A leading solar developer develops, owns, and operates a fleet of over 2 Gigawatts of solar generation and storage assets across the US. As a part of its commercial asset operations, the IPP manages a portfolio of 23 PPA contracts, tolling agreements, and hedging contracts. The IPP has deployed Salesforce CRM to manage its off-takers throughout their lifecycle, from origination to project development to ongoing operations post Commercial Operation Date (COD). To support wholesale market trading, it has deployed an Energy Trading Risk Management (ETRM) solution. It uses NetSuite ERP to manage finance and accounting processes as well as other enterprise operations.

However, the settlement of the portfolio of PPA, tolling, and hedging contracts is a highly manual process. The IPP has hired a team of business analysts to develop and maintain a set of Excel worksheets. At the end of the month, as the invoice due dates approach, the business analysts manually import the revenue meter data and wholesale prices and run the Excel worksheets to generate a set of PDF invoices and the associated settlement files, which are attached to emails to off-takers. The invoices are then consolidated with the wholesale market settlement results into a General Ledger file for import into its ERP. To make matters worse, whenever the wholesale markets revise the revenue meter data and wholesale prices, business analysts need to re-import the updated meter data and wholesale price changes and re-run the Excel worksheets to calculate the adjustment amounts to be included in next month’s invoices. The manual contract settlement process is labor-intensive, with billing and settlement errors occurring from time to time.

The IPP engaged CFEX to identify a solution to automate the contract settlement process. CFEX proposed its Contract Management and Settlement (CMS) solution to address the IPP’s manual operational challenges, automate the core contract settlement process, and, through integration with the IPP’s existing CRM, ERP and ETRM solutions, streamline end-to-end commercial operations.

CFEX’s Contract Management and Settlement solution consists of the following three applications:

• CFEX’s Meter Data Management System centralizes the management of revenue and check meter data and inverter data collected from its generation assets. The check meter data and inverter data are used to cross-check and validate the revenue meter data, estimate it when it is not immediately available, and ensure its accuracy when it is available.
• CFEX’s Contract Management System enables the IPP’s business analysts to accurately model, validate, and maintain the PPA contracts, tolling agreements, and hedging contracts that the IPP has signed with its off-takers. Since they have substantial working knowledge of these contracts from their prior experience in developing and maintaining the Excel worksheets, the business analysts were quickly trained to use the Contract Management System’s intuitive drag-and-drop user interface.
• CFEX’s Billing and Settlement System enables the IPP to automate the daily settlement and monthly billing and invoicing processes. As a part of the former, CFEX’s Billing and Settlement System applies the contract models to estimated revenue meter data daily to calculate the accrual of unbilled revenue. The daily accrual of unbilled revenue enables the IPP’s finance and accounting team to close the books immediately at month-end. As part of the latter, CFEX’s Billing and Settlement System applies the contract models to validated revenue meter data to calculate billing details and generate an invoice for each off-taker at the end of the billing cycle.

To streamline the end-to-end commercial operations, CFEX’s Contract Management and Settlement (CMS) solution was integrated with the wholesale markets on one hand and the IPP’s CRM, ERP and ETRM on the other. The CMS was integrated with the CRM to synchronize the contract PDF files that the CRM manages with the financial contract models CFEX manages, with the ERP to book accrued and invoiced revenue, and with the ETRM solution to incorporate day-ahead bids into the PPA contract settlement process.

The end-to-end solution operates autonomously in lights-out mode, from importing meter data and wholesale prices to booking accrued and invoiced revenue in the ERP. The processes are defined by a set of daily, monthly, quarterly and yearly workflows, depending on the requirements of the contracts, and executed automatically. The IPP’s operations staff only needs to monitor operational statuses and handle exceptions. As such, it requires only a fraction of the headcount and yet substantially improves accuracy and minimizes settlement errors. More importantly, the CMS generates audit logs for all of the processing.

• Billing quality and improved accuracy – all the PPA contracts, tolling agreements, and hedging contracts modeled by CFEX’s Contract Management System and the charges and billing details calculated using CFEX’s Billing and Settlement System are of billing quality with penny-level accuracy. As such, CFEX’s CMS substantially reduces the settlement errors and disputes.
• Increased operational efficiency – Once set up, this end-to-end solution has been operating reliably and automatically, importing data from the wholesale markets, calculating daily accrual of unbilled revenue, and generating monthly invoices with minimal human intervention.
• Better Managing Market Risks – The daily settlement process substantially improves the visibility of the financial positions of the hedging contracts and enables the IPP to manage market risks more effectively.
• Faster Month-end Closing – The daily accrual of unbilled revenue substantially speeds up the month-end closing.
• Improved auditability – CFEX’s CMS substantially improves auditability by generating audit logs for every intermediate calculation.