A recent deal which will see 42.5 megawatts of solar power from a 100-megawatt solar project in North Carolina divided among five smaller companies is being heralded as a critical step in corporate energy procurement.
The contract is seen as a milestone for buyers whose relatively small size would have precluded their signing corporate power purchase agreements (PPAs) until now.
“While aggregation deals are not new,” reports Greentech Media, the agreement signed by Bloomberg, Gap, software vendors Workday and Salesforce, and communications and automotive services company Cox Enterprises is making waves “because of the small capacity signed for by each offtaker.”
When Apple, reinsurer Swiss Re, e-commerce company Etsy, and cloud service provider Akamai jointly purchased 290 megawatts in 2018, the electronics giant was the main anchor for the deal. By contrast, the new agreement will find all five offtakers committing to between five and 10 megawatts.
Critical to the success of the more recent deal was the assistance of LevelTen Energy, an energy broker “that aggregates buyers and sellers and connects them with its project marketplace,” Greentech notes. “There are a lot of corporate buyers on the sidelines waiting to participate,” explained founder and CEO Bryce Smith. “But to date, there hasn’t been a way for those companies to cost-effectively buy PPAs because they want five megawatts, not 500.”
He added that “that’s really what’s most exciting about the model—you can allow much smaller purchases” and “aggregate those into something meaningful, where the economics are on par with the economics of much larger purchases.”
Kevin Sok, senior manager of environmental responsibility at Cox Enterprises, said working with a service like LevelTen will help smaller companies navigate the complex administrative dimensions of signing a PPA. “The biggest challenge is having that internal expertise to help you understand the mechanics of the energy market,” he explained.
The new deal is one sign of a steady uptick in corporate interest in renewables, Greentech states, with the Rocky Mountain Institute’s Business Renewables Center logging more than 6.4 gigawatts of deals signed in 2018, double the previous record. Moreover, “consortia like the Renewable Energy Buyers Alliance, which is supported by RMI, as well as the World Resources Institute, World Wildlife Fund, and Business for Social Responsibility, are also working to make more resources available to corporates.”
All of this is great news, Smith said. “We are all so fortunate for the efforts that the Microsofts of the world have made and the paths they have cleared for other buyers.” But “if we can’t create structures that allow the easy participation from that long tail of C&I [commercial, industrial, and institutional] buyers, we miss a real opportunity.”