The US corporate renewable market has grown by leaps and bounds in the past five years. Corporate procurement has rapidly expanded from a niche to a substantial part of the US electricity system—one that has cumulatively brought online over 12% of all utility-scale wind and solar installed in the country today.
However, risk mitigation solutions have not kept pace with a rapidly diversifying and expanding corporate market. The issue of buyer risk has been raised with increasing frequency over the last few years and the market must address this issue seriously and immediately.
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 report, of which this is the executive summary, dives into five specific risks buyers find unfamiliar—price, shape, basis, volume, and operational risk. It then reviews a range of mitigation strategies, including those that are widely available and those that are emerging in the market today—hub-settled contracts, floors and collars, proxy generation, volume firming agreements, and fixed volume swaps. The report also explores mitigation and procurement strategies such as long-term renewable energy certificate (REC) agreements, project tranches, and contract tranches.
Lastly, the report highlights best practices for buyers to contract for off-site renewable power in a way that meets their risk priorities.