Bloomberg, Cox Enterprises, Gap Inc., Salesforce, and Workday, with guidance from LevelTen Energy, closed 42.5 megawatts of a 100-megawatt North Carolina solar project by global renewable energy developer, service provider and wholesaler, BayWa r.e.
This group of companies, coming together as the Corporate Renewable Energy Aggregation Group, is the first example of companies aggregating similar, relatively small amounts of renewable energy demand to collaboratively enter into a virtual power purchase agreement (VPPA), collectively acting as the anchor tenant for a large offsite renewable energy project. According to the five companies, this lays the groundwork for other corporates to procure renewable energy cooperatively, maximizing value and reducing risk.
The five members of the group, with support from the Business Council on Climate Change (BC3) and the Business Renewables Center (BRC), began collaborating in late 2017. Many potential renewable energy purchasers have historically been faced with a key problem: businesses looking to procure smaller energy loads have been unable to contract directly with large offsite renewable energy projects due to limited energy demand. This has so far restricted business’s ability to catalyze the development of new renewable energy projects. To solve this problem, the group evaluated several mechanisms for aggregating smaller amounts of renewable energy demand to afford them the collective buying power that is typically necessary to contract directly with a large offsite renewable energy project.
The eventual solution chosen by the group was a uniform VPPA contract and a single, shared legal counsel to negotiate and finalize the transaction. This helped to further streamline the final phases of the transaction. The new, simple structure allows the buyers to contract for relatively small pieces of the BayWa r.e. solar project, keep transaction costs low, and learn best practices from each other. The group hopes other buyers see this structure as a viable way to enter the large offsite renewable energy market, helping to accelerate the corporate procurement of clean energy and expand renewables deployment in the U.S.
VPPAs in the News
In August 2018, global power equipment manufacturer Cummins Inc. signed a virtual power purchase agreement with EDP Renewables for 75 MW of wind capacity in Indiana. In October 2018, the company shared the cost-effective project framework they used for the deal in a new Business Renewables Center (BRC) case study.
Headquartered in Columbus, Indiana, Cummins is an American Fortune 500 manufacturer of engines, generators, and associated components that reaches customers in more than 190 countries and territories. The company reported earning around $1 billion on sales of $20.4 billion last year. Their energy efficiency goal, set in 2016, is a 32% reduction in energy use intensity by 2020, which also means reducing the company’s GHG intensity by the same percentage, according to the case study by BRC, a Rocky Mountain Institute program.
Also in August 2018, Salesforce announced a 15-year virtual power purchase agreement with EDP Renewables for 80 megawatts of wind power from a new facility in Illinois. The deal represented the company’s largest commitment to renewable energy to date.
The wind power will come from the EDP Renewables’ Bright Stalk project, which is scheduled to be completed by the end of next year. By 2022, Salesforce aims to reach 100% renewable energy. This year the company says it’s halfway toward reaching that target.
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