Why Etsy and Lockheed Martin seek clean energy matchmakers

Duke Energy
Two big corporate buyers, Corning and Lockheed, have committed to buying the power generated at Duke Energy's solar farm in Conetoe, North Carolina.

This story was updated Nov. 14 to clarify the status of Etsy's solar arrangement.

Most big companies are still willing, if not eager, to share what they’ve learned about sourcing clean power with other organizations — with the aim of accelerating the movement.

This sensibility was a guiding motivator for the creation of the Renewable Energy Buyers Alliance, formed earlier this year to help inspire the addition of 60 gigawatts of renewables capacity in the United States by 2025.

Increasingly, the buzz from the field is centered on how companies of all sizes are teaming up to help make deals happen.

For example, this theme emerged organically during the recent GreenBiz webcast about how to build a renewable energy procurement strategy. "There are only so many companies out in the market that have the ability to handle one of these huge deals themselves," Blaine Collison, managing director of clean energy advisory firm Altenex, told the attendees. 

It was also a central discussion point during a panel dedicated to corporate renewables strategy during the annual BSR conference in New York. "Many corporations are not big enough to absorb the entire size of a farm," noted Herve Touati, managing director of the Rocky Mountain Institute. "We need a form of aggregation, a matchmaker."

That philosophy was a no-brainer for Brooklyn, N.Y, online craft marketplace Etsy. The existence of community solar programs could be instrumental for the company’s first foray into procuring solar to help power its new headquarters. Aside from a modest roof-top solar installation, the company is working on an arrangement to buy electricity from a nearby array — a plan it hopes to orchestrate with the help of its landlord and a local developer.

"It was helpful and appropriately sized for our load," said Chelsea Mozen, senior sustainability specialist, energy and carbon, during the BSR panel discussion, referring to the company's interest in community solar as opposed to large power purchase agreements. 

Even larger companies stand to benefit from allying with other businesses on power purchase agreements. Consider the case of Iron Mountain, which disclosed a deal of this nature in October. It will buy about 10 percent of a wind farm that is mainly sponsored by e-commerce and cloud computing services giant Amazon.

Likewise, Lockheed Martin’s first big renewable energy contract — the power purchase agreement it signed in February with Duke Energy — took some creative orchestration on the utility’s part. The defense contractor is buying about 30 megawatts of solar power from Duke’s site in Conetoe, North Carolina. The rest of the capacity (about 62.5 percent of the production potential) is going to Corning; both companies are part of the Business Renewables Center, which played a role in bringing attention to this opportunity.

While Lockheed Martin originally sought to address its clean energy initiatives with on-site installations, the appeal of having a long-term view into electricity costs convinced the company to opt for the PPA, said Scott Stallard, senior manager of environmental stewardship for Lockheed Martin. "This was a major consideration," he said.

No one model

Doing a deal of this nature, however, is far from simple, the speakers noted. There are literally dozens of considerations such as the geographic location of the solar array, wind farm or other renewable-generating technology (some organizations will insist on sites close to their offices, factories or other facilities), the aggregate power load required over the course of the day, the financing terms, and so on. "No two businesses are alike," Stallard noted.

For that reason, any aggregated energy contract will need some sort of central organizer. Right now, several models are emerging with no one structure dominant in the nascent marketplace, said RMI’s Touati. They include:

Utilities — As organizations such as Duke build out their clean energy portfolios, they’re increasingly seeking large buyers to commit to the capacity.

Developers — Aside from procuring its own energy, Etsy is teaming with Geostellar to encourage the craft businesses on its marketplace to consider installing solar panels. (There’s an incentive, of course.)

Syndicates — A group of companies that are pooling their clean energy demand and negotiating a project on their own.

Market makers — An independent organization might choose to finance a project and then "resell" the power to interested buyers. This could even be a big corporate buyer, who sells to smaller companies.