The world of renewable energy purchasing is complex. There are many different options available to companies who want to use renewable energy but choosing the right option is an almost impossible task without knowing the full details of each option. This is a regular pain point that comes up in conversation with our customers, so to help, we created this simple guide to purchasing renewable energy.
What renewable energy purchasing options are available?
1. Self-owned on-site
In many cases, a company will have the option to install its own renewable energy installation on-site and use the power generated ‘behind-the-meter’. This could be through a rooftop solar array or a wind turbine on the grounds of a site. With these installations, electrons flow directly from the renewable generator to the power loads on-site.
The main benefit of this option is that it can lead to high-energy costs savings. Companies can typically avoid the costs of electricity transmission/distribution and other levies on energy bills. The main drawback of this option is that the company will have to fund the capital and operational costs themselves. With this approach, the purchaser will also generally assume more of the construction and operational based risk. The size of the installation will also be restricted by the available ground or roof space on-site.
- Price (All-in Cost) ~€50-€150/MWh (Highly bespoke to technology, size, location etc.)
- Accessibility — Medium (Restricted to available space on-site)
- CO2 Impact — Very High
- Risk — High
2. On-site Power Purchase Agreement (PPA)
With this option, a renewable energy plant is installed on-site by a third-party. The third-party developer will usually build, own, operate, and maintain the installation and so therefore assumes more of the project risks involved. Due to this risk transfer, this option will typically offer lower savings than if the company was to build the plant itself (as in Option 1).
To monetize the project, the third-party will set up a PPA with the purchaser and this could run for 10–30 years depending on the type of the contract. The main benefit of this option is that a company can be less involved in the construction and operation of the plant and pay for the energy as if it was a normal energy supply contract. The main drawback will be that the company will need to sign a long-term contract and this can be an issue as some companies will not know their future power requirements.
- Price (All-in Cost) — ~€50-€150/MWh (Highly bespoke to technology, size, location etc.)
- Accessibility — Medium (Restricted to available space on-site)
- CO2 Impact — Very High
- Risk — Medium
Keep on reading the article in FlexiDAO.com. You will read about:
3. Off-site Physical Power Purchase Agreement (PPA)
4. Off-site Virtual Power Purchase Agreement (VPPA)
5. Green Supply Tariffs
6. Unbundled Guarantees of Origin (GO’s) / Renewable Energy Certificates (REC’s)
