5 considerations to reflect on after signing a Power Purchase Agreement (PPA)
Authored by: Eric Jiang, EDPR NA Distributed Generation Business Development Team
Developing renewable energy offers a myriad of benefits to organizations looking to showcase their commitment and dedication to tackling climate change and sustainability. It’s an exciting milestone for a project to get to PPA signature phase, but what comes next?
It’s important to recognize that getting to a PPA is only the first step in creating your energy plan – much like a professional football team, you need a good coach to strategically time and execute your team’s next move.
In an ever-evolving marketplace with a growing pool of energy developers to choose from, it is increasingly important to ensure that your energy partner can support your firm’s specific energy needs and sustainability goals. It’s critical to ask the right questions to set expectations with your internal team.
Begin by asking if the energy developer can provide more than just data and metrics: Are they a comprehensive energy management partner that understands my business and its energy needs?
Secondly, Does the energy developer service similar businesses to you or are they active in similar business industries or market verticals? How does their experience benefit your energy needs and strategy?
Finally, make sure the energy developer checks off these 5 traits to ensure timely and successful project completion:
1. Actively Communicates with Transparency
Aligning Expectations between Parties
Each business is unique and complex in its own unique ways. With that, it is important to make sure that your energy developer can tailor a bespoke energy plan for your business.
To ensure project success, your energy developer should be able to set up a clear continuous line of communication shortly after signing the PPA. Your point of contact(s) should understand your business’ nuances in projected usage, local regulation and incentives, and potential expansion.
Keeping your internal team and your energy partner’s team on the same page is crucial to meeting and exceeding expectations while at the same time minimizing last-minute requests or interruptions to your employee’s daily workflow. To ensure transparency, your point of contact(s) should actively provide regular updates on the project timeline and highlight major project milestones that have been reached.
Lastly, when working with the energy developer, you should proactively ask yourself if there is pertinent information that may change the course of the project to ensure that major revisions don’t need to be made.
2. Retains Composure through Market Volatility
Navigating uncertainty and potential disruption
In the age of greenhouse gas inventories, Global Reporting Initiative “GRI” sustainability and environmental, social, and governance “ESG” reporting, your business most likely manages internal communications and engagements with stakeholders around expected project timeline.
Disruptions to the project schedule can be frustrating for both parties, and when working with the energy developer, they should seek to minimize unforeseen delays.
Nature is unpredictable and power prices can shift widely as cloud cover increases, as natural disasters occur, or as air pollution increases. In cases like these, electricity prices can surge, raising your business’ costs astronomically if the contract includes market price risk. Your energy developer should understand the long and short term market dynamics as well as be able to use complex modeling tools to help navigate the unexpected.
Your energy partner should have the tools and the skillset to help you manage market & environmental volatility in a contract that best suits your budget.
A few key indicators of a good partner are that they:
· Highlight potential market & environmental risks early on
· Remain flexible when the project doesn’t go exactly according to plan
· Actively involve you in contractual/permitting processes
3. Demonstrates Robust Engineering & Regulatory Experience
The physical site is one of the most important – if not the most important – aspects of a project that determines feasibility, pricing, and costs. When working with the energy developer, depending on the pre-development work done before the PPA is signed, they should coordinate a site visit to provide an in-depth insight into the proposed design, proposed interconnection pathway(s), as well as any relevant structural, rooftop or environmental analysis. They should highlight any concerns before going forward with construction.
Permits (as well as interconnection applications) are specific to the local authority having jurisdiction. And with over 89,000 local government entities in the United States, these can become confusing and frustrating to navigate. Your energy developer should have extensive experience with local and state permitting across North America to ensure that they are able to take on the project in your specific region.
Make sure your energy partner:
1. Has experience in your industry/region
2. Is highly recommended by their past and current partners
3. Has long standing engineering and regulatory experience
4.Provides the ‘Total Package’
From Proposal to Asset Management
When renting an apartment, you want to make sure that your landlord can perform necessary repairs, maintain common areas, keep vital services like electricity, water, heat, and plumbing in working order.
In much the similar way, you want to choose a suitable and competent energy partner.
Running a business is complex and demanding, and your energy partner should have the bandwidth to relieve some of the complexity and demands surrounding the development of a project through their own internal processes.
Be sure that your energy supplier has the financial backing and size to weather market volatility to ensure that they will be there for the duration of your contract term. Next, ask the energy developer to provide essential services like legal support, site evaluation, permitting support, asset management, as well as accounting services, as appropriate
Finally, evaluate what other offerings the energy partner may have and whether these could potentially be of interest down the line.
5. Facilitates Public Relations Opportunities
Storytelling and Marketing
With 60% of Fortune 500 companies having set goals to act on the climate crisis, participating in the renewables is something to be proud of. As such, your energy developer should provide a variety of internal and market facing offerings.
To take full advantage of your entry into solar, you should ask:
· What is our marketing/communication goals related to the project?
· What stakeholders are we trying to engage?
· Is this an opportunity to include the community around our facility or project?
· Are we focused on achieving ESG goals or corporate commitments, or both?
Once you and your team have determined what type of sustainability goals you are trying to achieve, make sure that your energy developer is able to offer internal and external communications and marketing deliverables to support your sustainability journey narrative.
Looking for these 5 attributes in your energy developer can help you determine which developer is right for you as you delve into the world of renewables and sustainability.
To learn more about EDPR NA DG’s work with a variety of stakeholders, feel free to contact our team members below.
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