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Utility-Scale Wind & Solar

Category: Energy Supply, Off-site Renewable Energy

As the cost of renewable energy becomes competitive with “brown” power, North American institutions of higher education are increasingly purchasing large-scale renewable energy, directly from utility-scale solar, wind, and hydro-electric power plants, and through utility-provided programs. These purchases deliver a host of environmental, economic, and other benefits, but navigating the market and successfully executing solutions is complex and requires a well-planned and implemented strategy.

Large renewable energy contracts deliver benefits due to their scale, e.g. mitigating up to 100% of scope two greenhouse gas emissions, and achieving energy price risk and cost savings that are material to budgetary planning (unlike onsite solar, and community solar, which are typically able to provide only a small portion of the electricity required for a campus, and can therefore only offer small risk and economic benefits).

Benefits

  • Mitigates up to 100% of scope 2 ‘purchased electricity’ GHGs
  • Can significantly reduce levelized cost of energy
  • Low out-of-pocket expense

Challenges

  • Renewable energy marketplace is unfamiliar
  • Solutions can be complex and take time to implement
  • Involves many stakeholders and typically requires president or board approval

Impacts

  • GHG Impact

    Enormous

    LSRE can mitigate up to 100% of scope two greenhouse gas emissions.

    To achieve these GHG reductions, buyers must maintain the right to claim the GHG benefits associated with renewable energy certificates (RECs) equivalent to the number of tons of carbon the buyer intends to deduct from their GHG inventory, i.e. one REC is produced for every MWh of electricity generated from a qualified renewable energy source. Buyers can buy RECs “bundled” with the energy that produced them, or “unbundled” from their energy supply, a.k.a. “unbundled RECs,” or “substitute RECs.” (However, if the buyer has renewable energy compliance requirements, they should ensure that their RECs adhere to those requirements).

  • Economic Impact

    Large Net Savings

    Utility-scale wind and solar projects are often competitive with conventional “brown” power supplies. The most attractive projects have the potential to significantly mitigate the risk associated with unpredictable energy prices over time, and furthermore can provide material cost savings compared to business-as-usual. Specific risk and economic benefits vary according to many factors, including the locations of the buyer and the project, the structure of the contract, and market conditions. Most LSRE buyers enter into contracts with expectations of realizing significant net cost-savings over the duration of the contract.

  • Feasibility

    Difficult

    LSRE is available to a wide range of higher ed buyers, including those in regulated and deregulated markets, public and private, small and large. However, each of the characteristics can impact the options available, the strategy for achieving the desired outcome, and the structure of the solution.

    Unique considerations

    • Wholesale versus retail solution
    • Project location, nearby (e.g. within the buyer’s state of province versus out-of-state and/or outside of the buyer’s electricity market)
    • Competitive process directly with project developers, versus working bi-laterally with a utility
    • Independent effort versus “aggregation” with other buyers, the latter of which may be required for smaller buyers
    • There are many ways for buyers and sellers to share risk and reward within a renewable energy contract

  • Timeline

    1-2 years

    LSRE purchasing typically takes 12-18 months from the time an advisor is engaged to the time a renewables contract is executed. Early phases should include defining goals and objectives, engaging and aligning stakeholders, developing a plan for execution, and ultimately implementation. There is typically at least another year from the time of contract execution to the time of a new project’s commercial operation date (sourcing from existing, a.k.a. merchant, projects can speed this timeline but loses claims to additionality). Thus, the complete timeline of a LSRE effort is typically at least 24 months from the time of formally engaging an advisor to the time a project is generating electrons.

  • Maintenance

    Low / None

    Higher ed institutions typically have no operations and maintenance burden since they are, with rare exception, not the owner of the LSRE project. Furthermore, LSRE contracts typically incent project owners to appropriately operate and maintain their projects in order to maximize energy generation.

  • Publicity

    Wow!

    LSRE can provide multiple opportunities for high-visibility publicity, including president and C-suite speaking/interview opportunities:

    • Press release upon LSRE contract execution
    • Press release at ground-breaking and/or commercial operation date
    • Site visits at ground-breaking, COD, and ongoing throughout the duration of the contract
    • Web-based project description throughout lifetime of project

Resources

Experts

  • Chris O'Brien Director, Business Development COHO Contact

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