A primary knock against corporations getting into the business of backing large-scale clean energy projects is that high rollers tend to dominate the field. Think Apple's $850 million deal back in 2015 to build a California solar farm, or Google, Ikea and Walmart's $1 billion-plus renewable power portfolios.
For those without 10-figure sums on hand, however, a new option soon could be on the table.
Instead of relying on one blockbuster energy user to solely finance a new solar, wind, hydropower or other renewable energy project, so-called "aggregated" purchasing models hold promise to broaden the field of potential corporate backers by bringing multple companies together in one deal. That is, if different parties can get on the same page and hash out familiar obstacles related to the complexity of long-term clean energy purchases.
"For several years now, there’s been an interest in how we can make this type of transaction more available to companies beyond the really big ones," said Ian Kelly, who manages the Rocky Mountain Institute's Business Renewables Center. "Aggregation is seen as one of the primary ways people have come up with to make that possible."
Limited examples of the model already are in action, such as the Massachusetts Institute of Technology (MIT), Boston Medical Center and Post Office Square Redevelopment Corporation teaming up on a 60 megawatt North Carolina solar farm owned by Virginia-based energy company Dominion. In Europe, Google also has joined forces with Philips, AzkoNobel and DSM to build a Dutch wind farm slated for completion in 2019.
Public sector entities, too, are exploring the space. In the San Francisco Bay Area, a group of local governments have come together with think tank Joint Venture Silicon Valley to pioneer joint procurement projects in the region.
Now, the question is if and when others will follow suit.
At Salesforce, for instance, Senior Director of Sustainability Patrick Flynn said the company hasn't yet participated in a group purchase but is closely monitoring the evolution of financial models in the space after participating in multiple long-term deals to power data centers with renewable energy in recent years.
"I think aggregation is a very important place, and one of the next ones where companies can provide a blueprint," Flynn said. "That opens up the floodgates for smaller entities — the 99 percent of companies that aren’t the big ones that have done deals to achieve their own renewable energy goals."
Aggregation is still in its infancy, but there are reasons beyond sharing the financial burden of a big energy project for companies to consider.
Some companies don't have the electricity needs to justify building a whole solar farm. Some prefer a portfolio approach to renewable energy, investing in multiple projects in different locations. In both cases, Kelly said, aggregation could help bring more businesses into the field.
"One of the things we’ve seen in this market in the past year or two overall is that it has started to expand beyond those first mover companies," he said. "I do think aggregation has to potential to encourage that even more."
Still, renewable energy power purchase agreements (PPAs) of any kind are already complex, particularly for companies whose core business isn't related to energy. The model also requires organizations to align on goals and financial terms, complicating the fine print on transactions.
"You have this added layer of, 'How will we work together as a consortium?'" Kelly said.
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