The Net Zero Consortium for Buyers
Helping to Scale Corporate Procurement of Renewable Energy
For professionals committed to advancing a more sustainable approach business, the shocking nature of consensus science regarding anthropogenic climate breakdown and the simultaneous, economically driven, inflection of renewable energy technology, is not news. Nor is the fact new business models are needed to accelerate the scaling of renewable energy. What is news is that Sustainability Roundtable Inc. (“SR Inc”) Member-clients are already building what we need in a new Net Zero Consortium for Buyers. This is new model of service it has been SR Inc and SR Inc Renewable Energy Procurements Services (REPS) privilege to develop. It provides a no necessary cost, confidential, platform for Buyers Only offering multi-member and one-on-one assistance from 20+ year experts in corporate renewable energy markets, financing, law, regulation, technology, contracting, transaction structuring and negotiating services. All financed by the contractual commitments already made by leading SR Inc Member-clients and provided by experts who accept no pre-transaction fees from Renewable Energy Developers. And can be paid exclusively by transparent fees (discounted off market fees) shared in all RFPs and paid by the member selected prevailing Renewable Energy supplier or developer. This is a new business model that has helped corporate buyers benefit from practical learnings of leaders in the field globally. And to gain access to Corporate Buyer organized aggregated procurements only available through the Net Zero Consortium for Buyers.
Corporate Renewable Energy Has Taken Off:
From Anheuser-Busch and Adobe in the As to Wells Fargo and WeWork in the Ws, global corporations are publicly committing to 100% renewable energy globally. As of today, 181 leading global companies have committed to 100% renewable energy – most before 2030. This represents radical change from when SR Inc original Charter Members such as Apple, Bloomberg, Cisco, Facebook, HP and Salesforce were still pioneering corporate procurement of utility scale renewable energy only five years ago and most SR Inc Member-clients were not interested. Now all SR Inc Member-clients across sectors and industries are interested and moving to implementation – and companies are even joining SR Inc’s confidential, Membership Based, Advisory & Support Service primarily interested in developing profitable, or at least cost effective, strategies for renewable energy globally. And once corporations become: (a) educated about how national Renewable Energy Certificates (RECs) and globally Environmental Attribute Certificates (EACs) operate; (b) the economics of utility scale renewable energy even before subsidies; as well as, (c) the ability of enterprises to aggregate their demand for RECs with other corporates to win utility scale economics, the question is no long “whether” they will chart a profitable path to Net Zero Emissions, it is “how.”
At this moment, however, we are not yet at the dawning of 100% renewable energy being adopted by an “early majority” businesses; even among just the 6,937 sophisticated corporations that reported to the CDP (formerly the Carbon Disclosure Project) in 2018. I know because I recently participated in my fourth annual Renewable Energy Buyers Alliance summit. “REBA” is an outstanding non-profit missioned to advance the revolution towards corporate renewable energy. SR Inc has been proud to support REBA financially and at its inception as the “Business Renewables Center”in 2014, with donated SR Inc Member Briefings, form RFPs, Terms and Tools regarding corporate PPAs. It has been wonderful to see REBA grow in size and sophistication with 100s of experts, corporate buyers and developers involved year-round supporting the contracting of GWs of new renewable energy.
A Tale of Two Groups:
It is, however, clear that the corporate buyers attending REBA remain firmly in one of two camps; and that division into two groups is one the SR Inc team has seen in our Member-client community for many years. At REBA the first group is a relatively small group of less than 30 corporate buyers that I have described elsewhere as “First Generation” corporate Off-takers. This group includes original SR Inc Charter Members such as Apple, Cisco, Facebook and HP who are defined by massive energy demands and related, large and sophisticated energy and sustainability teams. Full-time internal teams who have transacted multiple large scale Power Purchase Agreements from 2012 to 2018 (sometimes multiple times a year). These firms prioritize the hedge value of grid proximate large scale renewable energy projects can provide against the price volatility of super intense, localized, demand – regularly from their data centers. At least as much as the more credible “Bundled RECs” these projects provide them to help achieve their Environmental, Social and Governance (ESG) goals. The second group of corporate buyers at REBA are regularly 60-80 corporations from which one or two energy or sustainability professionals attend one or two REBA conferences and often report “feeling like I am drinking from a firehouse” as they prepare for their first utility scale PPA. This second group is primarily motivated by their interest in more credible Bundled RECs to achieve their ESG goals and often do not care about the price hedge value a VPPA can provide. This second group are much more similar in scope and energy sophistication to the many 1000s of more regular sized corporations and institutions that do not have “super intense” energy demands (and are often in 100% or nearly a 100% leased spaces) who have not attended a REBA conference but who are increasingly interested in renewable energy.
