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Corporates developing growing appetite for green PPAs, but still face obstacles

Image: Heineken.

Image: Heineken.

Companies and organisations in the UK are developing a growing appetite for renewables PPA structures, but still face obstacles including the perception of renewable projects and unprepared procurement teams.

The Solar Finance and Investment Europe conference heard earlier this month from a panel of experts in the field of power purchase agreements discussing the market’s potential and both the key drivers and barriers to deployment.

Speaking on the panel Steven Goodwood, environment health and safety manager at insulation manufacturer Xtratherm, described corporate PPA structures as a “win win” solution given their potential benefits for both a company’s bottom line and green credentials.

“As a big company we have targets as to what we’re supposed to be doing, so we need to make sure we’re spending the money we do spend wisely.

“With regards to energy expenditure we’re always looking at ways we can do that. We also have the environmental side, and our customers demand we have very good green credentials,” he said.

Vikas Ahuja, energy manager at Imperial College NHS Trust, revealed that the trust had invested more than £8.5 million over the last five years – provided by Salix Finance – to roll-out energy efficiency and renewable technologies in a bid to reduce its energy and fuel costs which exceed £12.5 million.

Having already “done as much as we could” in energy efficiency, Ahuja said PPAs would be a more important approach for the trust in the next few years as it looked to make its energy supply greener.

Ahuja also revealed his trust would be concentrating mainly on off-site PPAs after concluding that there were not many suitable rooftops for solar or wind deployment on its estate, which is mainly based in London.

Elizabeth Reid, partner at law firm Bird & Bird, said there were a wide variety of reasons why PPAs had become more prominent. “It’s a mixture. I think a lot of the corporates certainly in the last three to five years have really started taking renewable energy targets very seriously along with just seeing the benefits of fixing their energy price.

“Energy prices go direct to their bottom line so there’s a real economic driver for these corporates that, I think when we first started talking to these more than five years ago, not many were interested in,” she said.

However Reid also added that there had been some barriers when it came to identifying the right teams within companies or other corporate structures to discuss or negotiate such structures with, noting that there was rarely a dedicated energy team and the task was commonly left in the hands of broader procurement teams with other priorities.

Søren Kjær Petersen, managing director at Centrica division NEAS Energy, added his belief that renewables deployment is still regarded as a bigger and more complex project than it actually is, preventing smaller companies from getting on board.

“I think the big blue chip companies – for instance Google – having wind parks in the Nordics and consuming the power elsewhere in Europe… you need a certain size to enter into projects like that and we haven’t got to a point yet where we can start breaking that down to smaller companies,” he added.