Commercial, Industrial, Solar, Sourcing Renewables, Wind - October 4, 2019
RE Sourcing Forum Wrap-Up: Meaningful conversations and getting things done
Smart Energy Decisions’ 4th Renewable Energy Sourcing Forum brought together large electric power users from commercial, industrial, institutional and government sectors, along with suppliers and utilities, all united in the goal to accelerate the adoption of renewable energy. The event was held at the Ponte Vedra Inn & Club in Ponte Vedra Beach, Fla. Sept. 16-18.
“We’re the only event that really makes a conscious effort to connect corporate buyers and proven, established suppliers to help get things done in meaningful conversations,” said John Failla, SED’s founder and editorial director, in his opening remarks. The Forum offered a mix of educational workshops, customer keynote presentations, one-to-one meetings between customers and suppliers, and a variety of networking opportunities.
Following are brief highlights from the RESourcing Forum. More extensive coverage will follow in our RE Sourcing Forum Insights report, available later this year.
“Creating a Global RE Sourcing Strategy”
In his opening keynote, Eric Hoegger, director of global renewable energy at Cargill, noted that his company's sustainability goals, which include a 10% reduction in absolute emissions by 2025, have caused a shift in operational thinking. "Before, we were extremely focused on cost and also on not incurring additional risk, primarily price risk. Now, with the new goal, it has everyone moving in the same direction. We're caring not just about cost and risk, but also care about emissions. This is a result of having an absolute goal, So, any new growth that we have has to essentially be carbon-free. What that actually means is that we will need to have additional projects that can offset that new growth." He added, "The only way we’re going to reduce our emissions is by adding renewable energy to the mix."
"Going Global with RE Sourcing"
Growing interest in international sourcing was discussed from a variety of perspectives in this high-powered panel. Discussing the challenges of structuring RE deals in different countries, Rob Threlkeld (middle), global renewable, regulatory and commodity supply manager, General Motors noted that his company has done almost 40MW of onsite solar in China. Being an automotive company in China, he explained, “we have joint ventures. It creates a challenge because we actually have to convince two companies to do something. But, once you do that, they go big and they go quick. It’s interesting to take some of those lessons learned into implementing programs in other parts of the world.”
Saint-Gobain is a French company with about 130 manufacturing sites in the U.S. and Canada. Ryan Spies (left), director of sustainability, energy & stewardship, reported that his colleagues in Paris “actually like the length of the deals here because many deals in Europe are green tariffs or a shorter one, two-year contracts. They just don’t feel any certainty with that. You can get comfortable with one- or two-year price premium, but you don’t know what that’s going to be in year three or four.” Spies also finds himself educating his company on U.S. options. “In Paris, they’ve never seen the virtual power purchase agreement.”
Todd Wheeler (right), global energy and sustainability management at Cisco Systems, said one of the challenges of international sourcing “is that you don’t know what you don’t know about foreign countries. You’re not familiar with culture or regulatory issues.” His advice is “to have somebody on our team with local support, local knowledge, who knows the marketplace and suppliers. He added, “Having local legal representation that we could trust is a key part as well.”
“Using Analytics to Mold Your RE Sourcing Strategy”
In this conversation on analytics, Rob Federighi (left), vice president, sales, Edison Energy, noted the benefits of showing a range of outcomes to a finance team vs. “putting a number in a box.” Peden Young (right), senior manager - energy management, The Home Depot, said this method helps his team to be more prepared. “You can really see on the piece of paper what the range of outcomes might look like. We’re looking at it in terms of what might be the outcome of a particular project, how projects interact with each other, and then what our overall company-wide outcome could be. It shows the overall potential range of spend for the entire company for our load that we need to buy as well as the performance of this particular project.” Visualizing reduction and potential volatility can help steer the conversation, explained Young. “It’s definitely helping to unpack what’s going on underneath our more traditional way of evaluating projects.
Federighi noted that this can be an iterative approach as well. “It might not just be whether you pick one project or another; it could be some different iteration of the deal structure that you can rein in or change to do something differently.”
“Cities Driving RE Sourcing: Three Approaches”
Are cities driving renewable sourcing? These panelists say yes! While the City of Houston is best known for oil and gas, it is also the energy capital of the world, according to Laura Cottingham (right), chief of staff of the Administration and Regulatory Affairs Department, chief sustainability officer. “We have to power a future just like we have powered the past. We have to lead by example. We have to show that in a city the size of Houston, if it can be done in Houston, it can be done anywhere.”
