Often the lines between operations and maintenance (O&M) and asset management (AM) are blurred. Operations is engrained in O&M, but it’s also a large focus for AM providers. So what really is the difference between the two service areas?
AM is often looked at as the larger umbrella under which O&M is found. Chad Sachs, CEO of AM company RadianGEN, said asset managers “provide comprehensive services to owners to help them run their plants optimally, technically and financially.”
“AM is the broader term. It really includes everything at the operation level all the way to the financial and investment level,” he said. “Traditionally the O&M has been more boots on the ground—people doing preventative, corrective maintenance. When the inverter goes out, an O&M provider is usually the one who is called on to fix it. AM is really managing on behalf of the owner to get the best result for the project. They would be overseeing O&M, making sure the O&M provider got out there in time, is fulfilling their performance guarantees and didn’t overcharge for corrective maintenance because they didn’t do sufficient preventative maintenance.”
O&M has received the bulk of industry focus lately, and Sachs said equal attention should be paid to AM.
“You build the project, you expect it to run exactly as planned. That’s a naiveté,” Sachs said. “O&M has got an increased emphasis because people realize you need to take care of [systems]. With proactive asset management, you can avoid underperformance and really help the asset improve. That’s where a lot of people don’t give AM as much credit.”
Edmee Kelsey, CEO of solar asset management software provider 3megawatt, sees O&M and AM as needing each other equally to function properly.
“There are a lot of areas where the asset manager works very closely with the O&M guys to figure out the best action,” Kelsey said. “Sometimes you find that [a broken] panel has to be transported from China and shipping costs are not included. The decommissioning and reinstallation costs are not included. Who are you going to have do that? Is somebody a few days quicker but more expensive? These are all financial decisions that somebody who manages the accounts of the projects can determine to generate as much cash out of the solar project as possible.”
Everyone is looking to cut costs, and O&M is the latest area to be picked apart. Before, someone might hire an O&M to do everything—vegetation management, washing, preventative and corrective maintenance, etc. But now they may feel comfortable hiring a separate vegetation manager and a more efficient washer. How will all these separate services be managed?
“They split out the responsibilities to bring costs down,” Sachs said. “That means, they’ve added complexity and a need for managing those assets. What asset managers can do is help with that management at an affordable price in a way that really gives you the best of both worlds.”