Collaborative solar purchasing brings buyers together to reduce the costs of solar energy.
With its stable pricing and strong generation during high-consumption hours, companies and government agencies are increasingly turning to solar power to meet their environmental targets. Yet for organizations with little experience in purchasing solar power, the process can be complicated and seem prohibitively expensive.
That’s why WRI is piloting collaborative solar purchasing initiatives, in partnership with the Joint Venture: Silicon Valley Network, Optony Inc. and the U.S. Environmental Protection Agency. These regional collaboratives will bring interested solar users together to increase demand and lower transaction costs.
Solar Opportunities on the Rise
Solar photovoltaic (PV) electricity can be an attractive option for companies and government agencies to shift to a reliable, renewable electricity source:
The recent Executive Order 13514, requiring federal agencies to reduce their GHG emissions by 28% by 2020 (below a 2008 baseline), provides more motivation to explore solar installation.
On the corporate side, voluntary climate commitments continue to grow and leading companies are installing ever larger solar systems. Many organizations have found that their large roofs (atop commercial buildings, warehouses, government offices, military bases, schools, etc.) are ideal locations for installing solar, and more efficient than solar on individual homes.
Solar companies are using power purchase agreement (PPA) to win customers by charging them for each unit (kilowatt-hour) of electricity rather than the whole system upfront.
To capture the opportunity for widespread solar adoption in these markets, a number of barriers must be addressed:
Transaction costs remain high for solar purchasing, in part because the industry is more fragmented and less standardized than “traditional” energy providers. Staff time for research and legal fees to draft new contracts are not cheap, and the first few megawatts of projects may not seem worth such investments.
Education takes time. If staff have to learn on their own about the solar market, financing, and technology, it can be overwhelming.
Demand is fragmented. The current patchwork approach of designing, permitting, contracting and installing systems for one facility at a time is inefficient. Customers are missing out on the economies and efficiencies of large scale solar.
New Possibilities for Collaborative Solar Purchasing
In an effort to make solar purchasing easier and more affordable for the private and public sectors alike, WRI and Joint Venture: Silicon Valley Network have both piloted on-the-ground collaborative solar purchasing initiatives. By organizing interested energy users in the same region, these types of initiatives reduce transaction costs, educate potential buyers, and aggregate demand so that projects can be installed at lower average cost per megawatt. The U.S. EPA has launched its Clean Energy Procurement Initiative in the Washington DC and metro areas, and is developing regional aggregated clean energy purchases at scale for multiple government and educational organizations.
We have now joined forces, with the additional expertise of Optony Inc. to write a best-practice guide to solar purchasing. The Guide will be published in early 2011, and additional resources will be made available on this website to help potential solar customers navigate the learning process, and find others who are interested in joining forces to buy solar together. Check back here to find new resources,
A Preview of What’s to Come:
- Best-Practice Guide to Collaborative Solar Purchasing
- Guidance on how to issue a joint Request for Proposals;
- Contract templates, like the Power Purchase Agreement that the Silicon Valley Initiative will use to buy solar;
- Information on locations where solar makes the most sense given current incentives;
- Connections to potential buyers who are looking to collaborate.
For more information on this project, contact Jenna Goodward
- Jenna Goodward, Associate
Jenna Goodward is part of the Business Engagement in Climate & Technology team, where she leads initiatives to pilot new investment and purchasing models for renewable energy.