We have reached a point where most businesses are aware of, and accept as truth, renewable energy’s environmental and financial benefits. Until recently, however, renewable’s upfront investment was too great for many organizations to even consider implementation. The availability of onsite solar power purchase agreements (PPAs), where developers absorb all of the initial costs in exchange for “ownership” of the power generated, has created a viable option for commercial and industrial (C&I) entities to reap the benefits of renewable energy.
While onsite PPAs have broadened the availability of renewable energy, many organizations don’t have the space or appropriate infrastructure to house onsite renewable projects. This market gap has spurred the growth of offsite renewable PPA offerings, and third-party consultants to help companies determine what makes the most sense for their unique business needs. The combination of the two have generated broader appeal and adoption of renewable energy for a wide range of companies.
Offsite PPAs for renewable energy projects are especially attractive to large energy users, who are looking to complement or create a more holistic energy management system. Such PPAs allow organizations to lock in a consistent rate for several years, as opposed to being at the mercy of fluctuating, and sometimes volatile, rate increases. Additionally, renewable energy is less expensive in many markets than non-renewable sources; that extra savings will have a very positive impact on the bottom line.
Forward-looking companies such as Microsoft and Procter & Gamble, have signed PPAs with developers of large-scale renewable energy projects, and are already supporting their sustainability goals and making their future energy costs more predictable. These offsite renewable PPAs are no longer limited to the largest energy users. Smaller companies can also benefit from the energy savings offered by large-scale renewable PPAs, through an innovative program that warehouses PPAs for a period of time, and allows smaller chunks to be acquired by a variety of buyers. This program enables smaller buyers to benefit from the scale of larger projects (best pricing) via a collaborative approach.
Most people associate offsite renewable projects with wind turbines and solar panels in wide open spaces; depending on factors like topography, climate, or space limitations, however, wind and solar may not necessarily be viable options. Other sources can be vital components of an offsite renewable energy program, depending where the source is located. Such alternatives include:
Navigating the complications and nuances of securing a PPA for offsite renewable energy is not easy; in fact, the wrong choice can result in a disaster that unnecessarily increases risk, costs millions of dollars, and could tarnish an organization’s reputation (as well as its bottom line). More and more, companies are turning to renewable energy advisors to handle the myriad details that go into ensuring their PPA will achieve the technical and economic benefits of offsite renewable energy. In vetting an advisor, organizations should concentrate on the following areas:
Organizations have unprecedented options to enjoy the many benefits of offsite renewable energy. Making sense of available opportunities and properly vetting third-party advisors, helps companies position themselves to make a decision that meets sustainability requirements, and has a positive impact on energy costs for years to come.
Duncan McIntyre is the president of Altenex, an Edison Energy Company.
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