Corporate wind and solar power purchase agreements (PPA’s) are growing in leaps and bounds according to Rocky Mountain Institute (RMI), but not as fast as they could be. The issue is primarily one of awareness.
A solar PPA is a long term contract to purchase electricity generated by a solar panel system; either installed at a company’s premises or off-site. The same sort of arrangement applies to wind power. In some cases PPA’s require zero up-front capital outlay.
Solar and wind at a commercial or utility scale under a power purchase agreement is now the cheapest source of power in some markets – and they can provide long-term security. “Competitive power prices can be locked in for 20 years or more,” says Lily Donge, a principal with RMI’s electricity practice and leader of the Business Renewables Center.
However, less than two dozen Fortune 500 companies have signed off-site PPAs to date.
The pace of uptake is something that RMI’s recently launched Business Renewables Center (BRC) has its sights set on changing. The BRC is a collaborative platform aimed at accelerating corporate renewable energy procurement and aims to add another 60 gigawatts of off-site wind and solar power throughout the USA by 2025.
While 60 gigawatts may sound like a huge amount, it’s certainly achievable.
” For many large corporations, 100 MW of wind capacity represents about one quarter to one half of the power they require. If 600 companies purchased 100 MW of capacity each, the market would double,” says RMI.
So, if the clean power these companies can source is so economical, where’s the stampede?
Many companies are simply not aware of the potential benefits it seems. Additionally the complexity of large-scale, off-site renewable transactions, high transaction costs, and a lack of necessary information and tools are creating barriers.
This is where the BRC comes in.
The BRC’s founding corporate buyers include Bloomberg, eBay, GM, HP, Kaiser Permanente and represent more than $500 billion in revenue and 25,000 GWh of electricity consumption annually. These companies are not only leading by example, but are willing to share the expertise they have gained by pioneering these transactions.
The trailblazing will make the path smoother for those that follow and additionally, all will benefit from economies of scale and emergent solutions as the market accelerates.
For smaller companies, particularly those in Australia and where the system is to be installed at the company’s premises, the benefits of solar power purchase agreements are already easier to obtain. National solar provider Energy Matters‘ parent company, SunEdison, pioneered the commercial solar PPA and recently made its product available to Australian businesses.
