{"id":10093,"date":"2015-05-06T13:03:40","date_gmt":"2015-05-06T18:03:40","guid":{"rendered":"http:\/\/blogs.edf.org\/energyexchange\/?p=10093"},"modified":"2015-05-06T13:03:57","modified_gmt":"2015-05-06T18:03:57","slug":"are-apple-and-google-disrupting-americas-century-old-energy-market","status":"publish","type":"post","link":"https:\/\/blogs.edf.org\/energyexchange\/2015\/05\/06\/are-apple-and-google-disrupting-americas-century-old-energy-market\/","title":{"rendered":"Are Apple and Google Disrupting America’s Century-Old Energy Market?"},"content":{"rendered":"

\"solartesting_378x235\"<\/a>Apple made news earlier this year when it signed an $848-million \u201cdirect access\u201d deal to bypass Pacific Gas & Electric Co. and buy clean energy directly from a third-party solar provider.\u00a0For Apple, the big win was a contract that locked in affordable energy for the next 25 years.<\/p>\n

But the deal also set a historical precedent for corporate renewable energy purchases that may, over time, have huge financial implications for traditional utilities.<\/p>\n

Energy deals break new ground<\/strong><\/p>\n

With its solar contracts, the iPhone maker is insulating itself from the\u00a0price volatility<\/a>\u00a0that accompanies fossil fuels, in addition to getting power for less than half the cost. Going forward, it can count electricity as a fixed, predictable cost \u2013 an attractive proposition that is sure to spark interest among other large buyers of electricity.<\/p>\n

Apple\u2019s investment in First Solar\u2019s PV Flats, a 2,900-acre solar array in Monterey, California, also suggests that corporations are ready to take procurement of energy to a new level.<\/p>\n

On the heels of Apple\u2019s deal came news that Google signed a 20-year purchase agreement to buy half of the energy produced at the soon-to-be refurbished Altamont Pass wind energy facility. The wind turbines there will power the company\u2019s sprawling Googleplex headquarters in nearby Mountain View, California \u2013 again, effectively bypassing the local utility.<\/p>\n

Wind is already competitive<\/a>\u00a0with coal in many markets and just like Apple, Google will enjoy stable prices for the next two decades.<\/p>\n

Companies think beyond cheap energy credits<\/strong><\/p>\n

Corporate procurement of renewables is nothing new, of course. For years already, companies such as Intel and IKEA have purchased renewable energy credits, or RECs, to meet their sustainability goals.<\/p>\n

Over time, however, these credits became so popular that we now have a glut of nearly worthless RECS with some going for as little as 75 cents per kilowatt-hour.\u00a0As a corporate procurement activity, they now amount to little more than \u201cgreenwashing\u201d because the low prices undermine the REC market as a force for new investments.<\/p>\n

This criticism has prompted some investors such as Whole Foods and PepsiCo to scale back and instead focus on more tangible,\u00a0onsite renewable projects<\/a>\u00a0at their own facilities.<\/p>\n

Or, as in the case of Apple and Google, to think outside the box. Large power purchase agreements, like the ones the companies just announced, may prove to be a game changer.<\/p>\n

Such deals give renewable energy providers the collateral they need to approach a bank or other investor about financing the construction of their plants. And it helps them get a cheaper line of credit which, in turn, will bolster additional investments in renewables.<\/p>\n

Energy providers respond<\/strong><\/p>\n

Historically, power purchase agreements have been long-term commitments of up to 30 years.<\/p>\n

But now that model is changing, too, further broadening participation in new and innovative clean energy programs.<\/p>\n

MP2 Energy, a retail electric supplier in Texas, for example, recognized the limitations of the longer contracts. The company developed a landmark, two-year solar energy procurement proposal that attracted Rice University, and the parties announced a contract in February 2015.<\/p>\n

Today, corporate buyers of energy are trying new ways and they\u2019re finding energy providers willing to experiment. From Apple to Rice University, a growing cadre of large buyers are making smart business deals that also help pave the way for renewable energy development.<\/p>\n

As more buyers of energy move in this direction, pressure will build on utilities to find\u00a0new business models<\/a>\u00a0\u2013 and new revenue streams that are not based on volume sales or on the construction of new, fossil-fired plants.<\/p>\n

Or they may soon be looking at a major corporate exodus to their competitors in the clean energy business \u2013 and at a major disruption of the market they\u2019ve owned for more than a century.<\/p>\n

This post originally appeared on our Voices blog<\/a>.\u00a0<\/em><\/p>\n

Photo Source: Flickr\/DOE<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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