Managing a Commercial Solar Portfolio: How Solar Developers, EPC Contractors and O&M Teams Work Together

Chris Lord helps his clients manage a portfolio of solar assets. In that role he’s also managing a network of subcontractors who don’t always have aligned interests. This is the sort of thing Chris and Keith Cronin cover in their Solar Executive MBA course. I asked Chris for a quick overview of how solar developers, EPC contractors, and O&M teams work together to manage a portfolio of commercial solar projects.

What does the team look like that manages a portfolio of commercial solar projects?

Chris Lord: Well you need somebody to manage the fund and that person needs to be both experienced on the finance side, as well as on the you know, they need to understand solar and the projects underlying as well. And then you need a really strong developer for each of the projects.

That developer ideally is also the EPC, the engineering procurement, and construction contractor, who will build the project. And the idea is that you’re going to give them the money, they build the project, but you’re going to oversee them. But at the, for the most part, you’re relying on their expertise to deliver high quality, reliable projects that will produce the necessary energy so that sales will generate the returns for the customers. 

You also need an O&M team for each project. You need somebody to do the operations and maintenance work so that the projects continue to work through the life. And and if you have a strong EPC partner, that’s got to be the lead candidate to be the O&M.

I always like to structure them that way, because when you have an O&M, and you have an EPC, the EPC builds a project and the O and M is responsible for maintaining it. And each one is going to make some kind of assurances or even guarantees – outright guarantees – about how well the project will perform and how much energy it will produce.

But you don’t want, though, is in year three, if something goes wrong, you don’t want the EPC to point at the O&M and say, “oh, they didn’t maintain it properly”. And the O&M points back at the EPC, “No, they didn’t design and build it properly.” And so I like to see the O&M and the EPC for the first, at least five years, be the same party.