- Five companies spanning industries from media to technology partnered together to close a deal on Thursday for a virtual contract, aggregating 42.5 MW of a 100 MW solar project in North Carolina.
- Bloomberg, Cox Enterprises, Gap, Salesforce and Workday sought approximately the same load of renewable energy in the mid-Atlantic region within PJM Interconnection. They came together with similar risk tolerance levels and energy needs and tapped LevelTen Energy, an aggregation service startup, to figure out how to pull off the execution of this deal, according to Bryce Smith, LevelTen's CEO.
- The contract is intended to serve as "a template for the market going forward," Smith said, to allow smaller buyers to participate in the renewable energy market.
Corporate power purchase agreements (PPAs) had a record-year in 2018, reaching 7.2 GW of clean energy around the world by August — almost 2 GW more than the corporate PPAs for all of 2017. That investment is expected to grow as more companies are making 100% renewable pledges.
Tech giants seeking to power their data centers, such as Google, Amazon, Microsoft and Facebook, have been a big aspect of the growth of renewable PPAs, needing large amounts of capacity that leads to higher economies of scale in a project.
But not every company has Google's and Apple's energy needs, or their ability to buy as much renewable power. The uniform virtual PPA (VPPA) contract helps smaller buyers band together and take advantage of favorable economics. Last Thursday's deal, shepherded by LevelTen, was part of a single contract with developer BayWa r.e., which noted that the aggregated VPPA allowed each offtaker to claim less than 10 MW, without a specific majority investor or "anchor tenant."
"The interesting and replicable aspects of this particular transaction is that this is a ... feasible approach to small buyers being able to get a slice of a larger project — at the economics of a larger project — and being able to leverage that economies of scale without having to even personally kind of fully burden themselves with the legal fees, time and energy to craft their own structure," Rebecca Sternberg, vice president of power marketing at BayWa, told Utility Dive.
LevelTen has focused since its inception on offering small PPAs, for the company that "wanted to buy a 5-MW slice of a project easily," Smith told Utility Dive. Developers share their projects on LevelTen's database, which uses software and information technology to better compare projects for their potential in the marketplace and to track their progress, quantifying their level of risk.
BayWa has other projects in LevelTen's database, and the developer is in the process of establishing a contract for the remaining capacity of the 100 MW North Carolina solar project, expected online by the end of 2020.
To find the optimal solution for all five companies involved in the aggregated VPPA, LevelTen did a lot of data crunching, Smith said.
"Often, we're competing against companies thinking that they can or should do it on their own," he said, mentioning the variety of corporate requests for proposals put out by individual companies. "The market price doesn't equal 'value.'"
LevelTen's analytics help assess the risk associated with a project getting built along with the wholesale market risk based on the particular economics of the contract. The latter deals with a slew of factors such as how many renewable energy facilities might come online in the area in the next decade, which "can make or break the economics of your PPA," Smith said.
Simplifying the analytics through the platform and the aggregated VPPA model, LevelTen seeks to increase the accessibility to new renewable energy for all interested parties. Some 97% of the projects in their database are wind or solar, Smith estimated, but customers can also purchase a stake in biomass, small hydro and projects pairing wind or solar with storage.
CORRECTION: A previous version of this article misnamed the CEO of LevelTen, Bryce Smith.