Commercial PPAs: How Companies are Capitalizing on Utility-Scale Wind Power

Introduction

Over the past three years, power purchase agreements (PPAs) have emerged as a dynamic contracting structure for commercial, industrial, and institutional (C&I) wind buyers in both the U.S. and Europe. Historically, PPAs have been used by banks and investors as a form of financial hedge. For the C&I buyer, PPAs provide the opportunity to contract for long-term, utility-scale wind generation at a fixed price. The economics of PPAs, particularly in countries like the U.S. where tax subsidization has significantly reduced the cost of wind, are attractive to C&I buyers to help reduce and stabilize their electricity costs over time.

In this talk, Renewable Choice Energy, one of only a handful of companies advising on PPA contracting worldwide, will present on their experience working with C&I buyers to help them understand the nuances of PPAs, the risks that PPAs present to buyers and developers, and the compelling economics driving this new customer class.

Approach

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Main body of abstract

The growth of C&I buyers of new, additional wind projects in the U.S. began in 2008, and has accelerated over the past several years. Led by buyers from in the Information Technology sector--including Google, Facebook, Apple, Microsoft, Salesforce, and Amazon Web Services, among others--these new purchasers of utility-scale wind have added more than 5,000 MW of generation to the U.S. grid and have contracted for PPAs in Mexico, Ireland, Chile, Sweden, and the Netherlands. Several companies with European headquarters--including Ikea and Philips--have also executed PPAs for their U.S. load.

Despite the rapid growth of this new customer class, utility-scale C&I wind purchasing is still in its infancy. The contracting process for a large, multinational corporation can be complicated and slow-going, requiring the engagement of internal stakeholders from across the organization. C&I buyers are also particularly sensitive to risks associated with long-term generation and concerned with the falling price of oil and natural gas.



Conclusion

C&I buyers played a significant role in U.S. wind development in 2015 and are positioned to continue to be a leading force within the wind industry in the U.S. and Europe. For developers working with these customers, it's important to understand the nuances of the PPA process and how to adequately address and overcome customer objections risk concerns.


Learning objectives
In this session, leading advisory service provider Renewable Choice Energy will present several case studies of the C&I purchasing process, including recommendations for how to pitch PPA projects to C&I buyers, how to overcome objections and insulate risks, and the means of engaging a cross-section of stakeholders, which may include the C-level leadership or Board of Directors for some of the largest organizations in the world.

Attendees will leave the session with a deeper understanding of this emerging customer class and with tools to help developers confidently engage C&I buyers on PPAs and bring deals to their successful conclusion.