Part 1 of 4: during the month of July, Energy Edge is publishing a four-part series that will explore the decisions that need to be made before entering into a renewable energy purchase. Check out our blog each week for the next article.
Your CEO just publicly stated that your organization will be 50% renewable with respect to energy consumption by 2022. Are you prepared to issue an RFP for renewable energy? Are you aware of the different ways you can purchase renewable energy to meet your company’s goals? Do you understand the risks associated with different types of renewable purchases?
This four-part series will explore the questions that should be asked and answered before entering into a renewable energy purchase.
Here are six questions that anyone interested in buying renewable energy should answer before preparing an RFP:
- What am I going to do with the renewable energy I purchase? Am I going to use it to serve my load or am I just wanting to reduce the amount of electricity produced by fossil generation on the grid? This is the most important question and its answer will take you down very different paths. We will explore this more later.
- How do I determine whether I should buy wind or solar power? Both are renewable, but are the economics the same? Should I consider other renewable energy sources like geothermal or biomass?
- How much renewable energy should I buy? I consume 50 million kWhs per year and my CEO wants to be 50% renewable. So, should I buy 25 million kWhs of renewable energy?
- How do I economically evaluate rooftop solar or other behind the meter renewable generation? How do I determine the payback period? What are the major differences between a behind the meter renewable purchase and an off-site renewable energy purchase?
- What are the major risks I should consider? I have heard reference to terms such as busbar vs. market HUB delivery, as generated energy vs. guaranteed production, development term vs. delivery term security. What are the most important risk issues I need to be aware of?
- Who should I solicit renewable energy proposals from? I get so many calls from people who want to sell me renewable energy that I do not know who to listen to.
Understanding how your organization would answer the above questions prior to starting the procurement process is critical. This will allow you to develop a very clear request for proposals, establish the risk parameters your organization is comfortable with and ensure that what you purchase will achieve your organizational goals. Failing to address the above questions prior to embarking on a renewable energy purchase can lead to a prolonged procurement cycle, unnecessary risks, and overall increased costs, possibly beyond just the cost of the renewable energy purchase.
The next three articles in this series will provide insight into what you need to know in order to answer these questions. Check our blog next week for the second part of this four-part series.