Companies are turning to renewable PPAs all over the world to manage energy price risk, to meet environmental goals, and to save money. The fall of the cost of wind and solar power means that there is no better time to contract for one of these long-term deals. But what is lesser known is the importance of establishing an ongoing PPA management plan to maximize these benefits.
The PPA process doesn’t stop when ink meets paper. If anything, once the contract is complete, the real work of managing a PPA begins. For many companies, that work presents new challenges. The PPA might be the longest-term contract they’ve (ever!) entered. For others, the expectation of managing a new contract—which may be quite complicated depending on how the deal is built and how the environmental attributes from the deal are applied—can be daunting, especially for companies with large electricity footprints, distributed load, or a slim staff.
Operational management services from companies like Schneider Electric can help deliver the additional assurance and bandwidth that companies need to feel comfortable with their PPA. Here are 3 key reasons to look at these value-added packages.
You could save more money.
Many PPAs are designed as “fixed-for-floating” swaps, in which the corporate buyer agrees to a fixed price for power for their PPA. This fixed price is then compared to the floating market price. When the market price for power is higher than the contracted PPA price, company gets a rebate from the developer, which is how PPAs can help companies save money on their electricity costs over time—sometimes into the millions of dollars.
Verification of invoice accuracy and PPA performance becomes critical once a contracted project becomes operational. Even minor errors in billing can have a significant impact and result in many thousands of dollars in incorrect invoicing or performance reporting.
An operational services provider continually verifies the accuracy of invoices and PPA performance and can be instrumental in catching errors. Learn more about how Schneider Electric helped one of our clients save $30,000 from a single invoice in our new eBook.
You can keep your stakeholders informed.
PPAs come with increased scrutiny. The large-scale nature of the deals, combined with their risk profile, means that they often require the approval of C-suite officers or even the Board of Directors when contracting. This results in heightened awareness and sensitivity to PPA performance.
The right operational services provider can help energy managers and sustainability teams stay closely connected to their PPA, ensuring that the project performs as planned and that other counterparties are fulfilling the terms of the agreement. This oversight makes it easier to keep management, employees, and investors informed.
It’s important to keep customers and competitors informed, too. Increasingly, companies are using sustainability goal-setting and action to differentiate themselves. To keep abreast of the marketplace, smart companies communicate how they are advancing on topics like renewable energy acquisition, carbon reduction, and more. An operational services provider like Schneider Electric can apply their expertise to help develop communication tactics and strategies that give companies a leading edge.
You can give yourself peace of mind.
It’s easy to feel overwhelmed by the responsibilities of managing a PPA. How will the company handle the energy attribute certificates (EACs) from the project? If those EACs must be retired or cancelled in multiple markets, who will ensure that they are? Will the company be able to meet its goals purely with the EACs from the project—or will additional, unbundled EACs need to be purchased to make claims? Is the project counterparty trustworthy? Is the project performing as expected?
Gone are the days when a single utility bill told companies what they needed to know about energy spend. Today, the growing complexity of energy management makes this function more critical than ever before. And it’s a daunting task.
An operational services provider can give the assurance that companies—and energy managers—need to rest easy. By managing multiple data streams, providing EAC retirement and cancellation services, and scrutinizing PPA performance against contracted terms, managed services can let companies rest easier when it comes to large-scale renewable investments.
To learn more about the changing role of energy managers, the reasons why PPA management is crucial, and how we’ve helped our clients save millions of dollars on their PPAs, read our new eBook.