New LevelTen Technology Paves the Way for a Surge in Aggregated Power Purchase Agreements and Diversified Portfolios
When LevelTen was founded, our vision was to create an open, transparent marketplace where companies could purchase clean power safely and easily, not just from one project, but from a diversified portfolio of projects. Today, we're proud to announce the LevelTen Dynamic Matching Engine, a tool for corporate and industrial buyers that brings our ambitious marketplace vision to fruition. Our Dynamic Matching Engine curates and analyzes massive data sets on clean energy projects under development to identify optimal projects (or portfolios) based on each buyer's needs.
The Engine enables companies to execute power purchase agreements (PPAs) in volumes suitable for each buyer, independently, or with other specific buyers. One example of this was announced today: five companies - Bloomberg, Cox Enterprises, Gap Inc., Salesforce and Workday - signed agreements to purchase 42.5 megawatts of a 100-megawatt solar project, collectively acting as an anchor tenant for the project, enabling the developer, BayWa, to accelerate its development. The companies, known as the Corporate Renewable Energy Aggregation Group, used LevelTen's Dynamic Matching Engine to find a project that would meet all of their needs.
The flexibility and "transactability" offered by the Dynamic Matching Engine represent the future of aggregation, paving the way for more clean energy projects to get built. Historically, utilities (or utility-like entities) were the primary buyer of energy from large power plants. Fortunately, the recent wave of corporate renewable purchasing represents a brand new source of demand. However, despite the emergence of many new buyers, it remains extremely difficult for all but the largest companies to participate, for a few reasons:
- Historically, only large corporations could buy all the power from the largest, most economical projects;
- Finding the right project has been time-intensive, requiring deep industry expertise;
- It's risky - there are significant economic consequences for investing in a PPA hastily, or without proper market understanding. And, investing in a single PPA leaves a buyer exposed to single-asset performance risk.
For the hundreds and thousands of small and medium-sized companies that want to procure renewable energy, the challenges are even more significant. Before they can collaborate to purchase power from a large project, together, they first have to find each other, coordinate their extensive list of internal stakeholders, and jointly navigate tricky timing issues-in order to get a deal over the finish line. Moreover, this collaboration doesn't address single-asset performance risk.
The LevelTen Dynamic Matching Engine, powered by the LevelTen Marketplace, improves the PPA process for everyone involved:
- For buyers, the Dynamic Matching Engine yields deeper insights and better matches than those achieved with the naked eye, old-fashioned spreadsheets, or with broker/developer relationships. The resulting customized PPA portfolio and aggregation opportunities maximize value and minimize risk.
- For project developers, the Dynamic Matching Engine brings new buyers to projects in a way that acknowledges volume and credit requirements. Developers, therefore, can finance and build more projects without relying solely on the Fortune 50s, personal relationships, and endless prospecting.
For the past few years, clean energy proponents have lauded aggregation as a key mechanism to bring more buyers to market. More recently, buyers have recognized that portfolio approaches to PPA purchasing can offer better energy and environmental outcomes at significantly reduced risk. Though the benefits of aggregation and portfolios are obvious, in theory, they can't be obtained at scale without more mature market tools. LevelTen's Dynamic Matching software, together with LevelTen's transparent, comprehensive Marketplace, finally makes these concepts a reality for all buyers. The path to a 100% renewable energy future is one step closer!
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