Renewable Energy Market (REM) 2019 – Five Key Takeaways
At Renewable Energy Markets (REM) 2019, over 300 representatives from clean technology start-ups, multi-national corporations, the public sector and energy service providers explored the ideas transforming energy markets:
- Renewable Energy Credits (REC)
- Renewable Portfolio/Energy Standards (RPS/RES)
- Corporate Procurement
- Blended and Aggregated Products
- Renewable Natural Gas (RNG)
- Distributed Energy Resources (DER).
1. Renewable Energy Credits (REC) and Renewable Portfolio/Energy Standards (RPS/RES)
While many of the presenters in the workshops highlighted the onset of corporate procurement standards, carbon offsets and clean energy certification-type mechanisms as some of the key models and instruments used to drive growth in the renewable energy sector, Renewable Energy Credits (REC) and Renewable Portfolio/Energy Standards (RPS/RES) were the most frequently mentioned.
Jeff Deyette, Director of State Policy and Analysis at Union of Concerned Scientists at Union of Concerned Scientists (UCS), noted that RES policies will continue to be a primary driver of the development of renewables with 13 states having set, or are considering, 100% renewable energy or carbon emission standards/goals. Deyette also noted that the states are largely complying with their RES requirements and that compliance has been affordable, costing adopters merely 0.7% of the average retail electricity bill in 2012 to 2.6% in 2018 according to a study by the Lawrence Berkeley National Laboratory (LBNL). Jenny Heeter, Senior Energy Analyst at the National Renewable Energy Laboratory (NREL), highlighted that unbundled RECs account for about half of U.S. voluntary market sales, with more information soon-to-be launched in NREL’s 2018 Voluntary Green Power data.
Taiwan, Singapore and the Philippines were recognized as key Southeast Asian countries which have adopted voluntary market opportunities and initiatives to incite investments in renewable energy. Dr. Chih Wen Huang from the T-REC Center in Taiwan observed that there is a growing demand from the government and corporations with global supply chains for RECs. May Liew, Vice President at Singapore Power (SP) Group, who also presented at the Cleantech Forum SF in January 2019, pointed to RECs as paramount to achieving Singapore’s clean energy targets since the growth in renewables in the country is limited by space availability and the absence of an interconnected regional grid. Liew also presented SP’s blockchain-enabled REC Platform that serves as a market place for REC buyers and sellers and tracks REC transactions and lifecycle. The platform is linked to the International REC Registry (I-RECs), another monitoring tool that can be used internationally, established and governed by The International REC Standard (The I-REC Standard). Michelle Rogers, Director of Clean Energy Partnerships at Allotrope Partners, credited the growth of the renewable energy market in the Philippines to the RPS mandates on all utilities and the Green Energy Option Program (GEOP) that provides opportunities for large buyers to purchase off-site renewable energy sources.
2. Corporate Procurement
Speakers from Bank of America, BP, Schneider Electric, General Motors, Bloomberg and Workday shared their insights on corporate procurement of renewable energy and risk management practices. The key takeaway is that multinational corporations (MNCs) are increasingly engaging with the renewable energy market to serve their on-site load, meet their environmental sustainability goals or to diversify their risk/revenue streams.
The main deal/partnership structures highlighted were: Virtual PPAs (VPPAs), C&I offtake agreements, green purchasing agreements, aggregation deals, partnerships with CCAs, utility green tariffs and unbundled RECs, with VPPAs, unbundled RECs and green tariffs seemingly having the most clout.
Moreover, standards like Green-e®, RE100 and I-REC are setting benchmarks and facilitating the participation of MNCs in global renewable energy markets, yet there are significant risks to mitigate and barriers to overcome. Risk-mitigating methods include sleeve arrangements, safe harboring and fixed-volume price swaps. Moreover, lack of flexible deal structures and standardized documents, high sunk costs associated with internal learning curves, underdeveloped policies and market-based instruments governing their supply chain partners in emerging markets are common obstacles.
3. Blended and Aggregated Products
Another common theme that surfaced was the importance of deploying blended products/financing and aggregating small scale generation to accelerate the adoption of clean energy. Numerous presenters pointed to the surging demand for blended financing mechanisms from industry, for example, ones that incorporate a combination of green pricing, RECs and VPPAs to diversify risk. Moreover, there was a call for a deeper understanding of how the tax equity and credit worlds would view and assess risk.
