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November 19

‘Off the shelf’ contracts to improve uptake of corporate PPAs

In June 2019, new standards to simply the process of agreeing a Corporate Power Purchase Agreement (CPPA) with a renewable energy developer were launched by The European Federation of Energy Traders (EFET).

Whilst securing renewable CPPAs has traditionally followed a bespoke process, taking between six and nine months to complete and often supported by various external advisors and brokers, these new standards will prove decisive for smaller businesses looking to purchase green energy.

By standardising the framework for CPPAs, these developments ‘open the door’ for more companies to join the likes of Microsoft, Royal Caribbean and Amazon in securing green energy directly from source, and in the process locking in more affordable and predictable energy pricing.

The new EFET standards are expected to increase the demand for such corporate offtake, facilitating efficient and cost-effective access to the renewable energy market for small and medium enterprises, as well as local authorities.

RES has already agreed more than 1.6 GW of CPPAs globally and in addition to the economic benefits, early adopters are also benefiting from “additionality” benefits – helping to ensure new installed renewables capacity is competitive and investable.

Furthermore, such standardisation and simplification will likely lead to the creation of more flexible CPPAs, allowing corporates to dynamically scale up or scale down their green energy buying requirements to match the trends in their own businesses. This will include the formation of a new consortia of energy buyers; pooling their collective demand for green energy to create further efficiencies.

Looking ahead, such innovation and flexibility is vital, if we are to meet ambitious net zero goals.

Unlocking flexibility in value

As wind and solar power generation increases, so too has the demand for flexible power generation. However, how do you best capture value in flexibility and power generation, whilst still reaping the scaled benefits?

As a technology agnostic company, RES can objectively look at how batteries fit into the mix, how they can enable a new model of grid and how their value will grow long-term.

Battery storage, with its rapid response times, already plays a huge part in reducing inertia on the grid. To put it another way, battery has become the first line of defence for our energy network; crucial to keeping the lights on until the grid can respond to a sudden change in the gap between demand and supply.

While there is only a limited volume of battery storage on the UK system at the moment, its true value is already starting to be recognised thanks in part to the speed it can respond at, making it many times more valuable to the grid than gas peakers, for example. And if part of a long-term approach to a more distributed model, batteries could help reduce volatility on the grid and provide far more stability for the market. 

With a distributed model, storage can also reduce the need for large pylons and solve problems in countries with weaker grids, such as Germany and Austria.

More fundamentally, battery storage allows us to actually use more of the clean energy we generate through renewables. This not only helps bring down the cost of renewable energy, but means our grid has to spend less money on higher carbon forms of energy, leading to a cleaner, more sustainable future for us all.

So to assess the true value of batteries and flexibility, it is essential to look at the wider picture. Taken together, storage – through batteries, although hydrogen could come into the picture – enables greater use of clean energy, it unlocks extra value for renewables developers by enabling more power to be sold to the grid, it safeguards the National Grid by providing rapid response and it can help reduce infrastructure pressures by charging up during off-peak periods.

When put like that, it can be hard not to see the true value in energy storage.

 

Author: Donald Joyce, CFO, RES Group