Swedish energy group and burgeoning renewable energy leader Vattenfall has announced this week it intends to offer British businesses the opportunity to secure corporate Power Purchase Agreements (PPAs) direct from its 165 megawatt (MW) South Kyle Wind Farm from as little as 1 MW in a move that could revolutionize the idea of corporate PPAs.
Vattenfall has made several big moves in its effort to transition away from the traditional role of a fossil fuel energy provider, including going so far as to change its logo to demonstrate the company’s “determination to make it possible for everyone to live fossil-free within one generation.” Vattenfall is also behind the European Offshore Wind Deployment Centre (EOWDC) off the coast of North East Scotland, which is pioneering new wind technology and which recently installed the world’s most powerful wind turbine.
In another milestone move, which the company is describing as a potential “industry first,” Vattenfall announced on Monday that it would begin offering British business consumers the opportunity to purchase renewable electricity from its 165 MW South Kyle Wind Farm in South West Scotland through corporate PPAs. On the surface, this might not sound particularly revolutionary, but the key is in the details. Specifically, Vattenfall will allow British businesses to purchase as little as 1 MW of electricity through a corporate PPA arrangement.
This move by Vattenfall could lead a significant seachange to the way PPAs are viewed, making them available not just to large-scale companies such as Google or Ikea — companies that want the whole 165 MW, or similarly large numbers — but opening this important renewable energy tool to much smaller companies who simply don’t need more than 1 MW to power their entire business operations.
Power Purchase Agreements have quickly become the dominant force in companies seeking to transition away from reliance on fossil fuels and help drive the transition to a low-carbon economy. I recently dove into the intricacies of PPAs and the reality behind big-name companies announcing that they are “100% powered by renewable energy” — a claim that is entirely accurate, while also being a little misleading. The long and the short of it, however, is that PPAs are providing companies like Google, Microsoft, Apple, Ikea, and many others, the opportunity to play a leading role in the development of more and more renewable energy.
Vattenfall’s new approach to PPAs could subsequently open the door for much smaller businesses to begin taking their own place in the low-carbon economy transition and hasten even more renewable energy development.
“More businesses are starting to recognise the importance of taking a longer-term approach to tackling climate change in both their operations and through their supply chains,” explained Vattenfall’s UK Originator, James Hunt. “Corporate PPAs can be part of the solution to fix all or part of their energy prices.
“Vattenfall understands the importance business consumers place on building long-term relationships with their suppliers and we are pleased to be able to help UK business consumers with their climate goals by powering their sustainable consumption now and in the future.”
The 165 MW South Kyle Wind Farm is expected to generate 500 gigawatt-hours of clean electricity each year, and under the new corporate PPA offering will offer businesses the opportunity to secure electricity at index-linked fixed prices for periods between 10 and 20 years, in multiples of and from as low as 1 MW — which would provide a company with approximately 3 GWh of clean electricity per year. Such an agreement would not only provide British businesses with clean electricity, but would also provide them cheaper electricity at a long-term fixed price, providing economic savings and stability that reliance upon the traditional market grid does not provide.
Vattenfall’s move comes at the same time as it unveiled its Interim financial results for January to March of 2018, in which the company saw its net sales increase by 11%. The first quarter saw the company experience higher total electricity generation due primarily to increased hydro-power generation, and the successful non-subsidized bid for the Hollandse Kust Zuid wind farm in the Netherlands — made up of two 350 MW offshore wind farms that, upon completion, will be the first offshore wind farm to enter operation under a un-subsidized bid.
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