Corporate renewable energy purchases used to be driven primarily by sustainability goals — “it’s the right thing to do” — rather than cost. Now many companies, including Fortune 500 ones, are looking to renewable energy as a way to reduce their energy costs, according to a new study by Apex Clean Energy and GreenBiz Group that came out last week.
“This market is rapidly maturing and expanding, providing corporate and industrial purchasers with an immense number of options in terms of off-take, additionality and financial participation in renewable energy projects,” Apex Clean Energy chief commercial officer Steve Vavrik told Solar Industry magazine.
Given all that complexity, developing a successful procurement strategy for renewables and distributed energy resources (DER) can seem like an incredibly daunting time-suck. There are various types of renewable sources to consider, not to mention a host of potential financing strategies.
“Too often, organizations lacking an enterprise-wide energy procurement and energy management strategy end up relying on a single renewable energy or DER technology and can miss out on lower-cost or lower-risk opportunities,” Charles Benisch, marketing manager for EnerNOC energy procurement and advisory services, writes today in Triple Pundit.
Despite the renewable energy market complexity, Benisch thinks it is possible to develop a successful energy procurement strategy. He points to the US General Services Administration, which previously signed a historic wind power purchase agreement for 140 megawatts of wind power after developing a renewable energy procurement strategy.
Benisch recommends asking these key questions to help come up with a sound strategy:
- What are the goals of your renewable energy strategy?
- What is the value of budget certainty?
- What’s the premium you’d be willing to pay for region or resource-specific projects?
- Flexibility in contracting requirements (e.g. contract length)?
- Does your load closely match wind or solar generation profiles?
- How much of your load is located in competitive markets?
- Which internal stakeholders need to be engaged?
In addition, Benisch suggests keeping in mind that: on-site generation offsets your retail load, off-site purchasing through VPPAs exposes you to hourly market risk although that can be managed, prices in different market areas don’t always correlate perfectly, and there’s generally a tradeoff between budget certainty and cost savings.
There’s no one-size-fits-all approach that works for this, he insists. But, with a better understanding of the risks involved and the way the business uses energy, a winning plan is achievable.