PPAs aren't all about Apple

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Richard Heap
April 28, 2017
This content is from our archive. Some formatting or links may be broken.
This content is from our archive. Some formatting or links may be broken.
PPAs aren't all about Apple

How has it taken this long? Over the last three years, tech giants including Amazon, Facebook, Google and Microsoft have signed deals to buy energy from wind farms, but there has been one notable absentee from the PPA party: Apple.

That has changed this week, as Apple revealed that it has signed a power purchase agreement (PPA) to buy energy from the 200MW first phase of a 400MW project by Iberdrola subsidiary Avangrid in US state Oregon. The initial 200MW phase of the development is due to complete next year, and power one of Apple’s data centres.

Deals like this are good for wind developers and owners. They give financial certainty needed to start construction on schemes, even if corporate PPAs are in some ways less secure than state-backed PPAs: companies go bust more often than countries. In addition, Apple has the sort of covenant that any developer would love.

And we have seen a good number of these deals. In total, 2.5GW of corporate PPAs were signed in the US in 2015 according to the American Wind Energy Association, which fell to 1.6GW in 2016. We do not want to read too much into one drop but, in our view, this does show the corporate PPAs market is dependent on what is still a relatively small group of large companies.

That means the market must broaden its pool of energy buyers.

This is why we think more investors need to open their eyes to the opportunities for signing corporate PPAs with small- and medium-sized businesses. This is the focus of the PPA Partnerships reportthat we published this week with renewable energy company Apex Clean Energy, which focused on the potential for sub-50MW PPAs.

There are firms out there looking for the benefits that sub-50MW PPAs offer. They are far smaller than Apple, but many of these businesses will have ‘green’ targets to hit; will want the positive PR; and will want to lock in their energy costs for the long-term in order to mitigate against the impacts of future energy price rises.

But many will not know how to go about doing such deals. Corporate PPAs are still relatively new structures, and it can take time for businesses to get comfortable with the risks and benefits.
It is telling that a giant like Apple is only just doing so.

These smaller businesses also do not have Apple's resources, and so the role of securing a wind PPA will fall to someone who is likely not to be an expert in agreeing energy deals; and will have other things to do. It is tough to get the focus. Therefore, investors need to guide potential electricity buyers through the process.

But is it worth the effort? A PPA might only last 12 years, compared to the 25-year lifespan of a project, and so arguably does not offer investors the longevity they need. In the US, where projects of 100MW or more are commonplace, a PPA of under 50MW may also not give investors the scale required to make a project viable.

In our view, it is worth investors persisting to secure such deals.

First, the point about the size of these deals is a bigger issue in the US where projects are larger, but less of a problem in France or the UK. One 30MW PPA could be enough to buy all of the output from one project, as it was with BT’s deal at the 30MW Stroupster wind farm in Scotland.

Second, it is an untapped market – but a potentially valuable one.

The PPA Partnerships report includes case studies from Apex about how it made such deals work with manufacturing firms Avery Dennison and Steelcase. Investors may feel like agreeing such deals with smaller companies is a bigger risk than doing them with well-known multinationals, and certainly they can take a lot of time.

Ultimately, though, these are potential buyers. There are a lot of these smaller businesses out there and, if they want to sign sub-50MW PPAs, then those deals could make the difference between schemes being built and not. Apex is among those that are making them work, but we expect more to latch onto the idea soon.

There's more to life than Apple, but don't tell the iPhone junkies.

How has it taken this long? Over the last three years, tech giants including Amazon, Facebook, Google and Microsoft have signed deals to buy energy from wind farms, but there has been one notable absentee from the PPA party: Apple.

That has changed this week, as Apple revealed that it has signed a power purchase agreement (PPA) to buy energy from the 200MW first phase of a 400MW project by Iberdrola subsidiary Avangrid in US state Oregon. The initial 200MW phase of the development is due to complete next year, and power one of Apple’s data centres.

Deals like this are good for wind developers and owners. They give financial certainty needed to start construction on schemes, even if corporate PPAs are in some ways less secure than state-backed PPAs: companies go bust more often than countries. In addition, Apple has the sort of covenant that any developer would love.

