Trends in Renewable Energy Procurement

Corporations are increasingly interested in renewable energy procurement and actively talking about risk allocation, aggregation and impact.

Corporations are increasingly interested in renewable energy procurement, as evidenced by participation trends in organizations and initiatives such as RE100, Renewable Energy Buyers Alliance (REBA), and Rocky Mountain Institute’s Business Renewables Center (BRC). These organizations help to facilitate and accelerate corporate purchasing of renewable energy, especially at scale. They engage the community of corporate renewable participants, encourage dialogue around challenges and best practices, develop and publish practical resources, facilitate connections, track progress, and can be a great place to keep a pulse on what’s next in the renewables market.

As a member of the BRC and advisor to organizations with increasing interest in the above initiatives, WSP has a unique perspective on emerging activities and ambitions from both current and aspiring participants.  Below is a recap of the latest buzz in U.S. corporate renewable energy purchasing and where WSP sees the trends headed for 2018:

  • Risk allocation: While not a new topic, there is continued dialogue about proper risk allocation between the major deal participants. This is leading to innovative solutions to overcome historic barriers, such as price collars to bound downside risk, and ongoing discussion about how to streamline and simplify the corporate purchasing process to understand and manage these risks. This streamlined process of risk management is increasingly important as the community aims to expand to include buyers with smaller loads than those who have traditionally been at the forefront in renewable energy procurement from the leading technology and industrial sectors.
  • Aggregation: Two key benefits of a utility scale renewable purchase are price stability and direct association with a specific new project (more on this “impact” connection below). As buyers with smaller electricity demands enter the space, the advantages of purchasing energy at scale diminish without innovation. Demonstrated models have emerged for smaller off-takers to aggregate their demand for better project economics – with the developer, a single off-taker or a group of off-takers coordinating the negotiation of terms for the output from a single renewable project.This is allowing buyers with loads as small as 5-10 MW to enter and benefit from the corporate purchase power agreement (PPA) market by engaging directly with developers or through collaboration with strategic suppliers and partners.
  • Impact:Another motivation for corporate renewable purchasing is the ability to align with sustainability objectives. Corporate PPAs can provide buyers with a close connection to a specific new renewable project that can be promoted through sustainability reports or other avenues. However, the community is still wrestling with how to transparently, consistently and appropriately talk about the distinct role of each player in bringing new renewable projects online. The borrowed term of “additionality” from carbon markets isn’t quite cut out for the nuance involved in a new renewable deal, so the opportunity is emerging to advance and clarify the language used in talking about corporate PPA deals.

The voluntary renewable energy market has shown steady growth over several years and increased corporate engagement continues to provide momentum as the market matures. With all the exciting advances and participants, 2018 is poised to see more activity than ever before. Learn more about renewable energy procurement options for your organization through our Green Power Procurement whitepaper.

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