The record level of voluntary renewable power buys by corporate America could significantly help many states, such as Texas, Oklahoma, Illinois and North Carolina, that have considerable coal-fired generation, meet the greenhouse gas (GHG) reduction standards mandated under the EPA’s new Clean Power Plan (CPP).
The EPA’s Plan adopts state-by-state guidelines for reducing CO2 emissions from existing power plants — reductions must be roughly 32% below 2005 emissions by 2030, on average — but leaves it up to each state to decide how best to meet these standards. States may adopt a mix of strategies, including greater use of lower carbon generators (such as natural gas-fired power), more efficient plants, and expanded use of renewable generation, such as wind and solar power, which are also eligible for special federal incentives.
Although the EPA’s new mandates apply directly to the public sector — that is, to individual states and certain generators subject to EPA regulation — the rules are designed to impact the mix of power used by private consumers (business and households) and, thereby, the total volume of GHG emissions associated with U.S. electricity generation.
Thus, the more emission reductions that the private sector can achieve in any given state through voluntary action — by installing on-site solar or by changing to electricity suppliers that only deliver renewable power — the easier it may be for that state to meet its obligations under the CPP. In other words, while the Clean Power Plan does not say much about this, demand-side consumer initiatives, as well as supply-side actions, can make a significant contribution to reducing overall power sector carbon emissions. And corporate PPAs have begun to show the way.
That was evident earlier this Summer when a flurry of announcements from companies like HP and Amazon, pushed long term corporate purchase commitments for renewable power over the 1,500 MW mark, already exceeding last year’s record level of business deals for green power.
As we wrote in an April post, falling prices for renewable power and rising corporate sustainability goals are leading more Fortune 500 businesses to directly buy green electricity.
While terms for these PPAs vary, the seller typically develops, owns, and operates the renewable facility, and the buyer agrees to purchase the plant’s output at a negotiated price for an agreed term (typically 15 to 20 years). The size and type of long term commitment required for these deals have put off many prospective renewable power buyers, however.
At RPD, we believe that all business customers should be able to access the benefits of direct green power purchases. That is one reason why RPD developed medium term (3-10 year) PPAs for green power. RPD can offer shorter terms and smaller volumes by sourcing power from a mix of existing and new facilities that are not fully subscribed. RPD’s arrangements still help to finance additional renewable projects but they don’t require the customer (i.e., the end user of the power) to foot the whole bill for each project. The costs are spread over several off-takers.
Please get in touch if you’d like to learn more about how RPD can help your company switch to green power.