Your company just tasked you with finding ways to meet your company’s aggressive energy or environmental goals while minimizing costs. What do you do first? The best initial step is to consider all your options.
Energy efficiency is a tried-and-true long-term energy savings option, however actual reductions from and payback periods for efficiency investments have constraints and can vary widely. Energy Attribute Certificates (EACs) – referred to as RECs in North America – remain one of the easiest and most affordable ways for companies to use renewables, but they still require a capital investment and do not necessarily provide a story of additionality that management may be seeking. What about a Financial Power Purchase Agreement (PPA)? Like many companies, you may decide to invest in large-scale renewable energy through a PPA, as they are a great way to meet energy and environmental goals, including additionality, without an upfront investment.
To succeed with a Financial PPA, you will need a solid go-to-market strategy to attract the most cost-competitive and least risky results from the market. While it is possible for a company to run a solicitation process solo, commercial, industrial, and institutional (C&I) buyers are often unprepared for the significant time and resource commitment required to design a well-tailored Request for Proposal (RFP). This process requires comprehensive financial and risk analyses on potentially hundreds of responses, as well as educating and working with a diverse set of stakeholders to champion a PPA project within a company. An experienced renewable energy advisor offers value by drawing on broad market perspective and leveraging relationships with a wide variety of developers to run a competitive PPA process efficiently and effectively.
The Schneider Electric team serves C&I customers through custom RFP that gives a transparent view into the market and creates competitive tension among top developers. We apply a deep understanding of risk mitigation and the economics of a Financial PPA to align processes and acquire the appropriate internal stakeholder approvals at every level. For clients unsure of how to rank project results, we develop custom quantitative scoring to assess risk and reward for each offer. A thorough evaluation of all submissions for project execution risk – including permitting status, land control, interconnection, any conditions precedent, and community support – allows the client to comprehensively compare project offerings on an “apples-to-apples” basis to determine the best economics.
Once final projects are determined, we co-draft a custom term sheet, based on the client’s and outside counsel’s requirements, and facilitate term sheet negotiations to decide on a final price and negotiate the exclusivity period. The competitive RFP process is truly critical to secure these final steps of exclusivity before negotiation. Our C&I customers are consulted every step of the way and have full access to all RFP submissions. The Schneider Electric team also helps insulate clients from loss of opportunity by maintaining a robust roster of backup projects.
So here you are, prepared to take the next step and work to find the best possible project options that lend the highest ROI, meet upper management’s expectations, and accelerate your renewable energy and carbon reduction goals. Our global team of industry experts brings together a wide array of skills to support your buyer’s journey at any stage, engage the right stakeholders across your organization, and execute the best deal in the market. Ready to take the first step towards a diversified energy portfolio? Get in touch with our strategic renewables team today.