Both from a technical and legal perspective, standards are not yet well implemented. While standardization is still an important topic in major European markets as well as in the US, Japan is lagging behind. To give an example: many O&M contracts hardly include performance guarantees, but are rather based on trust that the operator will do his very best to optimize performance. Pricing, contracts, service levels: it is apparent that there is great room for improvement.

Investors slowly becoming aware of need for professional services

We’ve understood that investors are still limitedly – but increasingly – knowledgeable about the operational phase of their investments. As some larger scale plants are moving beyond the first year mark of operation, it's becoming clear that PV is not maintenance free, and needs professional services to secure yields and revenues.

japan om.jpg

Market players starting to understand long term opportunities

Compared to a year ago, domestic and international companies active in the Japanese market are increasingly recognizing that the installation boom won’t go on forever and that it might be smart to professionalize their services for the operational phase of plants. In the end, lower but long-term, stable revenues from services carried out over 20-25 years is something to consider pursuing.

Summarized

In summation we see the Right Ingredients for a Solar Asset Management conference:
Although Japan is a complicated market, experiencing some bumps in the road right now, we strongly believe that the right ingredients are there for a conference focused on the operational phase of PV assets:

  • Market is early in the learning curve and few best practices exist, however the need starts to be recognized
  • Large installed capacity, installed in a relatively short period of time
  • High FITs: every KWh lost has an impact and investment in O&M/AM is cost effective
  • Increasing flexibility requirements for PV plants, related to scheduling, forecasting and providing power when needed
  • Market is more focused on quality than many other Asian markets
  • Liberalization of electricity market, will lead to opportunities for IPPs and therefore drive consolidation of portfolios
  • Opportunity to stock list funds that include PV assets, will drive growth of portfolios as well and therefore the need for more developed services and knowledge in the field of managing PV assets

Are you active in this field in Japan, or looking to play a role in the operational phase of PV plants in Japan: feel free to contact us and share your experience and vision!
Also, please keep an eye on the conference at www.solarassetmanagement.asia

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