Download - Accelerated Procurement of Renewables in the US Business Scene · 2018-03-13 · GE Capital, BofA Merrill Lynch, and Citi. • Google’s investment: $76 million • Developer: Apex

Accelerated Procurement of Renewables in the US Business Scene

REVision 2018Lily Donge | March 9, 2018 | Tokyo, Japan

Corporate Renewable Deals2013 – 2018 YTD

Copyright 2018 by Rocky Mountain InstituteFor more information, please visit http://www.businessrenewables.org/ or contact [email protected]

Publicly announced contracted capacity of corporate Power Purchase Agreements, Green Power Purchases, Green Tariffs, and Outright Project Ownership in the US and Mexico, 2013 – 2018 (YTD). Excludes on-site generation (e.g., rooftop solar PV) and deals with operating plants. Last updated: February 13, 2018.

Apple

Apple

US Delphi AutomotiveVolkswagen

Google

Microsoft

Becton Dickinson

Facebook

IKEA

Google

Mars

Apple

Microsoft

Walmart

Yahoo IKEA

Aerojet Rocketdyne

Apple

Google

Procter & Gamble

General Motors

Kaiser Permanente

Kaiser Permanente

Dow Chemical

Walmart

AmazonAmazon

Cisco

Facebook

Amazon

SwitchHPE

EquinixProcter & Gamble

EquinixEquinix

Owens CorningOwens Corning

Amazon

Google

Apple

Switch

Bloomberg

Google

Google

Google General MotorsCorning

PhilipsSalesforce

Salesforce

Lockheed Martin

Steelcase

3M

Google

Iron Mountain

WalmartDigital Realty

Amazon

Johnson & Johnson

Apple

Iron Mountain

General Motors

Amazon

MicrosoftAmazonAmazon

Avery Dennison

PayPal

Apple

Facebook

Solvay

Anheuser-Busch InBev

DeAcero

Partners HealthCare

T-Mobile

Apple

Apple

Akamai Technologies

General MillsGoldman Sachs

TargetCumminsT-MobileJPMorgan

Anheuser-Busch InBev

Kimberly ClarkKimberly Clark

General MotorsGeneral Motors

Facebook

DSMGoogle

GoogleGoogle

Digital Realty

Digital Realty

Nike

Brown-Forman

AT&T

AT&T

Nestle

0.77

1.20

3.26

1.61

3.11

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2013 2014 2015 2016 2017 2018

Capacity (GW)

.69

YTD

http://www.businessrenewables.org/

mailto:[email protected]

• 501(c)(3) Non-Profit

• Energy market transitions since 1982

• Focused on the cost-effective shift to efficiency and renewables

Rocky Mountain Institute (RMI)

RMI in the News – Sampling from Past 12 months

Rocky Mountain Institute

Corporate Renewables Procurement


Microgrids and Resiliency




Transactional SystemsMicrogrids and Resiliency




Disruptive Energy Solutions




RMI in the News – Sampling from Past Year

Disruptive Energy SolutionsAdvanced Transportation




Business Renewables Center (BRC)

/RockyMtnInst #theBRCCopyright 2018 by Rocky Mountain Institute

For more information, please visit http://www.businessrenewables.org/ or contact [email protected]

10

A movement towards RE100





11@

Collaboration with first movers





Why buy renewable energy?

12

Sources: “Levelized Cost of Energy Analysis – version 11.0”, Lazard, November 2, 2017, https://www.lazard.com/media/450337/lazard-levelized-cost-of-energy-version-110.pdf“Levelized Cost of Energy Analysis – version 10.0“, Lazard, December 15, 2016, https://www.lazard.com/media/438038/levelized-cost-of-energy-v100.pdf

LCOEs attainable with existing federal

subsidies.$0

$50

$100

$150

$200

$250

$300

EnergyEfficiency

Onshore Wind Utility ScaleSolar

CombinedCycle Gas

Coal Nuclear C&I RooftopSolar

DieselReciprocating

Engine

Unsubsidized Levelized Cost of Electricity$ / MWh



https://www.lazard.com/media/450337/lazard-levelized-cost-of-energy-version-110.pdf

https://www.lazard.com/media/438038/levelized-cost-of-energy-v100.pdf



Why buy renewable energy?

13

>10x growth in BRC membership in ~3 years

9 23

44 46 52

8

15

23 37

44

14

31

57

83

113

May 11, 2015

31

Nov 2014

16

Nov 16, 2016

166

May 19, 2016

124

Nov 17, 2015

69

Developer

Service Provider

Corporation

(“Buyer”)

June 20, 201711/2014(Launch)

5/2015 11/2015 5/2016 11/2016 1/2018





Why buy off-site renewable energy?

