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Renewable energy procurement services
Supporting you on your renewable energy journey
Renewable energy procurement is increasingly becoming an essential part of an organization’s energy strategy. When it comes to a renewable energy strategy, we can help you assess the options, financial considerations, time to implement, complexity, risk, environmental benefits, and ability to support your business goals.
Why renewable energy procurement now?
Corporations across all industries are facing pressure from stakeholders, suppliers, competitors, employees, and customers to become more sustainable. As a result, many companies are setting science-based targets and goals. Procuring renewable energy is often a key aspect of meeting these corporate goals.
Renewable energy procurement strategy options:
- Purchasing Renewable Energy Certificates (RECs)
- Procuring green tariffs
- On-site or near-site renewable generation – "behind-the-meter" power purchase agreement, lease or investment
- Off-site generation through a physical power purchase agreement or a virtual power purchase agreement (VPPA)
VPPA: The energy procurement service of choice
Many corporations today procure renewable energy through a VPPA due to these key outcomes:
- Meet sustainability goals and increase transparency in sustainability reporting
- Fund renewable energy projects
- Receive financial value – potential positive projected settlement value (PSV)
- Maintain flexible operational status
- Brand benefits by supporting renewable development
What is a VPPA?
A VPPA is purely a financial transaction between a renewable energy developer and a corporate, where the corporate guarantees that the developer will receive a fixed price for their energy; in exchange, the corporate receives RECs for every megawatt hour (MWh) of clean energy generated and sold by the developer.
Step 1: Corporate signs a VPPA with a project developer for a fixed price per MWh with the goal of obtaining the generated RECs. This allows the project developer to secure financing.
Step 2: Developer sells the generated electricity into the wholesale market on corporate’s behalf at the current market price. RECs generated by the project will be given to corporate.
Step 3: Developer will send/receive settlement to/from corporate on a monthly basis.
Step 4: Corporate continues to purchase electricity from their current utility as normal and uses RECs to neutralize Scope 2 emissions. Corporate avoids the cost of purchasing RECs from a third-party source.
Key procurement process considerations
- The process takes time and deal team education and alignment should not be rushed. The process will go more smoothly, and issues will be easier to overcome, if the deal team members understand and agree on the strategic goals.
- A VPPA should be considered as a part of your renewable energy strategy to ensure it aligns with broader sustainability priorities.
- Engaging your accounting and tax departments early on and throughout the process is important in determining how the VPPA will be accounted for and treated for tax purposes.
How we can help
With hundreds of developers and thousands of VPPA offers in the marketplace, navigating those options can be a daunting task, and it's important to have an advisor working side by side with you to navigate this journey.
That's where Deloitte comes in. We leverage our subject matter knowledge across renewable energy, ESG, financial analysis, accounting, and tax to help companies through the renewable energy procurement process. We use the platform of our alliance partner, LevelTen Energy, to run the RFP process and provide the analytics required to assess the bids and secure a VPPA that meets your requirements.
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