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Uniting as a Community: Contributing to the Cause

Corporate Power Purchase Agreements (PPA)

Where onsite renewables are not an option for companies, community renewable energy projects should be considered. These programs offer great alternatives to companies who are unable to install RE at their site or for where building ownership is an issue: i.e., commercial building tenants. These projects are predominantly solar however, there are some community projects where wind farms have been established. Participants in this model commit to purchase a defined quantity of electricity or generation capacity and this is passed through as an ongoing payment similar to an electricity bill for a defined period to time. These projects are predominantly administered by a not-for-profit community group or by an energy retailer. In addition to the benefits of obtaining clean energy, these projects help to improve customer relations between businesses and locals. Community energy models have been utilized in European markets like Denmark since the 1970s and continue to grow in popularity worldwide as organizations look to re-engage with the local community.

A Corporate Power Purchase Agreement (PPA) is a long-term contract where a business agrees to purchase electricity directly from an energy generator. The corporate off-taker will enter into a fixed term PPA (usually 10 to 15 years) with a renewable energy generator to consume all or part of the energy generated by the plant for a fixed price per KWh, this price is likely to be subject to indexation. In some circumstances, a third party, usually a licensed energy retailer, will be the off-taker and will then on sell the electricity and renewable energy certificates or subsidies to the corporate entity. The renewable energy generator will need to commit to generating a minimum quantity of electricity that can be passed through to the corporate off- taker. The electricity sold under a PPA can be from existing renewable energy supply or a new build project. Larger organizations like Google use this model and up until recently, it was not always readily available to smaller users (less than 100MWH) as they do not generate enough electricity demand. However, more recently contracts of less than ten years with energy use of less than 10MWh have been offered to customers. Another model that has been utilized is a group-buying agreement where a number of organizations group their energy usage together in order to negotiate a more competitive corporate PPA agreement with a real estate generator. Real estate investment should be an integral part of any business strategy and planning for all large energy users.

We would recommend that you seek advice from your sustainability advisor at Cushman &Wakefield who can help you to assess your options and develop a robust renewable energy strategy for your organization based on your needs.

It is essential that businesses keep pace with industry developments and renewable energy has proven itself as an essential tool in meeting corporate energy security and sustainability goals.

GARY GRAHAM Director of Energy Management

ALAN SOMERVILLE Head of Energy, Infrastructure & Sustainability, EMEA alan.somerville@cushwake.com

Global Occupier Services gary.graham@cushwake.com

NG YUAN SOO Senior Director Energy & Sustainability ng.yuansoo@cushwake.com

54 The Occupier Edge