Emily Schapira (middle), executive director of the Philadelphia Energy Authority agrees that cities are drivers. “ We’ve made some great commitments on climate change - 80% carbon reduction by 2050, 100% renewable electricity for City government by 2030, and a handful of other goals that get at the City beyond just the government footprint. Having those goals have been really helpful and I start with them because having that political platform has given us the license to be able to do the work that we’re doing. "
“We see our obligation really as a two-pronged opportunity,” said Nick Brown (left), energy manager, City of Phoenix. “First is municipal operations. We have direct control, of course, over where the energy comes from and how we purchase it and what the resulting emissions and impacts might be. But, we also take very seriously our leadership role in managing energy consumption and greenhouse gas emissions at the community level. From 2012 to 2016 our GHG emissions community-wide were reduced by about 7%. That’s the result of aggressive energy conservation programs in conjunction with our utilities. "
“Opportunities in Renewable Energy Sourcing”
Cinemark recently entered into a nine-year VPPA with AEP Energy Partners, whereby Cinemark will receive RECS for 40 MW of wind power capacity representing about 38% of its current total annual domestic energy consumption. Hans Royal, director, Renewables & Cleantech, Schneider Electric, advisers to Cinemark said of the deal, “In many ways, it’s one of the first, if not the first, of its kind in the corporate space.”
Art Justice, vice president of energy and sustainability, Cinemark explained, “AEP brought a deal to the table that allowed us to do a smaller project and to do a shorter term. Those were the two areas that were unique and I think really got us over the hump to be able to do our first deal. That’s not to say that we wouldn’t consider different terms in the future, but I think we needed that one as our first deal in order to get our C-suite comfortable.”
Royal concurred, noting that a theme at the RE Sourcing Forum is “that there are innovative products and innovative solutions that the developers in this room are creating.” He added, “This industry is evolving to meet the needs of the Cinemarks of the world and others that aren’t comfortable with a 20-year, 200 MW power purchase agreement.”
Executive Interview: The Evolution of Renewable Energy Sourcing
When asked by John Failla (right) to describe what the energy transition means to his company, Sayun Sukduang (left), president and CEO of ENGIE Resources and head of energy management, said, “There are a lot of buzzwords out there - energy transition is a buzzword. There are a lot of D’s out there. 3Ds, 4Ds, decentralization, decarbonization. However, when I look at it big picture, what we have is a generation fleet in the United States and globally that is becoming less flexible, less dispatchable, a generation fleet that will produce when the wind blows and when the sun shines. Inversely we have a customer base that is becoming more flexible. If you go back 20 years, we would have never had a discussion like you’re having at this conference because there was no decision to be had around energy. The decision was made in a dual bureaucratic, rent-seeking model. You had the public utility commission, you had the utility, and you had a rent-seeking model where decisions were taken in a very centralized way. As customers become more flexible and generation becomes less flexible, that conversation has to change from two bureaucracies to much more decentralized decisionmaking.”
Pathways to Achieving Global Emission Reduction Targets: Mondelez International’s Journey
In June Mondelez International signed a VPPA, the company’s first U.S. agreement, covering 65 MW from the Roadrunner Solar Farm and this will help Mondelez reduce about 5% of its global manufacturing emissions. 3Degrees supported Mondelez on the transaction.
Discussing how Mondelez came to this deal, Erika Vasconcellos (right), global environmental manager, Mondelez International, explained that the company’s first push for sustainability came in the area of energy efficiency. “We invested a good amount of money in energy management systems across more than 40 facilities around the world and it has a very important part of our job.” The company set Scope 1 and 2 emissions goals in 2015 for 2020, she said, “but at some point, we realized we needed to start working with renewables more strategically because while we had some projects, we didn’t have a plan to implement a strategy globally.”
Discussing which comes first: setting goals or implementing renewables, Sarah Penndorf said, “The first step is really measurement. Organizations wrap their head around is quantifying the emissions. Then, what we see is that goals are set first. The reason for that is that it’s much easier to mobilize resources for any action or solution is if you have a goal established, especially with executive-level accountability assigned to it. The stronger the goal, the more empowered our clients are to find solutions.”
Executive Interview: Navigating the Key Risk Factors of VPPAs
In his conversation with Aaron Thomas (right), vice president gulf commodity sales, Calpine Energy Solutions, John Failla (left) noted a theme emerging at the event: “the increasing engagement and involvement that finance departments are having on (energy) transactions.” Thomas advised attendees on providing these departments with risk analytics. “Show the best case/worst case scenario analysis. Provide the analysis behind the numbers as to what your assumptions are so that you’re essentially documenting the information available at the time of the decision and set forth a range of potential outcomes as opposed to a specific yield number or return number or saving number that I think it’s very hard to defend over a 10- or 15-year time horizon with the amount of change that will just naturally occur in the marketplace.”
