The two new tools, a Request for Proposal (RFP) template and a Term Sheet template, aim to bring standardization to the corporate market for offsite renewables, and to serve as a starting point for companies still learning about the ins-and-outs of the transaction process.
Transactional Templates for Renewable Energy Contracts
Ian Kelly | Business Renewables Center
Rocky Mountain Institute’s Business Renewables Center (BRC) released two transactional templates that will help unify the market around key deal details. The two new tools, a Request for Proposal (RFP) template and a Term Sheet template, aim to bring standardization to the corporate market for offsite renewables, and to serve as a starting point for companies still learning about the ins-and-outs of the transaction process.
What challenge does the transactional templates solve for BRC members?
Many corporate buyers of renewable energy, when considering a transaction for the first time, are unsure what range of terms and conditions a term sheet or RFP should include. Furthermore, it can be difficult for any market participant to know where a reasonable position would be on any of those terms and conditions, based on the activities of others in the market. These BRC documents, developed with extensive industry input, address both challenges.
What is the main benefit of the new templates for the broader corporate procurement market?
For this market to continue to grow over the long term, we must ensure that the deals struck today reflect a fair allocation of risk. This will allow the corporate PPA to attract the necessary capital to build the farm, and it also reduces the chance that a corporate buyer takes on too much risk that it cannot effectively manage. Our work at BRC is aimed at identifying the midpoint on this risk allocation, we will see more successful transactions and thereby further accelerate market activity.
What is the Business Renewables Center and how does it help corporations reach renewable energy goals?
The Business Renewables Center, or BRC, is an initiative of the nonprofit Rocky Mountain Institute that accelerates procurement of renewable energy by large corporations at very large (i.e., utility) scale. The BRC raises awareness of the opportunity for corporate buyers and how they can best pursue it; has built a community of corporate renewable energy buyers, power project developers, and others who support this market; and produces various products that allow corporate buyers to procure renewable energy faster and cheaper.
What is the goal of the Business Renewables Center?
The BRC's ultimate goal is to see a cumulative additional 60 GW of utility-scale renewable energy capacity installed because of corporate procurement by the year 2030.
What are some of the milestones from this initiative?
After launching the BRC in November 2014 with 28 founding member organizations, we have grown to 181 today. This market has likewise grown from 50 MW of new capacity added in 2012 to an aggregate 4,800 MW in 2015 and 2016. 92 percent of all transactions have involved at least one current BRC member organization.
Can you give us some examples of projects that have come online with the assistance of the BRC process?
It is difficult to take credit for any specific project; our role is primarily to help corporate buyers pursue deals cheaper and faster. As noted above, 92% of all deals to date have involved at least one current BRC member organization.
What is the outlook of 2017 for corporate purchasing of off-site renewable energy?
We expect a strong year. 2015 was a banner year, 2016 saw a bit of a hangover in the first half before finishing strong, and corporate requests for proposals in the market today represent a massive amount of potential additional renewables. We see not only some companies that have completed past transactions returning for more but also many companies, from an ever-widening array of sectors, entering this space for the first time.
Do you think the newly elected government will change the course of this trend?
No, because the ultimate drivers of this trend are market-based: the costs of renewables continue to decline, even on an unsubsidized basis. Put another way, this trend does not rely on friendly federal policy: the two major sources of support for large-scale renewables at the federal level are in the form of tax credits that already are scheduled to fall over time and ultimately expire in a few years.
About Ian Kelly
Ian works primarily on RMI’s Business Renewables Center team and focuses much of his time on product development. He currently is leading the task force on risk allocation, which will result in the delivery of a primer on the topic at the May 2016 conference, and an analysis of the fair value of new wind or solar plants across the U.S. He previously managed the creation of the BRC Marketplace and authored the BRC’s Deal Structure Primer, Economic Analysis Primer, and Deal Process Guide.
Ian joined RMI after completing a master’s degree in Energy & Environment at Duke University. Among his activities there, he conducted an analysis of the feasibility and environmental impacts of incorporating renewable energy, energy storage, and energy efficiency into a proposed islanded microgrid to power an artisanal diamond mine in Sierra Leone and was part of a multidisciplinary faculty and student research team working to develop an energy disaggregation system.
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