How to Find the Best Renewable Energy Project for a Corporate Power Purchase Agreement
February 05, 2019
When a corporation decides to pursue a power purchase agreement (PPA) with a renewable energy developer, it faces a critical decision, one that will have significant financial consequences for over a decade: which clean energy project is best? If the corporation invests in the right project, it will earn renewable energy credits (RECs), hedge its energy costs through the long term, lock in a fixed price PPA, and potentially receive payments from the developer at the close of each settlement period. In this ideal scenario, the corporation achieves its sustainability goals and successfully manages its energy budget at the same time. However, if it chooses the wrong project, it could fail to create an effective hedge and end up owing the developer hundreds of thousands of dollars – or even millions – each year, thereby paying an out-of-market premium for the RECs it receives.
With so much on the line, many corporations turn to energy brokers to help them choose a project. The problem is that many brokers still take a very traditional approach. When a client wants to see proposals, brokers will send the RFP to their favored developers, who in turn submit spreadsheets full of potentially inconsistent data, requiring the broker and/or corporation to spend months scrubbing, analyzing and comparing the submissions. Not only is this process antiquated and inefficient, it lacks transparency. With no visibility into the full scope of projects available in the market, corporations just have to trust that their broker is presenting them with the best opportunities.
LevelTen Energy’s RFP Automation tool completely transforms this process, turning a labor-intensive practice fraught with human error into an efficient and standardized process driven by technology. The RFP Automation tool is fully integrated into and powered by LevelTen Energy’s platform, which features up-to-date PPA pricing on over 1,600 projects across North America. LevelTen Energy does not charge developers to participate, ensuring that buyers have access to every project available, not just those who have paid-to-play.
With RFP Automation, the entire project selection process can be completed in a few simple steps:
Step 1: Create the RFP
The corporation completes an online form, describing their renewable energy needs, including size, technology, location, online date, and other key project criteria. LevelTen will then contact the corporation to review submitted details, answer questions, design the detailed RFP specifications, and make final preparations for the RFP release.
Step 2: Distribute the RFP
At the pre-determined time, LevelTen will open the RFP in a designated web portal on the LevelTen platform and send an announcement to more than 200 North American developers, representing more than 1,600 projects available in the market.
Step 3: Collect Proposals
To be included in the LevelTen Marketplace, developers must provide a standard set of data, all calculated using the same methods. Because this data is already in the LevelTen Marketplace, developers can answer the RFP in just a couple of clicks, customizing their offer price as necessary. Responses to LevelTen RFPs are collected through a tested, online intake form – we avoid exchanging bespoke spreadsheets at all costs. As a result, proposals can be collected in a couple of weeks, whereas previously, this step would take months.
Step 4: Create a Short-list
The corporation can use their unique log-in credentials to view responses in the confidential RFP web portal as they come in. After the submission period closes, LevelTen will check each submission for accuracy, and then run a detailed analysis to determine the latest Implied REC Value and risk assessment for each project. This analysis relies on data from the LevelTen Marketplace, which processes more than 8 million data points daily. Once the analysis is complete, LevelTen will create a short-list of projects that meet the corporation’s goals and present these projects to the key stakeholders.
Step 5: Choose a Project or Portfolio
Armed with the right information – such as risk and value analysis, financial commitment, timeline, location and more – the corporation can quickly determine the most viable projects without having to tap into internal data analyst resources. At this point, the corporation can choose a single project from among the competitive short-list that best meets its needs, or it could use LevelTen’s Dynamic Matching Engine to generate a recommended portfolio of projects, in which the corporation purchases small slices of multiple projects.
Step 6: Negotiate and Sign the Power Purchase Agreement
LevelTen’s team of expert advisors can help corporations prepare a power purchase agreement with terms vetted by the market’s most sophisticated energy buyers, mitigating risk and maximizing value. Advisors will be there every step of the way, from getting all stakeholders on board, to supporting negotiations, to announcing the final deal.
To learn how one major brand used LevelTen’s RFP Automation tool to complete the process in three weeks, download the case study here.
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About Arati Shah – Director of Origination, LevelTen Energy
Arati is a seasoned energy professional with over a decade of experience in the field. She has worked in the C&I space for the largest retail energy providers in the industry. Prior to joining LevelTen, Arati was director of origination with OneEnergy Renewables, a utility scale solar developer.