And we have seen a good number of these deals. In total, 2.5GW of corporate PPAs were signed in the US in 2015 according to the American Wind Energy Association, which fell to 1.6GW in 2016. We do not want to read too much into one drop but, in our view, this does show the corporate PPAs market is dependent on what is still a relatively small group of large companies.

That means the market must broaden its pool of energy buyers.

This is why we think more investors need to open their eyes to the opportunities for signing corporate PPAs with small- and medium-sized businesses. This is the focus of the PPA Partnerships reportthat we published this week with renewable energy company Apex Clean Energy, which focused on the potential for sub-50MW PPAs.

There are firms out there looking for the benefits that sub-50MW PPAs offer. They are far smaller than Apple, but many of these businesses will have ‘green’ targets to hit; will want the positive PR; and will want to lock in their energy costs for the long-term in order to mitigate against the impacts of future energy price rises.

But many will not know how to go about doing such deals. Corporate PPAs are still relatively new structures, and it can take time for businesses to get comfortable with the risks and benefits.
It is telling that a giant like Apple is only just doing so.

These smaller businesses also do not have Apple's resources, and so the role of securing a wind PPA will fall to someone who is likely not to be an expert in agreeing energy deals; and will have other things to do. It is tough to get the focus. Therefore, investors need to guide potential electricity buyers through the process.

But is it worth the effort? A PPA might only last 12 years, compared to the 25-year lifespan of a project, and so arguably does not offer investors the longevity they need. In the US, where projects of 100MW or more are commonplace, a PPA of under 50MW may also not give investors the scale required to make a project viable.

In our view, it is worth investors persisting to secure such deals.

First, the point about the size of these deals is a bigger issue in the US where projects are larger, but less of a problem in France or the UK. One 30MW PPA could be enough to buy all of the output from one project, as it was with BT’s deal at the 30MW Stroupster wind farm in Scotland.

Second, it is an untapped market – but a potentially valuable one.

The PPA Partnerships report includes case studies from Apex about how it made such deals work with manufacturing firms Avery Dennison and Steelcase. Investors may feel like agreeing such deals with smaller companies is a bigger risk than doing them with well-known multinationals, and certainly they can take a lot of time.

Ultimately, though, these are potential buyers. There are a lot of these smaller businesses out there and, if they want to sign sub-50MW PPAs, then those deals could make the difference between schemes being built and not. Apex is among those that are making them work, but we expect more to latch onto the idea soon.

There's more to life than Apple, but don't tell the iPhone junkies.

How has it taken this long? Over the last three years, tech giants including Amazon, Facebook, Google and Microsoft have signed deals to buy energy from wind farms, but there has been one notable absentee from the PPA party: Apple.

That has changed this week, as Apple revealed that it has signed a power purchase agreement (PPA) to buy energy from the 200MW first phase of a 400MW project by Iberdrola subsidiary Avangrid in US state Oregon. The initial 200MW phase of the development is due to complete next year, and power one of Apple’s data centres.

Deals like this are good for wind developers and owners. They give financial certainty needed to start construction on schemes, even if corporate PPAs are in some ways less secure than state-backed PPAs: companies go bust more often than countries. In addition, Apple has the sort of covenant that any developer would love.

And we have seen a good number of these deals. In total, 2.5GW of corporate PPAs were signed in the US in 2015 according to the American Wind Energy Association, which fell to 1.6GW in 2016. We do not want to read too much into one drop but, in our view, this does show the corporate PPAs market is dependent on what is still a relatively small group of large companies.

That means the market must broaden its pool of energy buyers.

This is why we think more investors need to open their eyes to the opportunities for signing corporate PPAs with small- and medium-sized businesses. This is the focus of the PPA Partnerships reportthat we published this week with renewable energy company Apex Clean Energy, which focused on the potential for sub-50MW PPAs.

There are firms out there looking for the benefits that sub-50MW PPAs offer. They are far smaller than Apple, but many of these businesses will have ‘green’ targets to hit; will want the positive PR; and will want to lock in their energy costs for the long-term in order to mitigate against the impacts of future energy price rises.

