2. Be prepared in case of project delays
Delays in the global supply chain may impact the timeline of projects, which are often dependent on shipping schedules and manual labor. While delays are uncertain, companies may have to adjust to the possibility of new project timelines and plan to cover any gaps in supply contracts by extending or renewing existing contracts to avoid holdover rates. Companies that face project delays may need to find short-term solutions to meet sustainability goals in the interim by purchasing RECs.
Many large developers have robust procurement teams with access to a portfolio of assets and can help bridge the delay with RECs.
3. Take a portfolio approach to balance risk
Virtual PPAs fix the price of energy for a certain portion of a buyers load, leaving the decision to fix or float the remainder of their energy spend. By leaving a portion of their spend exposed to spot prices, companies can benefit from collapsing wholesale prices now, which will offset some of fixed-price premium.
To illustrate the concept, consider a PJM customer that uses 100,000 MWh annually and contracted for roughly half of their annual consumption in a renewable PPA in 2015. We can see in the chart that when wholesale energy prices are falling, leaving the remainder of the customer’s load exposed to spot prices would have resulted in lower overall energy costs as compared to entering into fixed-price contracts.
4. Continue to keep momentum and evaluate all renewable energy options
Demand for corporate renewable energy is driven by a variety of factors. Corporations are striving to be good corporate citizens and community partners through more sustainable business practices. As an increasing number of employees, investors and consumers are all asking organizations to engage in more sustainable activities, this is resulting in companies embracing climate action.
Because the process of renewable energy procurement can take years from commitment to commercial operation, it’s more important than ever to keep the momentum going – even if your organization has put the pause on transacting.