A European food company set a goal to source 100% renewable energy and become carbon neutral in its operations worldwide. To that end, the company decided to buy Guarantees of Origin (GOs) covering its European electricity consumption and sought Ecohz’ guidance on procurement options.
After taking a deeper dive into the sustainability goals of their business, the profile of their electricity consumption and ambition to create additionally it became clear that the company was a solid candidate for a Power Purchase Agreement (PPA). This is how Ecohz advisors helped finalise a deal that guaranteed clean electricity supply towards the companies’ operations in Spain and Belgium, bringing it closer to its climate targets.
The food company and Ecohz engaged on renewable energy solutions for the first time in 2021, when Ecohz advised on the procurement of their global Energy Attribute Certificates (EACs). But even though unbundled GOs were a viable option for European consumption and within the company’s renewable energy strategy, another opportunity was evident and recommended by Ecohz as an alternative long-term solution. But why was this company a good candidate for a PPA?
Ecohz advisors presented the case for a PPA, focusing on:
Once the company understood the advantages of a potential PPA, the Ecohz team established Spain as a suitable country for the PPA, kick-starting a PPA advisory process that would decarbonise a substantial portion of the company’s electricity consumption.
Ecohz’s PPA advisory progressed in five key stages.
Signing a PPA can be a lengthy and complex process, involving multiple actors and requiring a large, coordinated effort between client and advisor. Hence, it was crucial to lay the necessary groundwork for the rest of the journey.
Risk management is at the core of every PPA. A good contract should protect off-takers against market and policy uncertainty. To achieve that, Ecohz PPA advisors considered:
In the end, the food ingredient company had a solid business case for a PPA that would deliver financial and sustainability benefits.
It was then time to look for projects. Ecohz used its vast network of electricity producers to host an RFP, to find projects that matched the customers’ needs. Ecohz are now in partnership with LevelTen Energy, the largest PPA marketplace in Europe, to help find suitable projects.
After consulting multiple counterparties, the company received concrete offers with the necessary project information—including volume profile and price—as well as the net present value of the offered PPAs, allowing it to carefully evaluate its options before moving into the negotiation stage.
The offers delivered in the previous stage were analysed against the pre-agreed criteria, with each possibility assessed on an individual basis. Ecohz accompanied the food ingredient company at every step, providing input to narrow down the list of offers and advancing the company’s terms during negotiations to secure the best achievable deal.
At the end of a careful process, the food ingredient company found and signed the best possible option: a cross-border financial PPA that secures the supply of solar-generated electricity for close to a decade.
In a sense, signing a PPA is the beginning of an administrative process that will last for as long as the contract is active—one that is essential to obtaining the sustainability value of the contract.
To document the renewable quality of electricity, PPAs should deliver Energy Attribute Certificates (EACs)—in this case, GOs—which must be properly received, transferred to the correct registry, and cancelled according to regulations. Failing to do so would prevent off-takers from making valid renewable energy claims.
The company decided to partner with Ecohz for the management of EACs, ensuring that all documentation is handled in line with voluntary corporate standards such as CDP, SBTi, and RE100, as well as fulfilling mandatory reporting tasks, including the European CSRD.
By partnering with Ecohz, the food company received: