Schneider Electric wants to help you buy clean energy
Some of the world’s most innovative technology companies, from Apple to Facebook to Google, are famous for "acquihires," or buyouts of far smaller firms that are overflowing with specialists who have skills in important emerging business areas. Apparently, the same is also true when it comes to finding experts in clean energy procurement.
The latest evidence? In mid-January, energy management and sustainable building infrastructure company Schneider Electric snapped up one of the better-known advisory firms in this space, Renewable Choice Energy of Boulder, Colorado, for an undisclosed sum of money. In fact, the latter’s 35-person team is already making joint sales calls with its new colleagues from Schneider Electric.
If anything, we have to work to become more creative.
"Developers don’t have the time and resources to figure out how to get the output of their assets to the market, and you have end users who are eager to get their hands on this capacity," said Steve Wilhite, senior vice president of energy and sustainability services for Schneider Electric. "We are linking the two sides to make this more accessible."
Although the two organizations hadn’t partnered formally in the past, they often found themselves in discussions with the same customers and prospective clients, according to Wilhite and Renewable Choice CEO Pete Dignan. "We found ourselves wondering about how to work together," Wilhite said.
Two of the biggest considerations driving the union were Schneider Electric’s need to have more holistic discussions surrounding sustainable energy strategies — making the full circle link between energy efficiency, renewables procurement and energy storage projects — coupled with Renewable Choice’s interest in expanding its sphere of influence beyond North America. "While we were active in the renewable space, Pete and his team were much deeper in the subject matter," Wilhite said. "This is about breadth and reach."
Since its creation in 2001, Renewable Choice has managed both renewable energy certificate (REC) programs and power purchase agreements (PPAs) for more than 160 of the Fortune 500, influencing projects that have added more than 1,000 megawatts of solar and wind power to the global grid. It was the first organization to help broker a corporate partnership with a large-scale wind farm and it was the first to begin advising businesses about virtual power purchase agreements (VPPAs), which helped expand the universe of energy contracts available to corporate buyers.
Renewable Choice’s clients include consumer products company Unilever, wireless carrier Sprint, financial services firm TD Bank, retailer Kohl’s and tech giants Intel and Microsoft. Many of its relationships are ongoing — some companies that began by buying RECs to offset the impact of their energy consumption morphed into arranging PPAs with Renewable Choice’s help, said Dignan. "Several of our PPA clients have 100 percent goals," he noted.
Models morph and multiply
While Schneider Electric and Renewable Choice haven’t yet announced any new "products," Dignan said a big focus in coming weeks will be introducing services that help more midsize businesses buy power from renewable energy by aggregating or syndicating their demand. You can expect the New Energy Opportunities (NEO) Network, an online resource for researching projects launched by Schneider Electric in July, to play a role in this.
One of Renewable Choice’s best-known competitors in renewable energy advisory services, Boston-based Altenex, already has come to market with a new PPA model that allows commercial and industrial customers to buy power in smaller blocks, over shorter contract terms.
The offering, known as PowerBloks and launched in January, accommodates contracts for as little as five to 10 megawatts over 10-year terms. Many traditional PPAs require commitments of at least 100 megawatts for 15 to 20 years.
"We believe PowerBloks is an appealing solution for a much wider range of commercial and industrial companies and institutions such as universities, local governments and healthcare systems, many of which have smaller energy loads than would readily align with a traditional PPA," said Duncan McIntyre, president of Altenex, in a statement.
The contracts could also work for organizations supporting a large number of facilities scattered across many locations. "We’ve also seen interest from larger corporate customers that are attracted to the flexible offtake sizing and 10-year terms. We think that this structure will bring new participants to the renewables market and give current participants another strategic option for this cost-effective supply.”
Another financial instrument that could play a role in helping more companies invest in clean energy projects directly comes from the multinational insurance company Allianz Risk Transfer. In May, the company announced a new risk management product that helps organizations smooth out the pricing volatility traditionally associated with wind farms. And in November, Microsoft became the first company to buy into it, using it to help support its investment in the 178-megawatt Bloom Wind project in Kansas over the next 10 years.
Here’s how Allianz describes its approach:
Similar to a tolling agreement or capacity payment, this novel structure swaps the floating revenues of a wind farm — those driven by the hourly wind resource and power prices — for a fixed annual payment. This transaction is the first in a robust pipeline of future wind financings and would also be feasible in other wind farm markets globally beyond the U.S.
Stay tuned for other new investment models and financing models to emerge in the months to come, as clean energy becomes an even more mainstream concern.
"The leadership is there, regardless of what administration happens to be sitting in Washington," noted Schneider Electric's Wilhite. "If anything, we have to work to become more creative."