The renewable revolution is well underway, but it remains plagued by red tape and momentum-killing bureaucratic processes. The solar and wind industries have both been bogged down with major supply chain delays over the past year, and once the projects are finally in place, a snarl of rules and regulations pose increased impediments to actually connecting those projects to the grid. But it looks like at least one of the bottlenecks faced by clean energy hopefuls – so-called power-purchase agreements (PPAs) – could be dramatically improved in the near future thanks to pressure from the private sector.
The private sector – and especially the tech sector – has long been one of the primary drivers of clean energy expansion in the United States. Corporations are responsible for buying tens of gigawatts of wind and solar power each year, and that trend is on a major growth trajectory. Regardless of who has been in office and what the federal government’s stance has been on climate and energy, Silicon Valley has pressed forward with its purchasing, investing, and development of renewable energies. But these big tech companies are growing frustrated with the extremely long process for purchasing power.
In their current form, PPAs take a year or more to become finalized. The lengthy process requires either bilateral negotiations between the parties, or must be facilitated by a Request for Proposal (RFP). The RFP-to-PPA approach is the most common, but the related negotiations are complex, context-specific, and plagued by uncertainty and unpredictability. In short, they are a complete pain in the neck.
At the rate that the renewable industry is evolving and advancing, and in the context of a particularly volatile moment for the energy market, the current timeline for PPAs is an eternity. “Most critically, the cost of clean power, and the prices that buyers are willing to pay and project developers are willing to offer, can change dramatically,” a recent report from Canary Media states. If the pillars of a deal change dramatically by the time the deal is finally inked, companies are (understandably) more likely to balk and even drop the deal altogether. And that’s not just bad news for the parties involved, it’s bad news for the renewable revolution – and the climate – writ large.
But Google is determined to fix it. Just last month, in partnership with clean energy marketplace provider LevelTen Energy, Google presented a new model for RFPs and PPAs which would dramatically simplify the process, allowing corporations to purchase clean energy with much greater speed and efficiency. According to the press release, the model “reduces the time to negotiate and execute a clean energy power purchase agreement (PPA) by roughly 80%.” Google says that this re-imagining will bring them one step closer to the company’s own espoused goal of operation on 24/7 carbon free energy.
“A significantly faster and easier RFP process [...] also stands to do much more for the power industry broadly by helping standardize the buying and selling of clean energy,” the press release goes on to say. “This makes it easier for all types of end-use buyers to purchase new additional carbon free energy and expands the marketplace to create access for smaller sellers to participate.”
The PPA issue is far from the only problem plaguing green energy expansion, however. According to a recent McKinsey report, the main hurdles that the sector desperately needs to mitigate or otherwise innovate around are a lack of sufficient and affordable land, long and unpredictable development timelines, and aging grids that are wholly unprepared for an influx of clean energy.
McKinsey’s recommendations to developers include the suggestion to “create agile and lean processes across the organization.” Google seems to be doing just that at their end of the clean energy supply chain, which is a promising step forward. But this kind of ingenuity and initiative will have to be spread across the entire industry at every level in order to scale clean energy up and out at the rate needed to sufficiently cap greenhouse gas emissions and avoid the worst impacts of climate change.
By Haley Zaremba for Oilprie.com
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