What Most Don’t Know, Doesn’t Help:
The vast majority of enterprises interested in renewable energy are more similar to those companies in the second group of buyers at REBA as opposed to the first. And, of course, most all enterprises – even sophisticated municipalities, universities, colleges and hospital systems – have never been to REBA (and even some that have) and have not yet learned that Buyer Organized Aggregated Virtual Power Purchase Agreements (“VPPAs”) can enable them to:
Some learn the seven facts above at REBA, whereas others hear of the learnings above and feel compelled to participate in REBA to determine if these points would prove valid for their organization and objectives. Essentially, all enterprises that learn the above want to determine what risks would be involved for their organization and what time and costs would be involved.
The Risks Of Virtual Power Purchase Agreements:
Educating buyers about the risk and potential benefits provided by on and off-site renewable energy technology is accomplished efficiently by the Net Zero Consortium for Buyers. It is supported by SR Inc’s REPS which is a Senior Expert Delivered, Buyside Only Advisory Service. SR Inc REPS Senior Experts are 20+ year corporate renewable energy experts with decades of experience in relevant corporate strategy, procurement, contracting, law, financing, technology, internal approvals and reporting. One joined me a year ago to detail in writing the: Top Ten Risks involved in VPPAs. They have helped develop the Net Zero Buyers Consortium for Buyer approach to VPPAs, that SR Inc REPS leaders have styled “VPPA 2.0.” This VPPA 2.0 approach to VPPAs ameliorates the risks associated with VPPAs by customizing and reducing the amount taken by each individual “off-taker,” winning contractual buyer protections that dramatically reduce theoretical possible loss and enabling a portfolio of commitments across markets, developers and technologies. See SR Inc’s Blog on Renewable Energy for Every Enterprise.
What potential corporate “Off-takers” (i.e. how corporate buyers are referred to in the VPPA market) should learn at REBA and elsewhere, however, is that there is a dramatic asymmetry of expertise and information between renewable energy developers and corporate off-takers regarding utility scale PPA contracting. This is especially true in regard to “second generation” corporate Off-takers who are primarily interested in more credible Bundled RECs that provide an unquestionable claim of representing new renewable energy capacity the corporate Off-takers commitment to the VPPA caused because it made the financing of that incremental new renewable energy possible. These Second Generation Off-takers are generally the Sustainability and Corporate Social Responsibility leaders at their organizations partnering with the Finance office (often with the assistance of Corporate Real Estate to which energy management reports) to contract the organizations first off-site Power Purchase Agreement (PPA).
Since the large scale off-site PPA market has matured substantially over the last seven years as corporates have driven the development of more than 15 GW of new renewable energy capacity in the US alone through committing to large scale off-site PPAs – less experienced, smaller staffed, Second Generation corporate Off-takers can and should demand the assistance of advisors that have decades of experience in corporate renewable energy and multiple years of experience with VPPAs in particular who are not conflicted by also assisting (or primarily assisting) renewable energy developers in the sale to corporate Off-takers. Asking what percent of revenue their firm receives for advising and representing developers is a very fair question.
What Every Corporate Off-taker Should Require:
Whether they participate in REBA (which SR Inc REPs recommends) and are assisted by SR Inc’s Net Zero Consortium for Buyers – or not – every organization considering participating in a large scale PPA should develop an accurate understanding of their energy demand portfolio and its path and rate of growth. But that largely goes without saying, they also need:
This can reasonably create 100s of thousands of dollars in “soft costs” that are often not included in a first time business case for a corporate PPA. As often, anticipating soft cost like those associated with the above, corporates refuse to enter the market for large scale PPAs. This is mistake because whether it is through Net Zero Consortium for Buyers which can provide all of the above at no necessary cost for those high-credit corporates committed to growing their use of renewable energy that SR Inc selects to participate – or another long experienced expert team of advisors working on a success fee basis – Off-takers can obtain expert and experienced advisors. Most Buyer Advisors prefer to be paid as consultants and will discount their fees to encourage being paid a fee for specific service. But since most new “Second Generation” corporate Off-taker do not have the business case for what can be six figure Buyer Advisor Services, it is important to note a traditional brokerage fee paid by the winning developer is often available to help the corporate Off-taker understand and seize the opportunity.
When engaging a Buyer Advisor, corporate buyers will be benefit from: (a) ascertaining what percent of revenues the teams firm receives for advising and representing renewable energy developers; (b) clarifying which Senior Experts, specifically, will advise them; (c) obtaining references regarding that team’s assistance to other corporate Off-takers; and, (d) ensuring any and all fees paid by the winning developer/s are at market rates or below and transparently disclosed and documented in all Requests for Proposals, Letters of Intents and final Contracts. Consequently, whether through seeking to join The Net Zero Consortium for Buyers (where all those items are all provided) or seeking the assistance of other teams ready, wiling and able to similarly provide many months and potentially years of assistance week in and week out and quarter-over-quarter, your enterprise may be able to begin charting a profitable path to Net Zero Emissions globally. If yours is a high-credit corporation, university or municipality you will likely be amazed: first, by the depth and persistence of the expert assistance available; and, second, by the economics of large scale renewable energy – even before subsidies – that are still available. Although the most important federal subsidies in the U.S. are now decline which is, of course, exactly why large scale renewable energy is inflecting right now in the U.S.. It’s a revolution that can benefit you.
