Using settlements to reduce revenue leakage in renewable energy

Settlements are the financial reconciliation between what a renewable energy asset produces and what it gets paid for in the market. This process involves matching meter data, market prices, contractual obligations, and performance metrics.

Settlements are only as accurate as the data feeding into the system. Many operators today are still reliant on spreadsheets, manual processes, and fragmented systems, resulting in flawed data.

David Compton, a senior consultant at MidDel Consulting, says, “We’ve audited dozens of operations and found that 88–95% of spreadsheets contain errors. These aren’t just typos, they’re structural issues that affect calculations, forecasts, and even compliance reporting. When we onboard clients to modern platforms, we often discover errors that have persisted for years.”

Common cause of revenue leakage

Compton shared a striking example during a recent workshop: a solar farm was reporting production numbers that didn’t match actual output. After months of confusion, it was determined that they were monitoring the wrong meters. This went undetected for several months and resulted in significant revenue loss.

This isn’t an isolated case or only cause of revenue leakage. Here are some common origins for error:

Time zone errors: Data arriving in UTC, local time without daylight saving adjustments, or other formats can skew settlement calculations if not properly aligned.
Spreadsheet dependency: A sobering statistic reveals that 90 percent of spreadsheets containing more than 150 rows have at least one significant error according to IT World.
Lack of validation: Without automated checks, anomalies go unnoticed, and incorrect data gets baked into settlement reports.
Mismatched meter data: Using incorrect or outdated meter points leads to inaccurate production reporting.

Each of these issues may seem minor in isolation, but compounded over time and across portfolios, they can result in millions of dollars in lost revenue.

The root of the issue isn’t just technical, it is often organizational. In many renewable energy companies, the trading desk, operations team, IT department, and compliance group operate in silos to some degree. Data flows between them are often informal, undocumented, or misunderstood. Organizations need to establish a single source of truth, ensuring all stakeholders work from the same data set to avoid conflicting position reports that can lead to costly errors.

Building a resilient settlement system

To reduce leakage and run a tight ship some generators hire a third-party asset management firm to handle their data, compliance and security and others use a modern industry-specific scalable data management systems, or a combination of the two.

Regardless of which route you take here are some key components to set up for success:

Automated validation, estimation, and editing (VEE)

VEE processes are the backbone of reliable data. They ensure that incoming data is checked for:

Unit conversions (e.g., kWh vs. MWh)
Expected ranges (e.g., seasonal production patterns)
Anomalies (e.g., sudden drops or spikes)

When data fails these checks, alerts are triggered, and corrections can be made before settlement reports are generated.

Real-time dashboards

Operators need visibility into their data as it flows in. Dashboards that show live meter readings, forecast comparisons, and alert statuses enable teams to catch issues early.

If a sensor fails or a data stream goes silent, the system should notify the right people immediately. Waiting until the end of the month to discover a gap is too late.

Modern data management platforms allow for customization of dashboards enabling users to see a scenario snapshot that is meaningful to their role, for example, actual vs optimal performance, equipment availability, missed compliance activities, etc.

Separation of operational and compliance data

Operational data is used for day-to-day decisions; compliance data is used for audits and regulatory reporting. Mixing the two creates confusion and increases the risk of errors. A well-architected system keeps them distinct but connected.

Scalability and redundancy

As portfolios grow, so do data sources from SCADA systems, ISO meters, weather feeds, and more. Your system infrastructure must be able to ingest, normalize, and store all of it without bottlenecks. Redundancy ensures that if one source fails, another can fill the gap.

Having a scalable digital platform enables any type of renewable energy provider with a problem that needs solving to start today. Adding on functionality as needed helps with budgeting, and better results make it is easier to justify adding more functionality to streamline more processes.

The pay-off

Investing in robust settlement systems isn’t just about avoiding losses, it’s also about unlocking value. Quality, clean data enables accurate forecasting and bidding, gives confidence when it comes to compliance reporting and can help streamline audits. It provides the data needed for better decision-making across the organization. Knowing that your revenue is being captured correctly, your reports are defensible, and your systems are resilient provides peace of mind so owners can focus on growing the business.

Data isn’t just a technical asset, it’s a financial one. Settlements are where data becomes dollars, and every error is a leak in the pipeline. By prioritizing data quality, validation, and cross-functional collaboration, operators can plug those leaks and ensure that every kilowatt-hour earns its due.

Author: Eric Baller, Chief Product Officer at Radian Generation

The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.

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