Corporate PPA volume for renewable generation is set to reach a record high in the US this year, with a broad range of companies signing deals with developers. Now, the industry must begin to look past the Microsofts and Amazons of the world and find a way to reach agreements with smaller firms while limiting their own risk.
In the past five years, power purchase agreements (PPA) between clean energy developers and corporations have risen from a drop in the ocean of renewable development, growing nearly nine-fold in the US.
But even corporate PPAs have become competitive, leading some developers to search for counterparties beyond the Fortune 500. Contracts also feature complex terms that require negotiation of how much risk each party must bear.
"The biggest players with the biggest appetites are starting to get filled up," Giji John, a partner in Orrick’s Energy and Infrastructure group, told Inframation. “So how do you service these guys who only want 10MW, 15MW, for less than a full 12-year term?”
In 2013, just five corporate PPAs were signed comprising a mere 320MW, according to the Business Renewables Center at the Rocky Mountain Institute, a Colorado-based think tank that tracks these deals. By 2017, that figure had multiplied to 2.78GW and this year is expected to be the most active yet – by the end of April, more than 2GW of corporate PPAs had been signed.
*This publication was first published in Inframation News.