Microsoft inks largest corporate solar PPA for 315 MW project in Virginia

Dive Brief:

Microsoft on March 21 said it plans to purchase 315 MW of energy from two solar projects in Virginia, claiming it is the corporate purchase of solar energy thus far.
The Pleinmont I and Pleinmont II projects are part of a larger 500 MW solar development owned and operated by sPower, which is jointly owned by AES Corp. and Alberta Investment Management Corp. (AIMCo).
Microsoft said the solar power purchase agreement would enable it to make “significant progress” toward its goal of reaching 60% renewable energy for its data centers by early 2020.

Dive Insight:

Microsoft claims its planned purchase of 315 MW from two solar projects under development in Virginia by sPower is the largest power corporate PPA in the United States to date. But while it is likely the largest solar PPA signed to date, it is not unusual.

Corporations signed a record volume of renewable energy PPAs in 2017, according to a January report by Bloomberg New Energy Finance.

In 2015, corporations surpassed utilities as purchasers of wind power after a surge as buyers and developers rushed to bring deals to market before the expected expiration of the production tax credit. The PTC was eventually extended by Congress, but the pace of corporate PPAs has remained brisk.

Rocky Mountain Institute has tracked a peak of 3.26 GW of corporate renewable PPAs in 2015, which fell off to 1.6 GW in 2016, and rebounded to 3.1 GW in 2017. This latest deal signals a good start to 2018, Stephen Abbott, a manager at RMI's Business Renewables Center, told Utility Dive.

Earlier this month, Enel Green Power North America signed PPAs with Facebook and Adobe for the output of its 320 MW Rattlesnake Creek wind farm in Nebraska. Together, the two companies will eventually buy the entire output of the wind farm by 2029.

Earlier in March, Fifth Third Bancorp became the first Fortune 500 company and first bank to sign a power purchase agreement to achieve 100% renewable power through a single project. Fifth Third’s PPA will enable the construction of the 80 MW Hertford County Aulander Holloman solar project in North Carolina that will be built by SunEnergy1.

At the beginning of the month, Facebook also signed a deal to have the Walton Electric Membership Corp. provide 100% of the power for its new Newton data center from a solar farm the utility is building.

The Microsoft PPA will backstop the construction of more than 750,000 solar panels on more than 2,000 acres. The project, sited in Spotsylvania County, Virg., along the I-195 corridor between Washington and Richmond, is due online in late 2019.

The developer, sPower, was acquired by AES and AIMCo in February 2017 when the companies bought FTP Power from Fir Tree Partners and its minority owners for $853 million in cash plus the assumption of $724 million in non-recourse debt.

For the corporate purchasers, renewable PPAs help them make “meaningful strides to whatever sustainability goals they set,” Abbott said. For the developer, the PPA provides a guarantee of a revenue stream that allows them to go to the market to raise the debt and equity for the project, he said.

The Microsoft deal will not only “nearly doubles the amount of installed solar capacity in the Commonwealth, but with it Microsoft and sPower will also provide a new way for other energy purchasers to buy into, and benefit from, the secure, clean, affordable energy these solar facilities provide,” Harrison Godfrey, executive director of the advocacy group Virginia Advanced Energy Economy, said in a statement.