Signing a well-structured power purchase agreement (PPA) can be a massive win for your company, both financially and for your sustainability goals. But starting the process can be daunting, especially if your organization is new to PPAs or green energy. Getting buy-in from corporate decision makers is critical for success.
However, achieving that buy-in is often easier said than done. You need tangible evidence that a PPA is right for your company’s needs and that there are suitable PPA partners out there for you. But even getting that evidence can seem like a massive undertaking, requiring big teams and bigger investments. It can be hard to convince decision makers to take this kind of step at the best of times. The ongoing coronavirus situation and its economic fallout make it even more challenging.
But the good news is that you don’t need to jump ahead to costly feasibility studies to determine if a PPA is right for your company. Follow the right steps at the right time with the right tools, and you can build a compelling business with a lot less investment and fewer resources than you might imagine.
Identify your decision makers
Who will make the final decision on whether your company moves forward with a PPA? What are their goals for your company? Cutting costs, being a leader in innovation, beating competitors? Understanding this can help you to build a clear mandate and provide guidance on the kind of options to consider and the evidence you need to convince the relevant decision makers.
It is also important in creating support networks and advocates beyond your sustainability and finance teams, bringing vital additional knowledge such as legal expertise. Building an internal working group at the start is a good strategy to achieve a fast and efficient process.
Link to existing strategies
A corporate PPA should be part of a bigger picture, one that helps your company to achieve its financial and sustainability objectives. So, make sure you know your company’s existing green energy sourcing and wider sustainability strategy goals. Be clear on which green energy sourcing options are best suited to achieving those goals.
Know your boundaries
Set achievable targets that are in line with those existing strategies. Do you really need to reach 100% renewable energy by next year? Consult decision makers and be active in setting expectations and intermediate milestones across the company.
People often think that sustainability comes at a high premium. But “business as usual” is also a risk, just one that your organization is familiar with. To build support, you need to help your colleagues realize the business advantages of PPAs such as the cost benefits of certainty and security that come hedging against wholesale electricity market volatility. Depending on your overall hedging structure and energy strategy, a PPA has the potential to generate significant, long-term economic wins.
Understanding the risks of PPAs and how to manage them is important. However, you don’t have to be the “PPA expert”. DNV can support you in building understanding across your organization, for example through targeted workshops.
Explore your options
Having an idea of what kind of partners are in the market is a big help. Thankfully, that doesn’t mean you have to jump into a long, complex request for proposal process right away. Our green energy procurement services can help you understand what you need and who can provide it – even when global conferences are severely curtailed by coronavirus.
We guide you to the best PPA structures for your needs, preferences and circumstances through a few simple questions. Once your preferences and constraints have been clarified, most sustainability professionals would be able to answer these questions quite easily. But DNV offers support if you do need it. Based on these answers, the tool gives you a tailored draft PPA demand and direct access to energy sellers rated according to your preferences.
Leveraging DNV’s unique expertise in risk assessment and renewable energy technologies, our green energy procurement services support corporate energy buyers in achieving impactful green power procurement quickly, easily and transparently. Besides connecting renewable energy buyers and sellers, we offer support in risk assessment and allocation for corporate PPAs. For more information, please contact us today for more information.