Customer Renewables Monthly November 2018

Welcome to the latest issue of Customer Revolution Monthly
from David Gardiner and Associates!

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Customer Renewables Monthly
November 2018 Renewable Energy Policy and Market Action Alert

Large institutional buyers are changing the energy landscape as we know it. In the last five years, Fortune 500 companies and other large institutions, such as the military and universities, have begun to transform electricity markets by ramping up their purchases of renewable energy. David Gardiner and Associates launched this newsletter to identify and analyze the policy and market trends that define this historic change.

Introducing the Customer Renewables Initiative

Today, David Gardiner and Associates is renaming our Customer Revolution Project to the Customer Renewables Initiative. The new name reflects the massive shifts in U.S. renewable energy markets and the work underway to accelerate these markets to the levels required to lower our greenhouse gas emissions.

Corporate sustainability commitments around renewable energy use are no longer a revolutionary concept. Direct sourcing of renewables has grown from highly-customized, focused projects from unique corporate leaders to an accepted financial, risk, and climate-management strategy utilized by almost half of the Fortune 500. The changes in the markets over the last five years are incredibly important.

Looking back at 2013:

24 companies had set specific goals for renewable energy use;
Four companies executed five power purchase agreements (PPA’s);
NV Energy enacted the first “green tariff;” and,
The levelized cost of utility-scale wind and solar were around $70 and $100 MWh, respectively.

As of November 2018... read more from David.

Solar and Wind Are the Cheapest Sources of New Generation in Major Economies

On November 8, Lazard released the latest edition of its Levelized Cost of Energy (LCOE 12.0) analysis. The analysis reviews various generation technologies on a $/MWh basis, including sensitivities for U.S. federal tax subsidies, fuel prices, and cost of capital. Notably:

The mean LCOE of utility-scale solar PV technologies has declined approximately 13 percent from last year;
The mean LCOE of onshore wind has declined nearly 7 percent from last year;
In some cases, alternative energy costs have decreased to the point that they are now at or below the marginal cost of conventional generation:
- The low-end levelized cost of onshore wind energy is $29/MWh, $7 lower than the average marginal cost to operate a fully depreciated coal plant: $36/MWh
- The low-end levelized cost of utility-scale solar energy (PV thin-film) is nearly identical to the average marginal cost of coal: both are $36/MWh.

Bloomberg New Energy Finance (BNEF) conducts a similar levelized cost of energy analysis on a biannual basis. Their latest 2H 2018 LCOE update states that unsubsidized solar and onshore wind are now the cheapest source of new bulk power in all major economies except for Japan.

BNEF predicts that by 2030, the cost of new coal and gas plants will remain relatively unchanged; however, the cost of new utility-scale solar PV will drop by 41 percent and the cost of onshore wind will be reduced by 25 percent.

What we're reading:

It's Not Just Facebook and Google Buying Clean Power Anymore – Bloomberg

Facebook, TVA solar projects to nearly double Tennessee and Alabama solar – PV Magazine

Vail Resorts Announces Long-Term Wind Energy Contract – MarketWatch

New Texas IKEA To Feature Company’s 55th U.S. Solar Project – Solar Industry

Walmart plans 23 MW of solar for Illinois facilities – Solar Power World

UC Santa Cruz plans solar + storage system – Smart Energy Decisions

K-State will save $200,000 a year by tapping into this natural resource – The Kansas City Star

Chicago challenges businesses to power buildings with renewable energy – Smart Cities Dive

P&G hits goals, sets new ones – Smart Energy Decisions

Source: Lazard Levelized Cost of Energy 2018

Microsoft Announces a New Risk Mitigation Tool for Power Purchase Agreements

In October, Microsoft, with REsurety and Nephila Climate, announced a new contract structure designed to mitigate some of the risks associated with corporate power purchase agreements (PPAs), called volume firming agreements (VFAs). These contracts provide weather-related risk protection within a PPA. VFAs are intended to help potential buyers who remain challenged by the complexities and risks that need to be managed within the transactions.

Brian Janous, Microsoft’s general manager of energy and sustainability, notes that Microsoft is “confident that innovations like the VFA will make it cheaper and easier to procure renewable energy, enabling corporate buyers of all sizes, as well as retailers, to play a role in enabling the transition from fossil fuels to clean energy.” Microsoft has published a short white paper on VFAs with REsurety and Orrick; available here.

STATE POLICY AND MARKET NEWS

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Renewable Energy Sees Several Wins During the Midterm Elections

While the clean energy sector saw mixed results from several ballot measures calling for more renewable energy during the Midterm elections earlier this month, the political landscape has certainly shifted. In particular, the election of pro-clean energy governors looks very promising for the renewable energy sector.

Most notably, five governors-elect in states with a combined population of 26 million put forth campaign goals of 100 percent renewable electricity. These commitments should result in wind and solar energy growth in Colorado, Connecticut, Illinois, Nevada, and Maine. Additionally, the incoming governors of New Mexico and Oregon strongly endorsed renewable energy.

The U.S. Military Continues to Develop Clean Energy

A new report released by the Association of Defense Communities, Beyond the Fence Line: Strengthening Military Capabilities Through Energy Resilience Partnerships, highlights several of the clean energy and microgrid installations supporting military bases across the country.

The report notes that access to renewable energy and resilient energy systems is favorable for the military. In an interview, Tim Ford, CEO of the Association for Defense Communities, noted that, “The Department of Defense has made energy resilience a priority, and communities and states who can help achieve this goal will be in a stronger position to retain missions and attract new ones. It can also improve the resiliency of communities, which is important when you have 70 percent of military families living off-base.”

EVENTS
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GreenBiz 19 – February 26-28 in Phoenix, Arizona

Registration is open for GreenBiz '19. Join more than 1,200 influential sustainability leaders for a look into the pressing challenges, emerging trends and biggest opportunities in sustainable business today.

PROFILES IN THE CUSTOMER REVOLUTION
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Featured Large Customer of the Month: City of Philadelphia

The City of Philadelphia announced that city-owned buildings will get 22 percent of their electricity from a new solar farm, if an ordinance introduced by the City Council earlier is passed. The 70 MW solar farm, which would be constructed in Adams County, would be the largest solar farm in the state. Under the 20 year deal, the electricity would be used to power a portion of city-owned buildings such as City Hall, Philadelphia International Airport, and the Water Department. Ultimately, Philadelphia has pledged to get 100 percent of its electricity from renewable sources by 2030.

Philadelphia is not the only municipality leading the way with solar. Earlier this month, Mayor Jim Kenney was one of 200 mayors from across the country to sign a letter pledging to make solar energy a “key element” of energy plans moving forward.

Join the conversation about the customer revolution on Twitter @CustomerRe new and please email isabel@dgardiner .com if your company would like to be featured in the next Customer Renewables Monthly.

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