New Trends In Corporate Renewables: Ppa Case Studies Of The Future

February 24, 2021
Ami Khalsa

Over the past decade, we have witnessed rapid growth in corporate PPAs as companies andinstitutions seek operational savings and to achieve sustainability objectives. Even in theirdramatic growth from the early 2010s, corporate PPAs and the needs they fill for companieshave evolved and will continue to do so. Recently, there have been a number of notablechanges and advancements made to corporate PPAs foreshadowing additional changes tocome. These advancements include the evolution of a 1) 24/7 PPA offering in Europe, 2) adoption of proxy generation PPA (pgPPAs) in the United States and 3) shaped PPA in Alberta,Canada. It is likely we will continue to see future PPA developments mirroring these ascorporates look to meet their renewable energy goals and achieve greater decarbonization.

24/7 “Pure Statkraft PPA”

Statkraft, a Norway based renewables developer and operator, has launched a 24/7 PPA offeringcommercially called a “Pure Statkraft PPA.” 1 Developed in 2020, this PPA is designed to fitcorporate 24/7 clean energy needs with 15-minute granularity through a portfolio ofhydropower, solar and wind projects. Instead of purchasing a PPA for a specific project,companies are signing to a portfolio of projects to match their energy demand. To ensure theportfolio of project is meeting 24/7 energy demand, the PPA is independently verified by theGerman testing institute TÜV for real-time components and additionality. Statkraft’s first 24/7PPA customer at the end of 2020 was German car manufacturer Daimler, more commonlyknown as Mercedes-Benz. As more companies achieve their initial sustainability and renewableenergy goals, their commitments often shift to deeper decarbonization goals.

Proxy Generation Power Purchase Agreements (pgPPA)

First documented for a Kansas based wind project in 2016, a proxy generation power purchaseagreement (pgPPA) allows for weather-related risk to be managed through settling a facility’senergy transfer through a proxy generation index, instead of on actual metered generation.Proxy generation is an hourly index that determines the volume of energy to be produced by aproject if it had been operated as specified by the owner or developer. This shifts the operationrisk back on the seller rather than the buyer. pgPPAs rely on both parties, owner and offtaker,agreeing on a set of weather metrics to establish the proxy generation component. The ownerand offtaker may look for a third party to serve as the calculation agent for the contract lifetime.To establish the pg PPA values, the actual wind or solar resources at a given facility are measured. The actual measurement is then run through an agreed-to formula that estimateshow many megawatt hours (MWh) should have been produced given the facility size andoperations under best practice standards.

Recently pgPPAs have expanded from just wind projects to solar as well. The first known solarpgPPA was signed between Lightsource and the Capital Solutions unit of Allianz GlobalCorporate & Specialty (AGCS) in partnership with Nephila Climate in January 2021.2 The deal isfor Lightsource bp’s under construction 153 MW Briar Creek solar farm in Texas within theERCOT market. REsurety Inc. is being used as the pgPPA’s calculation agent and will providehourly solar radiance data to be managed using PVsyst photovoltaic software.

City of Edmonton RFP

As a part of its Road to Renewables Program, the City of Edmonton issued an RFP3in November2020 for about 330,000 MWh of renewable generation annually with COD by January 1st, 2024.What is unique about this RFP is that Edmonton sought to procure 330,00 MWh with a specificmonthly and hourly shape that matches its demand profile (see Figure 1). This concept is similarto the notion of a 24/7 PPA but with a more specific demand profile. Essentially this is a shapeddeal, likely giving advantage to a hybrid project of wind and solar or wind/solar plus storage.The RFP allows for up to ten different renewable project facilities to meet the required MWh, butonly a single strike price offer is to be submitted regardless of the number of facilities. This typeof product leaves the seller with material merchant exposure. It is a novel advancement incorporate renewable energy procurement as the City of Edmonton is more directly hedgingtheir consumption alongside green attributes. Edmonton’s RFP is scheduled to close in March.