Did you know we have operations in Europe? Visit our sister site Altenex Energy
October 14, 2021

Considering Aggregation? Top 5 Tips on Navigating Virtual Power Purchase Agreements with Consortium Partners

By Grace Morrissey, Manager, Renewable Supply

In the piece below, Edison Energy’s Grace Morrissey, Manager, Renewable Supply, walks through the key steps in the consortium-based procurement process. Read Grace’s bio here.

Virtual Power Purchase Agreement (vPPA) aggregation has become an increasingly inviting opportunity for voluntary buyers, particularly for buyers who otherwise may not be able to transact in the space on their own. Aggregated procurements have the potential to offer positive impact – not just on renewable energy targets, but also on overarching sustainability goals as well as your organization’s environmental, social, and governance (ESG) investing strategies.

Along with considerable benefits, vPPA aggregation efforts come with their fair share of obstacles. However, with the right advisor, an aggregated vPPA may well be the most impactful option for your organization.

Given Edison’s experience with consortium-based procurement, we know there are particular decision points and strategic approaches that, when assessed, will best position your organization for success. Key elements of this procurement approach are offered below; get in contact with us if you have questions or would like to discuss aggregation opportunities for your organization.

Aggregated Procurement: Steps to Success
Consider possible consortium partners and reach out to them to gauge interest before seeking an advisor, or find an advisor to project manage this search with you to find complimentary partners.
  • To expedite the kick-off process and streamline the education and strategy timeline, it has proven effective to have some documentation in place with consortium members prior to hiring a consultant. This articulates in plain terms the shared goals and commitment all parties have in making this procurement a success.
  • Depending on the size of the consortium, consider establishing a steering committee comprised of a small set of core members who are willing to take on some of the heavy lifting; be sure this committee is representative of the broader consortium membership. Duties of this committee are likely to include regular meetings, facilitating strategy development among members, and orchestrating key aspects of the procurement such as project evaluation.
  • With your advisor and consortium members, discuss the amount of time this procurement will take – and be realistic. While daunting at first, set a schedule measured in weeks, not months, and ensure you have a structure in place with engaged stakeholders in order to meet those deadlines. Establish a process if the schedule starts to slip. This type of transaction is complex, given that variable market dynamics and timing can make or break a deal.
Seek alignment, both across stakeholders within your organization as well as across consortium members, before you agree on a strategy.
  • For your own organization, incorporate key stakeholders like legal counsel and accounting early on. Along with your sustainability and energy departments, consider queueing in other stakeholders from the start, such as policy, procurement, public relations, and key decision makers at the management level. These folks do not need to be present in every day-to-day machination, but rather will serve as a roadmap for you as the engagement progresses. Understanding various concerns, goals, and roles across your organization will clarify steps in the process, from education and procurement strategy to solicitation and sign-off.
  • Identify key differences among consortium members. Can these differences be accommodated under an umbrella procurement and then addressed at the contracting phase? Are there trends across members where groups can form? If there are bespoke differences, can compromises be struck? If not, is there clear value in the consortium approach?
  • Have distinct goals in mind but be willing to discuss and iterate with your consortium team and your advisor. For instance, perhaps there’s a clear contract structure you’re targeting, but you have flexibility regarding market location. Alignment and compromise will be ever-present in this process, across consortium members and across market solutions. Trade-offs and cost benefit analyses – per market, product, project, and ultimate counterparty – will be the most helpful exercises to find solutions that work for all involved. These contracts take place in a fast-paced, dynamic market, so a solution at one moment in time may shift to being untenable at another moment; being receptive to real-time market feedback will make you nimble in your pursuit.
Together with the consortium members, agree on a decision-making structure and a conflict resolution process from the start.
  • This may seem premature, but having mechanisms in place when issues arise will make the resolution of those issues as amicable and swift as possible. If a dispute does come up, setting clear protocols beforehand eliminates the guesswork at a stressful and urgent juncture. This is also an area where a steering committee provides tremendous value in maintaining a solution-oriented approach while fielding individual member concerns.
Consider how policy and market dynamics may affect your overarching goals.
  • Communicate with relevant state and local agencies to ensure alignment and understanding, particularly for the voluntary market. For instance, what caps are in place for onsite installation in the target utility region? Or, are vPPAs viable in the state you’re considering? There may be advocacy work that can be done early on that could aid in ensuring success.
Think about other overarching goals that consortium members may have in common, outside of the energy sector.
  • How else can this project provide value? What specific sustainability goals will this procurement accomplish? Could there be a greater impact from a renewables perspective? How might this procurement benefit or disadvantage the project community, as well as your organization’s community? Could there be a greater impact from an ESG perspective?
  • Are these goals specific to your organization, or would they benefit others in the consortium? Renewables procurement taps into a holistic impact story that can incorporate other organizational goals. Discuss with your advisor to learn various options in the market to enhance the impact of your procurement.

Click here to learn more about Edison Energy’s Renewables Advisory services.

Grace Morrissey

Manager, Renewable Supply

As a member of the Renewable Supply Team, I work with a variety of clients pursuing offsite renewables procurement by advising them on strategic planning, goal setting, market education, competitive solicitation, analysis, and project selection. I also foster relationships with Edison’s vast network of renewable energy developers, ensuring Edison maintains current and relevant data pertaining to renewable assets, contract structures, market trends, and policy’s effects on the industry. Driven by an interest in how policy and markets converge, I strive to articulate policy implications in an ever-evolving industry and find new ways for clients to consider the environmental, social, and financial impacts of renewable projects.

Prior to joining Edison, I worked in the United Kingdom’s Houses of Parliament focusing on climate change research and policy, as well as Parliamentary casework. I’m a proud member of Women in Renewable Industries and Sustainable Energy (WRISE) and a 2020 Environmental Leadership Program (ELP) Senior Fellow.

Educational Background

M.Sc. in International Relations - The London School of Economics & Political Science
B.A. in Analytic Philosophy - Marywood University