In a bid to significantly accelerate the purchasing process for clean energy and help companies execute on their decarbonization goals, Google announced a collaboration with renewable transaction infrastructure provider LevelTen Energy that has developed a faster and easier RFP process for Power Purchase Agreements (PPA).
According to Google, the new more standardized solution can speed up the time to negotiate and execute clean energy PPAs by around 80%, accelerating clean energy deployment and opening the market to new buyers.
Google parent Alphabet announced a 24/7 Carbon-Free Energy (CFE) ambition in 2020, aiming to run its entire business on carbon-free energy by 2030, and the company has actively pursued initiatives to facilitate the deployment of clean energy by other organizations, including partnering with major cities to help them move to 24/7 CFE, and launching the 24/7 Carbon-free Energy Compact to work with companies, governments and other stakeholders to enact policies critical to fully decarbonize the world’s electricity systems.
Under the new collaboration, Google and LevelTen are piloting an approach to address some of the key issues that slow down and complicate the clean energy purchase process, primarily targeting the RFP negotiation process, which Google said is “lengthy, complex, and unique to every buyer and seller,” and can “can drag on for anywhere from ten months to more than a year, increasing the cost for both buyers and sellers.” In addition to extending the length of the process, the negotiations can also slow the development of clean energy projects, with the companies noting that sellers typically need to finalize PPAs before investing in the projects.
To address these issues, the new approach developed a faster and easier RFP process, with features that provides sellers the flexibility to customize the ways in which they offset risk and requires them to agree to those terms when submitting a proposal, creates transparency for sellers to verify how their offers are evaluated in real time, reducing the risk of entering into negotiations, and enables sellers to create pricing based on the final contractual details, rather than speculating on terms that can change during negotiations. Google and LevelTen also designed a PPA “that’s already risk balanced,” to help avoid extended negotiations.
According to the companies, the new approach has already been used to enable clean energy contracting in two months, compared to traditional deals which can take more than a year. The companies said that they expect to make the new approach widely available to buyers and sellers later this year, adding:
“Over time, we’ll continue to make improvements that enable this to become a new standard for clean energy procurement. The clean grid of the future may be sooner than we think.”