Here’s a modern business energy challenge.
As an RE100 member, your business has made a public commitment to using only renewable energy. But the large amount of power your business uses and the location of your buildings means you can’t generate it all yourself. And many other large companies have the same idea. Already 137 RE100 members are competing with you for the limited supply of renewable energy available.
So how do you ensure you’ll have a secure long-term supply of renewable energy to meet your commitment?
A large part of Nestle’s answer is to buy all the power produced by a new wind farm built by an independent renewable energy generator, Community Wind Power (CWP). This one deal takes care of nearly half the electricity Nestle will use for the next 15 years.
The deal – called a Corporate PPA (Power Purchase Agreement) – also helps to boost the UK’s stock of renewable energy. By committing to buy all the power at an agreed price, Nestle made it easier for CWP to raise the capital to build the wind farm. Having a credible long-term buyer and a known price removes the investment risk of an otherwise highly variable income.
Stefano Agostini, CEO Nestlé UK and Ireland, sums up what this means for Nestle this way. “I’m proud that Nestlé is doing the right thing and directly contributing to the reduction of carbon here in the UK and Ireland. We all have a part to play in reducing climate change and its effects while making sure that we safeguard our planet’s future.
“We already use 100% renewable, grid supplied electricity across all our UK and Ireland operations, but now with the opening of Sanquhar wind farm, we can supply half of our own energy here in the UK and Ireland. I’m delighted we not only using 100% renewable electricity to run our business here in the UK and Ireland, we are now responsible for producing it too.”
How to get a Corporate PPA for your company
Of course, there are some practical issues that need to be addressed for this deal to work in practice. And that’s where EDF Energy as Nestle’s supplier and CWP’s offtaker (buyer) comes in.
- Location: CWP’s wind farm is based on a remote hill in Dumfries and Galloway, roughly halfway between Carlisle and Glasgow. Nestle’s sites are dotted around the country. With a direct generator-user connection impossible, Nestle needs take CWP’s power through the grid. EDF Energy manages the allocation of the power CWP feeds into the grid against the power Nestle takes out of the grid.
- Intermittency: CWP’s wind farm produces constantly varying amounts of electricity. And that production is not in sync with Nestle’s operations. So EDF Energy takes delivery of the power CWP produces and trades it in the wholesale power market – selling excesses and buying shortfalls against Nestle’s usage profile - to ensure the wind farm’s output can be matched against Nestle’s business operations.
- Top up: CWP’s wind farm uses highly efficient turbines on a high yield (often windy) site. Because the turbines spend little time standing idle, the nine turbines on this site are forecast to produce 120 GWh of electricity each year – enough to power 38,000 homes. But if wind conditions are poor, EDF Energy will ensure Nestle receives a top up of renewable energy from our other sources. We’re able to do that because we produce around 1 TWh of renewable electricity (enough to power 320,000 homes) and purchase another 5 TWh through over 300 power purchase agreements with generators running a range of renewable energy technologies.
- Payment: Having to use the grid exposes both parties to the complexity of the electricity industry’s settlements process. Simply put settlements describes the way every party using the grid knows who needs to pay what price for what they used to each generator. EDF Energy takes care of that complex process so that Nestle’s payment to CWP is a simple single transaction once a month.
- Staying power: These Corporate PPA deals require all parties to have a long-term commitment as well as the technical expertise to make them work. It’s taken roughly three years to move from Nestle’s tender for renewable projects to the launch of this wind farm. The contract runs for another 15 years. As a large company with a long-term commitment to the UK energy market, EDF Energy has supported Nestle and CWP get to this point. And we’ll be around for the rest of the contract.
Almost anything’s possible when you have the right partners.
If your business is looking to buy or sell renewable energy, please get in touch. Call us on 0845 525 0028 or email us on email@example.com