Interconnection backlog brings renewable PPAs to a standstill
Over 2 TW of proposed energy generation and storage are currently stuck waiting in interconnection queues across the United States, of which 95% are for zero-carbon sources like solar, wind, and batteries. Last year, interconnection wait times increased by 40%, with costs to connect to the grid doubling in recent years due to rising material costs and elevated regulatory risks. An astounding 79% of projects seeking connection are ultimately abandoned, and the ones getting built are taking, on average, five years to connect to the grid and become operational.
Moreover, the Federal Energy Regulatory Commission’s "commercial readiness" requirement has added an unnecessary hurdle by requiring most developers to be placed in the interconnection queue before even being considered for a PPA, prohibiting project developers from accurately pricing their PPAs to customers. This challenging regulatory environment has led some developers to stop offering Power Purchase Agreements (PPAs) in the short-term until PPA prices and levels of uncertainty diminish.
Despite these crippling setbacks, industry demand for renewable energy generation is stronger than ever, with more and more companies looking to achieve ambitious clean energy goals and prepare for the upcoming Securities and Exchange Commission’s (SEC’s) Climate Disclosure mandates, which are set to go into effect in 2024 for most businesses. Clean energy demand has eclipsed market supply as the interconnection backlog has led to a shortage of available renewable energy projects to invest in, causing PPA prices to rise dramatically by 29% since 2021. Commercial and industrial clients are left in a bind - actively seeking a practical solution to decarbonize their Scope 2 emissions without the high risk of a PPA or minimal impact of a Virtual PPA (VPPA) that does not deliver green energy to the site and runs the risk of not meeting the new SEC distance rules.
Derisk your clean energy investments with on-site Energy as a Service (EaaS)
Fortunately, there is an innovative and flexible business model that makes on-site clean energy simple, cost-effective, and accessible without taking on any upfront investment or operational risk. On-site Energy as a Service (EaaS) allows you to take control of your energy and be seen as an industry leader in the sustainability and renewable energy space. EaaS eliminates typical risks associated with a PPA and boasts the following benefits:
- Predictable long-term pricing
- Protection from technical, financial, and regulatory risks
- Zero upfront costs
- No risk of energy curtailment
- Rapid deployment to be operational as soon as 15 months
With EaaS, you can unlock the benefits of a microgrid asset without paying any out-of-pocket capital costs for expensive technologies and infrastructure upgrades. Simply pay a monthly subscription to your energy service provider during the length of your contract and receive predictable and affordable clean energy produced directly on-site. The EaaS provider will guarantee energy volume, uptime, and performance at competitive and predictable prices so that you can meet your sustainability goals and comply with the latest climate policy regulations.
Decarbonize C&I buildings quickly with an EaaS
A typical EaaS project gets completed in as little as 15 months, compared to a PPA that can take five years to connect to the grid and has a 79% chance of falling through. An average timeline of an on-site EaaS project is illustrated below:
- 0-1 month: Collaborate with an Energy as a Service provider to gather preliminary energy data.
- 1-3 months: The provider verifies all financial and technical assumptions. You then sign a final proposal and Energy Service Agreement (ESA).
- 3-9+ months: Construction of on-site renewable energy systems takes place.
- 9-15 months: Infrastructure undergoes commissioning and becomes fully operational.
- 15+ months: the provider ensures continuous maintenance, management, and support throughout the entire contract period.
One-stop-shop for on-site net zero energy
Take control of your energy future with an industry-leading EaaS provider. GreenStruxure designs, builds, finances, operates, and maintains on-site renewable energy systems and microgrids for Commercial and Industrial (C&I) clients who spend at least $500,000 in annual electricity bills.
As your trusted energy partner, we understand the challenges of derisked clean energy supply and meeting Scope 2 emissions. Our modular and standardized Energy as a Service and digital solutions allow you to reach your clean energy and resiliency goals without any headache or hassle so you can focus on your core business needs. Contact our experts today to learn more about how our EaaS expertise and digital services can help you achieve your business and sustainability goals without any upfront capital or risk.