14

Sampling of Industrial and Manufacturing BRC Members Companies

FOOD, BEVERAGE, & PACKAGING CHEMICAL & PHARMACEUTICAL

AUTOMOTIVE & AEROSPACEELECTRICAL & DIVERSIFIED

BUILDING MATERIALS & FURNITURE






15

147 145

108

94

51 5044

3930

23

0

20

40

60

80

100

120

140

160

Target Walmart Prologis Apple Costco Kohl's IKEA Macy's GeneralGrowth

Properties

Bed Bathand Beyond

On-site Solar Installations

MW

Source: SEIA






16

“Mars’ long term goal is to eliminate all GHG emissions from our operationsand reduce GHG value chain emissions by 2/3.”






17

1 off-site project100% US Operations

“Mars’ long term goal is to eliminate all GHG emissions from our operationsand reduce GHG value chain emissions by 2/3.”



PPAs are limited to deregulated markets

Source: FERC



What issues do buyers consider when evaluating projects?

19

With a partner, come up with

• a potential priority, and • a potential risk

that companies might consider when selecting a project.





What issues do buyers consider when evaluating projects?

20

Buyer priorities

and concerns

Wider social good from renewables development

Meeting sustainability goals

Additionality/marketing claims

Volatility of downside risk

NPV of worst case scenario

Carbon reduction

Locating generation close to load

Energy spend hedge value

Clear exit options and costs

Triggering mark to market accounting or capitalization





Value, rather than price, determines the economic returns

$0

$5

$10

$15

$20

$25

Negative Delta Positive Delta PPA Price Market Price

$/MWh Cone of uncertainty

PPA Price

Negative Value Positive Value





$0

$5

$10

$15

$20

$25

Negative Delta Positive Delta PPA Price Market Price

$/MWh Cone of uncertainty

PPA Price

Negative Value Positive Value

Value, rather than price, determines the economic returns





An important process





Third parties that support transactions

Consultants Brokers Lawyers

Activities• Originate and structure

transactions• Run RFP process• Can support internal

stakeholder engagement

Fees• Typically success-fee

based• Often $/MW or

$/MWh basis

Activities• Provide legal advice• Experienced legal

advice can be vital to a transaction

Fees• Hourly, fixed fee or

success-fee based

Activities• Advise on strategy and

implementation• Run RFP process• Can originate and

structure transactions

Fees• Hourly or success-fee

based



APPENDIXA changing clean energy economy

driven by corporations

Lily Donge | March 20, 2018 | Tokyo, Japan

Procurement Options

Unbundled renewable energy certificates (RECs)

Virtual PPAs (aka contracts for differences)

Direct investment

On-site solutions

Companies can purchase renewable energy projects directly

Transaction

Details

Context

• 165 MW Texas wind farm

• Together with an existing wind farm in Illinois,

will generate nearly 1,000 GWh per year

• Outright project ownership in both Texas and

Illinois

• Texas deal announced November 2014,

expected to be operational in late 2015

• IKEA’s 2020 goal: produce as much renewable

energy as it consumes globally

• Committed to have invested $1.9 billion in wind

and solar by end of 2015

• Also has solar PV on 90% of its U.S. rooftops

(total capacity 38 MW)

• Owns wind farms in eight other countries

Alternatively, companies can invest capital in exchange for tax credits

Production Tax Credit (PTC): • $23 of tax credits per MWh generated over 10 years• Typically used by wind farms

Investment Tax Credit (ITC): • Credits worth 30% of eligible capital costs when plant opens• Typically used by solar farms

Modified Accelerated Cost Recovery System (MACRS): • Used by both wind and solar farms

Potential tax benefits:

Tax equity can be profitable, but requires significant investment in capital and time

Example transaction: Balko Wind Farm

• 300 MW wind farm in Oklahoma

• Tax equity investors included Google,

GE Capital, BofA Merrill Lynch, and

Citi.

• Google’s investment: $76 million

• Developer: Apex Clean Energy

Some Considerations

• Tax equity returns can be as high as 10% or more

• Tax equity is usually 45-60% of the capital stack, equating to tens of millions of dollars

• Tax equity investing is complex, and requires the investor to undergo significant due diligence of the project

• Tax credits can best be utilized by companies with reliable annual profitsSource: Forbes and Apex Clean Energy.

Words from the market

REBA is led by four non-profit organizations that have brought together their deep expertise in transforming energy markets.

REBA coordinates with The Climate Group's RE100 campaign, delivered in partnership with CDP to support companies committed to 100% renewable electricity.

Our collective goal is to help corporations purchase 60GW of additional renewable energy in the US by 2025.

https://youtu.be/kw-MhTjY_zI

https://youtu.be/kw-MhTjY_zI