The Rocky Mountain Institute’s Business Renewables Center has released a new report highlighting renewable energy procurement risks and mitigation strategies.
The corporate renewable market in the US has grown by leaps and bounds in the past five years, with corporate procurement rapidly expanding from a niche to a substantial part of the US electricity system. However, risk mitigation solutions have not kept pace with a diversifying and expanding corporate market and the issue of buyer risk has been raised with increasing frequency. This new report states that for its own long-term health, the market must move away from the current one-size-fits-all approach to a “many-sizes-for-all” approach to risk mitigation.
The Business Renewables Center’s 75-page report – A Corporate Purchaser’s Guide to Risk Mitigation – dives into five specific risks corporate buyers of utility-scale renewable energy commonly face including price, shape, basis, volume, and operational risk. The report reviews a range of mitigation strategies, including some that are widely available and some that are emerging in the market today.
“If your company has set a renewable energy target, then A Corporate Purchaser’s Guide to Risk Mitigation can help you better understand and manage the risks associated with renewable energy procurement,” said Dr. Nicola Piell-Moelter, Director of Sustainability Innovation at VMware (formerly at Akamai Technologies). “It’s also key to help suppliers better understand the unique challenges faced by this significant corporate market.”
The report highlights best practices for buyers to contract for off-site renewable power in a way that meets their risk priorities. “At Edison Energy, we advise our clients how to manage the long-term risk of renewable energy contracts for their competitive advantage while they meet their sustainability commitments,” said Jay Zoellner, CEO, Edison Energy, a BRC member. “This report lays out many of the tools available today to effectively control the exposure of future energy costs to technology development, regulatory change and new energy products.”
A lack of familiarity with risks makes it all the more important for buyers to understand them, their implications, and the applicability of different mitigation options. “As the corporate renewable energy market continues to grow, resources like A Corporate Purchaser’s Guide to Risk Mitigation are required reading for buyers, suppliers, and intermediaries alike,” said Erik Haug, Senior Manager, Business Development, Apex Clean Energy. “This report is key to expanding the market by helping all parties better understand the corporate renewables procurement landscape and by making transparent the potential solutions to mitigate risks.”