But many will not know how to go about doing such deals. Corporate PPAs are still relatively new structures, and it can take time for businesses to get comfortable with the risks and benefits.
It is telling that a giant like Apple is only just doing so.

These smaller businesses also do not have Apple's resources, and so the role of securing a wind PPA will fall to someone who is likely not to be an expert in agreeing energy deals; and will have other things to do. It is tough to get the focus. Therefore, investors need to guide potential electricity buyers through the process.

But is it worth the effort? A PPA might only last 12 years, compared to the 25-year lifespan of a project, and so arguably does not offer investors the longevity they need. In the US, where projects of 100MW or more are commonplace, a PPA of under 50MW may also not give investors the scale required to make a project viable.

In our view, it is worth investors persisting to secure such deals.

First, the point about the size of these deals is a bigger issue in the US where projects are larger, but less of a problem in France or the UK. One 30MW PPA could be enough to buy all of the output from one project, as it was with BT’s deal at the 30MW Stroupster wind farm in Scotland.

Second, it is an untapped market – but a potentially valuable one.

The PPA Partnerships report includes case studies from Apex about how it made such deals work with manufacturing firms Avery Dennison and Steelcase. Investors may feel like agreeing such deals with smaller companies is a bigger risk than doing them with well-known multinationals, and certainly they can take a lot of time.

Ultimately, though, these are potential buyers. There are a lot of these smaller businesses out there and, if they want to sign sub-50MW PPAs, then those deals could make the difference between schemes being built and not. Apex is among those that are making them work, but we expect more to latch onto the idea soon.

There's more to life than Apple, but don't tell the iPhone junkies.

How has it taken this long? Over the last three years, tech giants including Amazon, Facebook, Google and Microsoft have signed deals to buy energy from wind farms, but there has been one notable absentee from the PPA party: Apple.

That has changed this week, as Apple revealed that it has signed a power purchase agreement (PPA) to buy energy from the 200MW first phase of a 400MW project by Iberdrola subsidiary Avangrid in US state Oregon. The initial 200MW phase of the development is due to complete next year, and power one of Apple’s data centres.

Deals like this are good for wind developers and owners. They give financial certainty needed to start construction on schemes, even if corporate PPAs are in some ways less secure than state-backed PPAs: companies go bust more often than countries. In addition, Apple has the sort of covenant that any developer would love.

And we have seen a good number of these deals. In total, 2.5GW of corporate PPAs were signed in the US in 2015 according to the American Wind Energy Association, which fell to 1.6GW in 2016. We do not want to read too much into one drop but, in our view, this does show the corporate PPAs market is dependent on what is still a relatively small group of large companies.

That means the market must broaden its pool of energy buyers.

This is why we think more investors need to open their eyes to the opportunities for signing corporate PPAs with small- and medium-sized businesses. This is the focus of the PPA Partnerships reportthat we published this week with renewable energy company Apex Clean Energy, which focused on the potential for sub-50MW PPAs.

There are firms out there looking for the benefits that sub-50MW PPAs offer. They are far smaller than Apple, but many of these businesses will have ‘green’ targets to hit; will want the positive PR; and will want to lock in their energy costs for the long-term in order to mitigate against the impacts of future energy price rises.

But many will not know how to go about doing such deals. Corporate PPAs are still relatively new structures, and it can take time for businesses to get comfortable with the risks and benefits.
It is telling that a giant like Apple is only just doing so.

These smaller businesses also do not have Apple's resources, and so the role of securing a wind PPA will fall to someone who is likely not to be an expert in agreeing energy deals; and will have other things to do. It is tough to get the focus. Therefore, investors need to guide potential electricity buyers through the process.

But is it worth the effort? A PPA might only last 12 years, compared to the 25-year lifespan of a project, and so arguably does not offer investors the longevity they need. In the US, where projects of 100MW or more are commonplace, a PPA of under 50MW may also not give investors the scale required to make a project viable.

In our view, it is worth investors persisting to secure such deals.

