Is Collaborative Renewables Sourcing Right For Your Company?

This is the third in a series of blog posts about renewable energy options for retailers. 

As retailers look to reduce their environmental footprint and grow renewable energy investments, RILA continues to hear from our members that understanding the ever-changing renewables procurement landscape can be challenging. That's why we are developing a new renewable energy guide, which highlights fundamentals of different procurement options and key considerations, specifically for retailers. 

In a series of blog posts, we'll be outlining various topics featured in the guide; the third in our series, Collaborative Renewables Sourcing, is outlined below. We are excited to share the chapters one by one and work with partners like Schneider Electric in their development. 

What is Collaborative Renewables Sourcing? 

Collaborative Renewables Sourcing allows retailers to take advantage of PPAs they might not be able to otherwise. 

Aggregated PPA deals allow multiple buyers to participate in the market by banding together as a joint venture consortium to reach the size or capital needed for a long-term PPA.  

A joint tendency model allows buyers to enjoy the benefits of a portion of a PPA agreement with an anchor tenant. The anchor is usually the primary tenant taking most of a project that another buyer can participate in. 

Alternatively, under a reseller PPA model, a large buyer purchases a project and divides it into more flexible and smaller segments. 

Who uses them/What are the key benefits? 

Aggregated PPA deals are ideal for smaller buyers who are interested in the benefits of a PPA, but may be less creditworthy, have less capital to invest, and are more risk averse, but still have the interest in adopting a renewable energy agreement. These buyers may have an interest in gaining benefits such as cost savings, fixed price for power and emissions reductions. 

Aggregated PPAs have been implemented successfully through conglomerates, such as George Washington University, American University, and George Washington University Hospital for a 52 megawatt (MW) solar PV project in Washington, D.C. In 2016, the Dutch wind consortium negotiated two long-term offsite PPAs for a total of 136 MW. And Microsoft recently announced a new solar deal in Virginia where Microsoft serves as an anchor tenant for a project but allows other buyers to buy smaller portions of the output at a competitive price. 

Are Aggregated PPA Deals right for you? 

Advantages: 

• Flexibility for constrained companies 

• Lower credit or shorter contract options 

• Potential for easier, faster execution (resold PPAs) 

Downsides: 

• Execution complexity (aggregation) 

• Full PPA execution (joint tenancy) 

• Less negotiation flexibility (resold PPA) 

• Environmental and additionality claims (joint tenancy; resold PPA) 

Ready to move forward with collaborative renewables sourcing? 

Like any renewable energy initiative, engaging company stakeholders is crucial to get buy-in and ensure there is a thorough understanding of the deal structure, benefits, risks, and implementation. Stakeholder groups that should be involved include a renewable energy buyer’s advisor, such as Schneider Electric, accounting/auditing, tax advisors, and internal as well as external legal counsel. 

To learn more about collaborative renewables sourcing, if they're a viable option for your company, and next steps for moving forward, access the full chapter in the renewable energy guide here and all the chapters published so far here. For more information about RILA's renewable energy initiatives, contact Erin Hiatt.