Last year, European corporate renewable energy activity doubled, underscoring the need to consider sustainable ways of consuming energy. While this presented opportunities for ‘green’ energy companies only large companies could purchase green energy projects.
This is changing with LevelTen’s entry into the European marketplace. Now, businesses of any size across Europe will have an accessible, transparent and easy way to procure clean energy and join the fight against climate change.
To discover more, Digital Journal spoke with Jason Tundermann, VP of business development at LevelTen Energy.
Digital Journal: Are businesses taking renewable energy seriously?
Jason Tundermann: More and more companies are joining the RE100 and We’re Still In initiatives so it’s safe to say that businesses are taking renewable energy seriously. Companies are starting to realize that it makes sense, not just environmentally, but economically—as green power is starting to edge out brown power in lower pricing.
DJ: Are renewable energy sources only for ‘big business’?
Tundermann: The reality is that not every company has Apple’s balance sheet, so creating transaction structures that suit all companies is vital. It’s not that the economics aren’t compelling, but rather that smaller companies often have credit issues and/or they might not be large enough to buy all the power from the largest, most economical renewable projects. That’s what we do every day here at LevelTen, aggregating buyers and sellers and connecting them in smarter ways so that more buyers can participate in this market. This approach enables many more corporate and institutional buyers to support, in a fiscally responsible way, the massive buildout of new clean energy projects across the globe.
DJ: How is the market for renewable energy procurement in the US?
Tundermann:The volume of renewable energy procurement in the U.S. currently exceeds the rest of the world. New renewable energy deals are announced regularly. This charge is being led primarily by big business, but government and higher education is starting to creep in as well. Buyers aggregation is available to companies of all sizes, and because of this you will start to see more and more small and medium-sized businesses entering into PPA aggregation deals with larger companies. In addition, a portfolio deal allows one buyer to take partial offtake from multiple projects to mitigate risk and better represent their consumption footprint.
DJ: What are the aims of LevelTen Energy?
Tundermann:LevelTen Energy is a global renewable energy marketplace and procurement platform. We reduce the cost, complexity and risk of renewable energy PPAs by connecting buyers and sellers through analytics, aggregation and process best practices. Our aim is to expand the market for renewable energy by facilitating frictionless clean energy procurement for corporate and other energy buyers.
DJ: What is your strategy for expanding into Europe?
Tundermann:We plan to pursue a similar strategy to the one we pursued when we launched our PPA Marketplace in North America – though in this case, with the added advantage of having an operational marketplace with hundreds of multinational buyers and sellers already registered. From a supply perspective, we already launched a large-scale Request for Information to allow developers to upload their renewable energy projects across Europe.
Soon we will be launching a Request for Proposals on behalf of a well-known corporate buyer seeking PPAs with European renewable energy projects under development. In parallel, we are working closely with buyers, sellers, regulators, financiers, utilities and attorneys throughout Europe to tailor Marketplace offers and form PPA agreements to each country, to ensure that the LevelTen Marketplace presents PPA offers that are compatible with buyers’ needs, meet local financing criteria, and are consistent with how local electricity markets operate. Our goal is to have a fully functional PPA Marketplace that is seamlessly integrated across North America and Europe by Q1 2020.
DJ: How is the European market different to the US?
Tundermann:From a corporate renewable energy purchasing perspective, the U.S. is essentially divided into two markets – regulated markets (where corporates must purchase renewable energy from regulated utilities) and deregulated markets (where corporates have the freedom to contract directly with projects). The vast majority of corporate purchases have occurred in deregulated markets, where PPA terms and conditions have become relatively standardized over time – in a form that reflects US GAAP-based accounting treatment, among other things.
In contrast, there are 28 sovereign nations in the E.U., each with a unique set of permitting processes, supply/demand dynamics, project finance requirements, electricity market structures, and cross-border grid interconnections. In addition, EU-domiciled companies are subject to a different set of accounting standards than U.S. corporates, which can significantly influence PPA structuring. A successful marketplace must take all these differences into account to solicit project offers and provide contracting tools that are specifically tailored to each country.
DJ: What will be the major challenges?
Tundermann:The primary challenge will be to systematically collect all the country-specific information that is required to expand the Marketplace across a region as diverse as the EU, while also hitting our target launch date. Fortunately, LevelTen has established an array of partners – investors, strategic partners, project developers, corporate buyers and channel partners to name a few – whose interests are aligned to help us accomplish these simultaneous goals.