In a workshop on small-capacity renewable energy aggregation deals, the audience got first hand insight into a promising corporate Renewable VPP deal, developed by BayWa r.e. In addition to emphasizing the joint benefits of developing marketing synergies and securing attractive prices for purchasing clean power, the panelists shared best practices from the day-to-day deal closing operations including gaining early internal stakeholder alignment. They agreed on the importance of having a single legal counsel and standardized term sheets in streamlining and accelerating the contracting process. Finally, the panelists stressed the crucial role of LevelTen Energy in coordinating project development, providing advisory and guidance to buyers and dealing with the various degrees of expertise among buyers and developers.
4. Renewable Natural Gas (RNG)
Representatives from Southern California Gas Company (SoCalGas), the Renewable Natural Gas (RNG) Coalition, 3Degrees, American Gas Association and the Renewable Hydrogen Alliance pointed to the importance of RNG as a baseload resource for the grid as well as a waste management or storage solution. RNG was also presented as an opportunity for gas utilities to innovate and participate in the renewable energy transition by capitalizing on their existing infrastructure.
According to keynote speaker Jeff Walker, Vice President of Customer Solutions at SoCalGas, the Dairy Renewable Natural Gas Facility by California-based Calgren Dairy Fuels, in partnership with SoCalGas, uses biogas technology to produce pipeline-quality RNG, using the methane produced from more than 75,000 cows as the feedstock by the end of 2019. The RNG that is produced is then injected into the SoCalGas pipeline system and supplied to compressed natural gas (CNG) refueling facilities. According to Walker, the RNG generated will be enough to fuel more than 1,200 class 8 heavy duty vehicles by the end of the year. Additionally, Detroit-based DTE Biomass Energy, a subsidiary of DTE Energy, announced the launch of the first RNG processing and interstate injection site in Wisconsin a few days after the conference.
5. Distributed Energy Resources (DER)
Another emerging theme at REM 2019, also one of the main energy topics at Cleantech Forum SF 2019, is the potential value that DERs can add to the electric grid.
Jonathan Hart, Senior Policy and Technology Specialist for DERs at the Center for Sustainable Energy (CSE), spoke about the opportunities and challenges of integrating DERs into wholesale markets using practical examples from CSE’s projects. Solutions the Center has implemented with hotels include pre-cooling buildings during off-peak hours to reduce cooling electrical demand during the peak periods for potential savings on energy and demand charges. By doing this, CSE plans to bid load reduction into the CAISO’s wholesale market as demand response. However, this type of project, per Hart, has difficulty capturing high economic value in energy markets alone, highlighting the need for forward capacity markets and other stackable value streams to enhance the economics. He also urged better ways to quantify and measure the value that DERs can provide to utilities, the grid, wholesale markets, and customers. There are start-ups addressing these tasks, including:
- PXiSE Energy Solutions, as described by founder Patrick Lee, is a DER management system provider for electric grid operators. It provides effective, real-time solutions for utilities using a suite of innovative grid-balancing tools such as advanced Battery Energy Storage System (BESS), power plant, microgrid and active power controls as well as unified Distributed Energy Resource Management Systems (DERMS).
- Apparent Inc. is another start-up looking to maximize the value from DER. Being eligible to form a CAISO-approved DER aggregation, Apparent Inc. provides energy management services and grid edge technologies with machine learning capabilities for power producers looking to participate in the wholesale electricity market. Maggie Alexander, Director of Business Development, took the audience through concrete cases of the deployment of Apparent Inc.’s proprietary igOS™ application on a building rooftop project, a campus and an eBus fleet program.
The main message that I left the conference with is: we have a tried and tested toolbox of policies, financial products, risk mitigating methods and technologies that are ready to be deployed at scale, with varying degrees, across countries and corporations. It’s our responsibility to leverage this toolbox with patience, grit and an open mind.
Keep an eye out for…More Aggregate Deals!
Renewable Energy Buyers Alliance (REBA) is planning to launch a report entitled Aggregating Small Energy Demand: How Five Companies Partnered to Build a New Procurement Model. This could spur further interest in small scale aggregation deals among MNCs and other small buyers.
Technology in renewable energy is evolving quickly. For the latest insight and opportunities to meet the next generation of start-ups and investors looking for partners, join us for Cleantech Forum San Francisco, 27-29 January.