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Five global brands sign joint 42.5-MW energy deal, creating a new blueprint for renewable energy aggregation.
This week, five global companies announced a new approach to renewable energy
procurement that could change the game, particularly for companies with smaller
energy needs. Bloomberg, Cox Enterprises, Gap Inc., Salesforce
and Workday — with guidance from LevelTen Energy and its renewable
energy procurement platform — have closed 42.5 megawatts of a 100-megawatt North
Carolina solar project by global renewable energy developer, service provider
and wholesaler BayWa r.e.
The group of companies, which has dubbed itself the Corporate Renewable
Energy Aggregation Group, is the first example of businesses 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. This
unprecedented coordination between five international businesses lays the
groundwork for other corporates to procure renewable energy cooperatively,
maximizing value and reducing risk.
The group, with support from the Business Council on Climate Change
(BC3) and the Business Renewables Center, 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 restricted business’s ability to pursue 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 corporate procurement of clean energy and expand renewables
deployment in the U.S.
“BayWa r.e. is excited to be partnering with Bloomberg, Cox Enterprises, Gap
Inc., Salesforce and Workday to support their sustainability and
carbon-reduction goals. This is truly a milestone in corporate energy
procurement. We greatly admire the collaborative Corporate Renewable Energy
Aggregation Group for rethinking how companies of all sizes can access
cost-competitive clean energy; this model can be replicated for companies for
years to come,” said Jam Attari, CEO of BayWa r.e. Solar Projects, LLC.
“For BayWa r.e. this novel deal is not only the right new model for corporate
energy procurement, but an example of our commitment to a significant, strategic
investment in key markets to support the growing demand for renewable energy by
corporations in the Americas.”
The deal was coordinated by LevelTen Energy, which aggregates both buyers and
sellers across national and regional renewable energy portfolios. Through
LevelTen's renewable energy procurement platform, buyers and sellers
provide dozens of key criteria related to their purchase needs and project
specifics, triggering LevelTen’s proprietary Dynamic Matching Engine to process
this information in real time, to create the ideal aggregation options for all
parties. The LevelTen Energy platform processes more than 8 million data points
across nearly 1,600 projects on a daily basis to help all energy buyers evaluate
value, risk and other critical criteria required to properly pursue renewable
energy procurement opportunities.
“Five buyers coming together to procure near equal slices from this project is
yet another critical milestone in the expansion of the renewable energy
procurement market,” said Bryce Smith, CEO of LevelTen Energy.
“Historically, a lack of transparency, high costs and little flexibility meant
only a select group of Fortune 500 buyers with immense resources could
participate in this type of transaction. Kudos to these buyers for their vision
and commitment toward not only impacting their own carbon goals, but also toward
paving the way for many others.”
In 2018, a Bloomberg New Energy Finance
revealed that signatories of the RE100 initiative — who have all set targets
of 100 percent renewable
by 2030 — have a long way to go. For the initiative’s 128 members to meet their
goal, they will need to spend an estimated $94 billion — enough to procure 172
TWh of renewable power and add 87 gigawatts of new wind and solar power
Aggregate deals could be an important tool for achieving that.
“Gap Inc.’s share of the project will be used to offset the energy footprint of
all Athleta stores and operations,” said Chris Samway, SVP & CFO of
Athleta, a B Corp-certified subsidiary of Gap Inc. “Through innovation
and collaboration across industries, business can do more to create a healthier
future for our people and our planet.”
“At Salesforce, we are committed to taking a leadership
in the fight against climate change and ensuring a just transition to a
low-carbon economy,” said VP of Sustainability Patrick Flynn. “This
collaboration is not only an important step toward advancing Salesforce’s
commitment to reaching 100 percent renewable energy by 2022, but an innovative
approach that demonstrates a company of any size can play an essential role in
transitioning our planet toward a clean energy future.”
Published Jan 17, 2019 7am EST / 4am PST / 12pm GMT / 1pm CET