Are Offsite PPAs Right For Your Company?

This is the ninth 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 next chapter in our series, offsite power purchase agreements (PPAs), is outlined below. We are excited to share the chapters one by one, and to work with partners like Edison Energy in their development. 

What are offsite power purchase agreements (PPAs)?

Offsite PPAs are renewable energy contracts between a project developer and a company, where the RE installation is not sited at the location of the company's electricity usage. PPAs can deliver the energy physically to a company through the grid or can be financially-settled transactions. 

Who uses them/What are the key benefits? 

Offsite PPAs are a good option for companies with meaningful renewable energy goals that cannot be met with onsite RE installations alone. In addition, when utility options are unavailable or unattractive, and a company does not have sufficient options for onsite RE, offsite PPAs can help companies stay on track with their RE goals. An offsite PPA can also serve as a cost stabilizer and even a cost reduction tool when a company has load in deregulated electricity markets. 

Corporate buyers of all sizes now participate in offsite PPAs. Notably, companies like Walmart, Target, General Mills, General Motors, Novartis, Bloomberg, and the J.M. Smucker Company have signed offsite PPAs to help with their RE procurement. 

Is Pursuing Offsite PPAs right for you?

 Advantages: 

• Scale and impact 
• Cost savings and stability 
• Sustainability leadership and reputation 

Downsides: 

• Geographically diverse or regulated utility territory footprint of facilities 
• Complexity 
• Term length 

Like any renewable energy initiative, it is important to identify what commitments have been made in the past and their outcomes. By engaging stakeholders across the organization such as your finance team, you can accurately evaluate the best renewables strategy for your company. 
 
Talking to other companies that have already executed PPAs can be a good place to start for advice, lessons learned, and tips on completing a successful transaction. Industry organizations like the Business Renewables Center and Ceres also bring RE buyers together and provide materials to help companies get started. In addition, seeking insight from external law firms or energy advisors such as Edison Energy or Schneider Electric can be valuable as you start to structure transactions that will work for your company.  
 
To learn more about offsite PPAs, if they are a worthwhile consideration 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.