"In 2015, commercial and industrial (C&I) buyers accounted for greater than half of all signed wind energy power purchase agreements (PPAs), outpacing utilities."
That finding is one striking note among many in the latest edition of the Corporate Clean Energy Procurement Index, a ranking of all 50 states across 15 criteria that measure the ease with which companies can procure renewable energy (RE) for their operations. Here's another one:
The 15 indicators of the Corporate Clean Energy Procurement Index are broken into three categories:
Utility Purchasing Options
Green Tariff/Direct Utility Purchase Deployment
Existence of Green Tariff
Green Power Purchase Option
C&I Retail Choice
Presence of an ISO/RTO
Third-Party Purchasing Options
Third-Party Utility-Scale Offsite (Wind/Solar PPA) Deployment
Third-Party Onsite PPAs for Distributed Generation
Third-Party Onsite Leases for Distributed Generation
Community Choice Aggregation
Onsite/Direct Deployment Options
Onsite Solar Deployment
Direct Investment Procurement
DG Fixed Charges
Watch for more coverage of corporate approaches to renewable energy in the July issue of Site Selection magazine.
"The C&I market is now around five gigawatts (GW) of contracted wind and solar power, with commercial customers intending to procure an additional 60 GW by 2025, according to the Renewable Energy Buyers Alliance (REBA)."
Published by Clean Edge Inc., the index was created for members of the Retail Industry Leaders Association (RILA) and Information Technology Industry Council (ITI), but is broadly applicable. One of its primary lessons: Power can cross state lines, but those states' policies and regulations can vary widely in the ways they help or hinder renewable energy purchases. With sustainability a high priority for many high-profile companies — think Google, Amazon, Target, Coca-Cola and Microsoft — the policy stakes are high too. Indeed, especially for readers of Site Selection, the "RE" abbreviation used in the report could easily be interpreted as standing as much for "real estate" as "renewable energy."
"Some state electricity market structures enable more customer choice, a strong desire of many large buyers," the report notes. "States that limit customer choice can see higher RE costs, making their markets less attractive. That means the structure of a state’s electricity market can directly influence where corporations choose to invest in renewable projects, and in which states they decide to expand their operational footprint." (Italics mine.)
Driven by its utility and third-party purchasing, Iowa is No. 1 with a score of 74.73, followed by Illinois (68.79), New Jersey, California and Texas.
"The Hawkeye State is #1 in the Utility Purchasing category and #10 in Third-Party Purchasing, although just tied for 21st in Onsite/Direct Deployment, with no corporate onsite solar or direct investment procurement deals," says the report. "But offsite utility-scale deployment is a big strength; Iowa joins Oklahoma, Virginia, and North Carolina as the only states with measurable deployment via both green tariffs/direct utility purchases (548 MW in Iowa) and offsite PPAs (114 MW)."
The report makes five recommendations to stakeholders wishing to improve their territories' scores:
Among the report's other notable findings:
"Among the index’s four deployment indicators, corporate onsite solar procurement and offsite procurement (wind and solar power purchase agreements or PPAs) correlate most closely with overall leadership. Eleven of the top 20 overall states are also in the top 20 in onsite solar. New Jersey, the #3 state overall, leads the field in this indicator by a wide margin, with 1.21% of its statewide generating capacity coming from onsite solar as of the end of 2015; no other state tops 0.4%. New Jersey’s total 225.6 MW of onsite solar procurement trails only the 285 MW of California, a state more than 18 times its size in square miles. Retail stores and corporate campuses in New Jersey teem with solar roofs and arrays, with facilities of FedEx, McGraw-Hill, Staples, Target, and Toys R Us among them; Target aims to reach 500 onsite solar installations across the U.S. by 2020."
"For a state with a considerable amount of nuclear and coal-fired power, in a region with few bordering renewable energy leaders, Illinois has emerged as one of the strongest states for corporate clean energy deployment and policies ... Illinois is the #1 state in the Onsite/Direct Deployment category and #7 in Third-Party Purchasing ... Illinois ranks sixth in the nation in wind power generation with more than 10.7 GWh in 2015, according to EIA. In a July 2016 report, Illinois State University’s Center for Renewable Energy found that the 25 largest wind farms in the state will generate a total economic benefit of more than $6 billion during the construction and 25-year operation of the projects ... On the corporate deployment side, two major companies, Microsoft and IKEA, have tapped that wind power resource with procurement deals totaling nearly 275 MW, both signed in 2014. It speaks well of Illinois’ policy and regulatory environment that each of these deals used a very different procurement mechanism."
"Colorado, a partially regulated electricity state, joins California and Texas as the only states ranked in the top 10 in the U.S. in both wind and solar power generation, according to EIA data ... Its best category is Onsite/Direct Deployment, where it places 11th as well as 11th in the onsite solar procurement indicator in that category, with 10.2 MW statewide. Nearly all of Colorado’s corporate solar installations are in the retail sector, according to the Solar Energy Industries Association (SEIA), with Macy's, Safeway, Walgreens, and Walmart locations in the greater Denver area dominating ... Colorado has no significant corporate offsite procurement deals to date, but that could change soon. The Renewable Energy Buyers’ Alliance has worked with Xcel Energy, the state’s dominant utility, on a proposed green tariff option that Xcel wants to provide called Solar*Connect. Seeking approval by state regulators by the end of this year, Solar*Connect (to be renamed Renewable*Connect) would offer corporate buyers a fixed price contract for 100-percent solar power on a month-to-month basis, or for five or 10 years. The longer-term contracts would be at or below projected regular market rates."
"Onsite PPAs (mainly solar) are the intended path of 67 percent of companies planning RE procurement in the next 18 months, according to a PWC survey of corporate RE buyers in June 2016 ... In one of the highest-profile onsite PPA deals of 2015, developer Greenskies Renewable Energy will install 100 MW of solar PV at 180 Target retail and distribution center locations in a dozen states."
Offsite PPAs are more complex, and fall into the categories of "physical" (i.e. direct procurement of electrons) vs. "financial," a category that is further subdivided into "virtual" and "synthetic." These are crucial distinctions for all parties, but can yield crucial benefits. As the report explains:
"With 'virtual' PPAs, the power itself does not go to the buyer; the developer sells it into the local wholesale power market. It is essentially a price hedge against rate volatility. The developer pays the buyer if it can sell the power into the market at a higher rate than the contract price, but if the market price falls below that, the buyer must make up the difference."
“ 'Synthetic' PPAs are very similar, except that the renewable generation plant and the purchaser’s facilities are located in different ISOs. The manufacturer 3M, whose facilities are mostly located in Minnesota (which participates in the MISO market), recently agreed to a synthetic PPA for 120 MW of wind power located in Texas, which is dominated by ERCOT ... Virtual or synthetic PPAs can be a game-changer, as tech firms such as Amazon and Yahoo have found, but they are complex arrangements typically involving a company’s legal, treasury, accounting, and finance departments. Many questions need to be asked and answered about the specific language in any virtual or synthetic PPA. Much of the decision, though, rests on market factors, particularly whether a state is in an organized market."
Clean Edge last July released the latest version of its Corporate Clean Energy Leaders Universe, recognizing 37 corporations that are leading the way. Here they are in alphabetical order: