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Clean Energy Deal Tracker

Q1 2020: Google, Amazon show creativity in new renewable deals as COVID-19 slows the market

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The first quarter of 2020 had a respectable showing of corporate renewable procurement deals, despite the economic disruption caused by the global pandemic. Companies announced deals for at least 1.6 gigawatts of capacity, more than Q1 or Q4 of 2019. 

A review of the deal structures, involved partners and energy resources embraced also shows that the corporate renewable procurement model has continued to evolve, making room for more companies of more sizes to enter deals. 

But Q1 2020 may be the last stretch of "normal" corporate renewable procurement we see in a while. 

The COVID-19 elephant in the room

It’s hard to remember what the clean energy procurement environment felt like at the start of 2020. The world of energy — and everything else — transformed in the last month, and renewable procurement deals are in a state of suspended animation while we wait to see where we end up at the other side of the pandemic. 

The COVID-19 crisis certainly will slow new corporate renewable procurements in the short term. It’s hard to know when business will pick back up, and it’s difficult for developers and companies to enter long-term deals with so little certainty. 

Additional renewable procurements may appear temporarily less financially attractive. Supply shortages, travel restrictions and tighter project financing options may drive up the price for power purchase agreements (PPAs). According to a report from LevelTen, 56 percent of developers expect PPA prices to be impacted by COVID-19. With wholesale electricity prices so low, PPA offtakers also may see losses in the short term. That all may make it temporarily harder for companies to make projects pencil. 

Clean Energy Leaderboard Q1 2020

While GreenBiz’s Clean Energy Deal Tracker focuses on when transactions are announced, not completed, it’s worth noting that all renewable energy projects being built will be delayed. Construction is on hold as we bend the COVID-19 curve, and supply chain disruptions mean projects don’t have the supplies they need. I’m keeping an eye on how that may affect how and when new deals are signed.

However, in the long term, the COVID-19 slowdown likely will be a blip for corporate renewable procurements trajectory. Renewable energy procurement has become popular because it makes economic sense — and neither business disruptions nor a recession will change that. Read my analysis here. 

Moving beyond 100 percent clean energy to time and location matching 

The largest deal of the quarter was inked by Google. No big surprise there: Google held the No. 1 spot in both Q1 2019 and Q3 2019, when it inked the largest procurement to date.

Trailblazer Google's contract this quarter included between 250 and 280 megawatts of storage, a resource only seen as part of one other corporate procurement deal to date (healthcare provider Kaiser Permanente in Q3 2018). The solar asset and energy storage, which will power Google’s new data center, are procured through a partnership with NV Energy in Nevada. The agreement is pending approval from state regulators. 

The amount of storage is impressive; it’s large even by utility standards. It shows Google’s emerging strategy to reach "24x7 clean energy," the goal to go beyond 100 percent clean energy procurement on an annual basis and strive for 100 percent clean energy where and when it’s needed. Cracking this nut is key to reaching 100 percent clean energy goals for utilities and states. 

Google wrote the white paper popularizing the idea of "24x7" carbon-free energy in 2018, but it isn’t the only corporation working on the problem. Notably, last year Microsoft and Vattenfall partnered on an hour-by-hour renewable power matching in Sweden, and Daimler and Statkraft signed a PPA in January where the carmaker’s German operations will get 100 percent clean energy in real-time, supplementing wind and solar with hydropower. 

Corporations working with utilities to bring clean energy to communities

While utilities working with corporations is nothing new — different service territories offer products such as green power programs, community solar and green tariffs — the first part of 2020 showed ways corporations can align at a deeper level with utilities. 

Online retail juggernaut Amazon spearheaded a partnership with Dominion Energy and Arlington County to power its east coast headquarters, HQ2, in Virginia. Under the agreement, Dominion is building a new 120 MW solar facility, 68.3 percent of which will go to power Amazon’s HQ2

The rest of the clean energy is going to the county of Arlington, which is expected to cover more than 80 percent of the county’s annual electricity demands. Once the solar plant is in operations, slated for 2022, Arlington county will surpass its clean energy goal of 50 percent

Similarly, Toyota and Dow entered into an agreement with local utilities to purchase 50 MW and 25 MW (respectively) from a 100 MW solar in Kentucky. The remaining 25 MW will go to local utility customers. It is unclear, however, if the corporations had a hand in encouraging the utility to offer the excess renewables to its customers.

Geothermal and energy storage are part of the renewable procurement mix 

In the past, all procurement deals noted in GreenBiz’s Clean Energy Deal Tracker series have been from solar and wind resources. 

In addition to Google’s deal that included energy storage, this quarter saw the debut of another energy resource: geothermal. 

Controlled Thermal Resource (CTR), a resource developer, inked a geothermal PPA with Imperial Irrigation District, an energy provider in Southern California. But the project is more than a standard energy procurement deal. 

The CTR project will be at the Salton Sea, a human-made ecological catastrophe in Southern California with high levels of lithium. CTR, along with technology provider Lilac Solutions and backing from Bill Gates’s Breakthrough Energy Ventures, is betting it can extract lithium from the geothermal brine — the wastewater byproduct that comes from geothermal facilities. The hope is that the lithium can be used in lithium-ion batteries to meet the world’s growing energy storage demands — making the region California’s "lithium valley."

Because of the uniqueness of CTR’s deal — geothermal brine is at the core of its pilot project — it’s hard to say the role geothermal may play in future corporate procurement deals. However, CTR’s deal was not the only geothermal PPA in Q1. 

Silicon Valley Clean Energy and Monterey Bay Community Power entered a 10-year, 14 MW geothermal PPA in January. The project, expected to come online in 2021, will be the first geothermal plant built within California Independent System Operator in the last 30 years, indicating more geothermal plants may be in the offing.  

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