kWh Analytics tries to solve solar’s overestimation, underperformance issues with new STAR reports
Every mature asset class requires market data to improve the accuracy and certainty of investment returns, and solar is getting there, but still needs work. To address this need, solar risk management firm kWh Analytics announced two new initiatives. First, it collaborated with 10 of the top 15 solar asset owners on the “2020 Solar Generation Index” (SGI), the largest industry-wide energy validation study. The report analyzed over 30% of the market’s non-residential systems in the U.S. and found that on average, systems underperformed their initial estimates by 6.3% on a weather-adjusted basis. The report concluded that performance estimates are systemically over-estimated and that assets are often not yielding the expected returns.
“Although underperformance impacts multiple stakeholders, the long-term equity investors are the most exposed to inaccurate energy forecasts. Change won’t happen on its own. It is up to us as an industry to collectively allow hard data to overcome opinions, however well-intended,” said kWh Analytics CEO and Founder Richard Matsui. “We look forward to the shared work of improving our solar industry and accelerating the clean energy transition.”
In parallel, it issued the industry’s first Solar Technology Asset Risk (STAR) Comps reports with leading sponsors and asset owners, including New Energy Solar and Captona, to use industry data to validate solar production estimates on more than 1 GW of solar assets.
STAR Comps explained
The STAR Comps reports are meant to provide an objective standard to assess solar performance for solar asset investors. STAR Comps leverages the industry’s largest database of solar performance to validate or invalidate performance estimates and loss assumptions for similarly designed systems. The STAR Comps report supports deal teams by improving efficiency and accuracy of asset diligence for projects under construction or under consideration for M&A. It also provides asset managers with context on asset performance to identify addressable versus exogenous performance issues.
“The STAR products are an innovative set of tools that combine analytics and industry data to offer unique insight into our systems’ performance. Our asset management team can now validate and contextualize what we see in the field with industry metrics and more accurate weather analytics to inform our O&M strategies,” said Paul Whitacre, Director of Asset Management at New Energy Solar Manager.
Equipped with objective data and comparables through STAR, the solar industry can course correct and improve accuracy and certainty of its investment returns.
“kWh Analytics has data on production results that were previously ‘best guess’ estimates. It was only a matter of time that we began using market data to validate those numbers,” said Captona Founder and Partner Izzet Bensusan. “The STAR Comps product helps bridge the gap between the Independent Engineer reports and actual performance of projects and provides insight into what we can expect as the future owner and operator of a project.”
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