First, the point about the size of these deals is a bigger issue in the US where projects are larger, but less of a problem in France or the UK. One 30MW PPA could be enough to buy all of the output from one project, as it was with BT’s deal at the 30MW Stroupster wind farm in Scotland.

Second, it is an untapped market – but a potentially valuable one.

The PPA Partnerships report includes case studies from Apex about how it made such deals work with manufacturing firms Avery Dennison and Steelcase. Investors may feel like agreeing such deals with smaller companies is a bigger risk than doing them with well-known multinationals, and certainly they can take a lot of time.

Ultimately, though, these are potential buyers. There are a lot of these smaller businesses out there and, if they want to sign sub-50MW PPAs, then those deals could make the difference between schemes being built and not. Apex is among those that are making them work, but we expect more to latch onto the idea soon.

There's more to life than Apple, but don't tell the iPhone junkies.

How has it taken this long? Over the last three years, tech giants including Amazon, Facebook, Google and Microsoft have signed deals to buy energy from wind farms, but there has been one notable absentee from the PPA party: Apple.

That has changed this week, as Apple revealed that it has signed a power purchase agreement (PPA) to buy energy from the 200MW first phase of a 400MW project by Iberdrola subsidiary Avangrid in US state Oregon. The initial 200MW phase of the development is due to complete next year, and power one of Apple’s data centres.

Deals like this are good for wind developers and owners. They give financial certainty needed to start construction on schemes, even if corporate PPAs are in some ways less secure than state-backed PPAs: companies go bust more often than countries. In addition, Apple has the sort of covenant that any developer would love.

And we have seen a good number of these deals. In total, 2.5GW of corporate PPAs were signed in the US in 2015 according to the American Wind Energy Association, which fell to 1.6GW in 2016. We do not want to read too much into one drop but, in our view, this does show the corporate PPAs market is dependent on what is still a relatively small group of large companies.

That means the market must broaden its pool of energy buyers.

This is why we think more investors need to open their eyes to the opportunities for signing corporate PPAs with small- and medium-sized businesses. This is the focus of the PPA Partnerships reportthat we published this week with renewable energy company Apex Clean Energy, which focused on the potential for sub-50MW PPAs.

There are firms out there looking for the benefits that sub-50MW PPAs offer. They are far smaller than Apple, but many of these businesses will have ‘green’ targets to hit; will want the positive PR; and will want to lock in their energy costs for the long-term in order to mitigate against the impacts of future energy price rises.

But many will not know how to go about doing such deals. Corporate PPAs are still relatively new structures, and it can take time for businesses to get comfortable with the risks and benefits.
It is telling that a giant like Apple is only just doing so.

These smaller businesses also do not have Apple's resources, and so the role of securing a wind PPA will fall to someone who is likely not to be an expert in agreeing energy deals; and will have other things to do. It is tough to get the focus. Therefore, investors need to guide potential electricity buyers through the process.

But is it worth the effort? A PPA might only last 12 years, compared to the 25-year lifespan of a project, and so arguably does not offer investors the longevity they need. In the US, where projects of 100MW or more are commonplace, a PPA of under 50MW may also not give investors the scale required to make a project viable.

In our view, it is worth investors persisting to secure such deals.

First, the point about the size of these deals is a bigger issue in the US where projects are larger, but less of a problem in France or the UK. One 30MW PPA could be enough to buy all of the output from one project, as it was with BT’s deal at the 30MW Stroupster wind farm in Scotland.

Second, it is an untapped market – but a potentially valuable one.

The PPA Partnerships report includes case studies from Apex about how it made such deals work with manufacturing firms Avery Dennison and Steelcase. Investors may feel like agreeing such deals with smaller companies is a bigger risk than doing them with well-known multinationals, and certainly they can take a lot of time.

Ultimately, though, these are potential buyers. There are a lot of these smaller businesses out there and, if they want to sign sub-50MW PPAs, then those deals could make the difference between schemes being built and not. Apex is among those that are making them work, but we expect more to latch onto the idea soon.

There's more to life than Apple, but don't tell the iPhone junkies.

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Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.