Look Who Switched to Renewables: Sprint’s Journey to Lower Emissions
Amy Bond (middle), energy and sustainability program manager, Sprint, gave RESF attendees a preview of the company’s very first VPPA, a 12-year deal for 182 MW of wind power in partnership with Duke Energy Renewables and orchestrated with Schneider Electric. This agreement will match almost 30% of Sprint’s energy consumption and that will greatly offset their carbon footprint.
Offering some history on the deal, Bond explained that Sprint launched environmental goals in 2008, but the alternative energy goal was tabled. “At the time, the economics just didn’t make sense for us," she explained. When Sprint began considering their first VPPA, Bond said of the earlier plan, "A great byproduct was that we already had this internal team assembled, about 20 people, and they were all still at Sprint. She also credits her attendance at the 2018 Smart Energy Decisions Innovation Summit “for giving us that extra push to get back in the game.”
Scott Macmurdo (right), business development director, - corporate accounts at Duke Renewable, addressing the audience about the hard work of putting a deal together, said, "For those of us who are here in this community, this has to be fun for you. This has to be something that you’re passionate about to really roll that ball up the hill, especially if you’re a first time participant in this market as Sprint was in this case. You really need an internal champion with a lot of enthusiasm and a lot of knowledge to push these deals through."
Regulatory Hot Spots
Brianna Esteves, senior associate for state policy at Ceres, said, “When I think about regulatory hot spots for corporate renewable energy procurement, I think about one state in particular: Virginia.” She continued, “What’s unique in Virginia is that while it is a monopoly utility system, there are a couple of very limited cases in which if you meet certain criteria you are allowed to then leave your utility service territory to go shop for electricity.” As corporations, especially data centers in Northern Virginia, fought to add renewable energy to their portfolio, utilities denied the move, “first in closed-door meetings, which didn’t work,” followed by more public actions. Among the more effective, said Esteves, were a series of education sessions held in Richmond. “We brought companies in who told their story on how they want to be able to access renewables. They want to stay in Virginia and they want to have those local investments in the state. I think every single legislator understands that in order to make Virginia attractive and maintain its attractiveness to companies, they need to be able to offer businesses access to renewables.”
Bank of America’s Innovative Solar Initiative
Beth Wytiaz, SVP global environmental operations manager, Bank of America, offered insight on the process for developing and implementing their wide-ranging sustainability plans, which includes a 2020 goal to purchase 100% electricity from renewable sources, in part through implementing onsite solar at owned locations. She explained that their business proposal “contributes to four of our different public goals. We also felt like we had an opportunity if we could move relatively quickly to perhaps get ahead of our peers, and also get tax benefits and things of that nature.” But ultimately, she said, “we really wanted to do something that was tangible to our employees and our customers because, at the end of the day, I think we all realize that all of the other things that we’re probably going to do to get to our 100% goal are not easily understood by people who are not in this room. So, that’s where onsite solar became an important piece of what we wanted to do with this goal.
Moving Beyond VPPAs
Ben Chadwick (right), executive director of renewables origination for Constellation Energy announced from the RESF stage the balance of their second aggregation in the PJM market, a 175 MW solar project. While Johns Hopkins University was announced as part of the transaction earlier this year, the participation of McCormick & Company, TJX Companies, and the Applied Physics Lab was revealed. “This is not a virtual PPA,” Chadwick explained. “In our transaction structures, we, Constellation, are entering into a physical wholesale PPA directly with the developer. So, we negotiated that 75-page agreement with S-Power and the four retail customers are signing roughly 5-page retail power agreements that convey all the benefits, both economic and sustainable benefits, of the offsite new-build renewable project, through a standard retail electric power agreement.” He added, “That’s what our offsite renewable business is all about: trying to simplify the procurement and make it look a lot more like retail power.
Solar-Plus-Storage: Key Drivers and Considerations for Execution
Ray “Paul” Robinson (right), Chief of the Energy Division for U.S. Corps of Engineers, in discussion with Chris Elias (left), senior director, business development, SunPower, discussed their Redstone project. Elias explained, “In 2017 SunPower and the Army brought online a 12.5 MW solar power plant at the Huntsville, Alabama facility at Redstone that included a 1 MW/2MWh energy storage system." Overall, the system offsets 20-25% of the facility’s energy consumption. The energy storage system, in particular, is operating to enhance the savings that come from this system by offsetting on peak energy purchases that the base would otherwise make from the Tennessee Valley Authority and reducing demand charges that the base pays.”
With Redstone in place, Robinson talked about what’s next. “It’s going to be resilience that drives our goals.” Calling renewable energy “part of a broader solution,” he explained, “we’re looking at building a microgrid in a system that then gives us the control and the ability to isolate at any point in time. We want redundant sources of energy as we go forward. We want the ability to recover quickly, and we wanted the ability to be self-sufficient if we need to be, at least with our critical infrastructure. It’s a broader solution set.”
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