The Scotsman

Sustainabl­e energy supplies should be your goal

- Ronan Lambe

Amazon this week announced its third investment in a Scottish offshore wind farm and with 206 renewable energy projects internatio­nally, the e-commerce specialist is now the largest commercial buyer of green energy in the world.

With climate change increasing­ly on the corporate agenda, large businesses are increasing­ly considerin­g how they can procure energy in a more sustainabl­e way. Last year companies sourced a record 27.3GW of electricit­y through Corporate Power Purchase Agreements (CPPAS) despite the impact of the Covid-19 pandemic, according to research by Bloomberg New Energy Finance.

A CPPA allows a corporate entity to contract directly with a generator of electricit­y to use in its facilities and operations. CPPAS invariably contain requiremen­ts on the generator to provide evidence that the electricit­y is from a renewable or clean source, for example through the use of guarantees of origin. This in turn allows the business to demonstrat­e the sustainabl­e purchasing choice it has made.

Consumers are more influenced by the impact their spending habits have on the environmen­t than ever before while institutio­nal investors, encouraged by initiative­s at industry and government levels, are increasing­ly using their influence to shape the strategic direction of the companies in which they invest.

CPPAS are often, but not always, based on payment of a fixed price for a fixed period of time. This provides developers with sufficient certainty of revenue over a long enough period to secure the viability of their project, and commit to constructi­ng it.

For the business, demonstrat­ing that its purchasing commitment has resulted in the constructi­on of a new wind farm or solar park is a powerful message of its commitprov­iding

ment to sustainabi­lity, with far reaching benefits from branding to investor relations.

Several models of CPPA are in use around the world, for both projects which are physically connected to the corporate consumer and those which are remote and supply electricit­y via the local transmissi­on or distributi­on system. The CPPA may be a physical supply arrangemen­t, or a financial product price certainty to both parties without a physical supply of electricit­y, and it can combine supply of other commoditie­s, such as gas or steam.

The “powering down” of demand of many industrial consumers as a result of national Covid-19 lockdowns and other regulatory interventi­ons resulted in a cumulative global fall in electricit­y demand in 2020, and we have seen evidence that some companies are more hesitant to enter into new CPPAS at the moment, given uncertaint­y around electricit­y demand and energy prices. For example, retail clients with large numbers of physical stores are trying to establish whether the shift to online retail will be permanent and, if so, the impact on their store presence and electricit­y use.

Although difficult to say with any certainty, it feels more likely than not that any downward trend on CPPA deployment caused by Covid-19 will be temporary and businesses will begin to gradually return to certain pre-pandemic normalitie­s, meaning they can once again focus on sustainabi­lity targets and other longer-term concerns.

Ronan Lambe, Legal Director and renewable energy specialist at Pinsent Masons

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 ??  ?? 0 Amazon is investing in offshore wind
0 Amazon is investing in offshore wind

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