Thu. Jul 18th, 2019

Clear Power Deal Tracker: New fashions, gamers form blockbuster quarter

The second quarter of 2019 was one for the file books for company renewable procurements, as offers inked added greater than 2.eight gigawatts (GW) of capability and 490 gigawatt-hours (GWh) yearly to company power portfolios.

The capability contracted throughout Q2 was a few 60 p.c improve from the second highest quarter on file, This autumn 2018, throughout which corporations added 1.75 GW by means of energy buy agreements and utility packages. On high of that quantity, a number of offers disclosed through the second quarter had been reported in megawatt hours (MWh), that means the rise is extra vital, though the 2 figures can’t be mixed with out extra data. 

The banner quarter featured some acquainted names — together with Fb, Walmart and Amazon, all of which have commitments to energy their operations with 100 p.c clear power — together with new gamers, similar to Hormel Meals, Mondelēz Worldwide’s Oreo division and Ball Company.

Taken as a complete, three tendencies come out. 

1. Corporates are inking offers for a number of tasks 

Most offers signed this quarter concurrently procured power from a number of tasks, areas and/or property. 

That is in distinction to transactions disclosed in previous quarters, which had been primarily represented by single contracts for single tasks (though 2018 This autumn foreshadowed this development with each Walmart and ExxonMobil signing aggregation offers for 2 tasks). 

Notable a number of undertaking offers in Q2 included one orchestrated by Starbucks, which signed three digital energy buy agreements (VPPAs) in three states that embody wind and photo voltaic assets; one introduced by Ball, which signed two VPPAs (one wind and one photo voltaic) in two states; and one disclosed by Amazon, which inked a deal for 3 wind power-purchase agreements (PPAs) throughout two international locations.  

Most offers signed this quarter concurrently procured power from a number of tasks, areas and/or property.

This aggregated deal construction displays the rising choices for company clear power procurements that convey worth and decrease danger for the off-taker. Aggregating a number of tasks diversifies the power portfolio by location and useful resource, very like how a mutual fund reduces danger in an funding. 

“Inherently, range of expertise, location and developer ought to all end in a greater stability of dangers than choosing a single undertaking,” stated Patrick Leonard, power supervisor for Starbucks shops in america and Canada, in an e-mail. 

Different corporates used this construction to accumulate power from many small contracts. In a separate deal, Starbucks acquired capability from seven photo voltaic tasks in Texas directly, and Walmart introduced it executed 46 rooftop photo voltaic PPAs throughout 5 states. The Walmart rooftop offers, that are behind the meter making them completely different from different transactions on the leaderboard, are notable as Walmart strives to take greater steps to time and location-match clear power use. 

The range of tasks implies that clear power assets could also be situated nearer to the purpose of use. Walmart and Starbucks, each of which have hundreds of areas, have the potential to higher time and placement match with their renewable energy useful resource, whereas relieving congestion on the grid. 

“Shopping for renewable power from a number of tasks throughout the U.S. displays how we use electrical energy throughout our retailer portfolio,” Leonard stated.

The emergence of this enterprise mannequin is only one instance of how the market is offering extra choices to suit extra use instances as corporations step up clear power commitments.

2. The timing is true 

The uptick within the variety of offers and dimension of offers displays market forces which may be spurring on renewable procurements. 

For a lot of corporations, renewable procurements simply pencil. The price of the expertise continues to lower, with the price of large-scale photo voltaic and wind cheaper than dirtier choices on a levelized value foundation, even with out subsidies.

Moreover, the unsure way forward for federal tax breaks could also be spurring on corporations to enter PPAs now as a substitute of later. The photo voltaic funding tax credit score and the wind manufacturing tax credit score, the main items of federal insurance policies which are designed to encourage funding in clear power, start to part down on the finish of the yr. As soon as the tax credit expire, financing of recent tasks could also be dearer.

This confluence of forces is one purpose why AB InBev, Anheuser-Busch’s U.S. arm, entered its first VPPA, a 222-megawatt (MW) photo voltaic plant in Texas. The huge plant, anticipated to be operational by 2021, would be the dimension of 1,500 soccer fields, the corporate stated in a assertion

“Timing is nice with the funding tax credit score and the manufacturing tax credit score that will not be there into the longer term,” Angie Slaughter, vp of sustainability at AB InBev, stated in a telephone interview with GreenBiz

Timing is nice with the funding tax credit score and the manufacturing tax credit score that will not be there into the longer term.

Lastly, as the general public turns into extra conscious of the crucial to scale back emissions, corporations are recognizing the reputational benefits of striving for clear power objectives.

AB InBev, for instance, has put an emblem on each Budweiser bottle and may, noting that it’s brewed with renewable power. 

“Now it’s within the hand of each one in every of our Budweiser shoppers every day,” Slaughter stated. “I do imagine our shoppers are very interested in particular issues which are used to provide the product they purchase each day. They need to be told, they need to know extra concerning the merchandise they purchase, they need a worth proposition and to really feel good and perceive that what they’re shopping for is a constructive product.”

three. New(ish) meals gamers are going large 

After company and tech trailblazers have examined the water, meals manufacturers new to our roundup are making spectacular showings. 

Ball topped this quarter’s listing with a deal reaching 388 MW, sufficient to cowl all of its North American electrical energy load. Whereas not a totally new participant — Ball entered a four.5 MW wind PPA in 2016 — the brand new deal vaults Ball into one of many leaders in renewable procurements, because the deal is among the largest recorded by GreenBiz. 

Smithfield Meals entered a 75 MW PPA that will cowl 15 p.c of the corporate’s power use in america. The corporate has explored smaller clear power choices previous to this deal, together with utilizing on-site wind technology and capturing biomethane from pig manure, all in its quest to scale back emissions by 25 p.c. 

The rise of bigger offers from new(ish) procurement gamers could also be a harbinger of a quick ramp-up as extra corporations flip to renewables in a blink of a watch.

Oreo’s dad or mum firm, Mondelēz Worldwide, signed its first U.S.-based renewable deal to acquire 65 MW from a photo voltaic undertaking in Texas. The power, Mondelēz says, is sufficient to energy the manufacturing of half of the Oreos consumed within the U.S. — about 10 billion cookies. 

Hormel, proprietor of Skippy, Applegate and Wholly Guacamole, says it’s on observe to acquire 50 p.c of its power from renewables following a 74 MW VPPA, along with different initiatives, together with subscribing to group photo voltaic gardens. 

The rise of bigger offers from new(ish) procurement gamers could also be a harbinger of a quick ramp-up as extra corporations flip to renewables in a blink of a watch.

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