Twenty of the UK’s largest universities have teamed up to buy renewable energy directly from wind farms. It’s the first time that public sector entities have come together to buy clean electricity.
The deal known as a “Power Purchase Agreement” or PPA is worth 50m and guarantees the price of power sourced from a portfolio of wind farms over a 10-year period.
The collaborative clean energy deal will supply electricity from wind farms across Scotland and Wales to universities including Newcastle University, University of Exeter and Aberystwyth University.
James Rolfe, the chief operating officer at Anglia Ruskin University, which is part of the deal, said the university has joined others in declaring a climate emergency.
James Rolfe said:
“We aim to source all of our electricity from zero carbon sources by 2025, and this power purchase agreement makes a significant contribution towards this goal whilst delivering financial savings and budget stability.”
The PPA was organised by deal brokers at The Energy Consortium (TEC) in conjunction with its framework partner EDF Energy, onshore wind operator Statkraft and Squeaky-Clean Energy, a 100% renewables supplier that will provide balancing services. The agreement fixed the price of renewable electricity from a portfolio of British farms for the next 10 years thus minimising the exposure to market volatility. The universities have been guaranteed clean energy by the windfarm owner, Norwegian energy giant Statkraft which will issue certificates matching the output of the windfarms.
Richard Murphy, the managing director of The Energy Consortium, said the deal would help universities reduce their carbon emissions as well as save them money while highlighting how the PPA market could be opened up to a wider market of public sector bodies and smaller businesses.
Richard Murphy said:
"The corporate PPA market has long been touted as a means for larger organisations to procure renewable power and enable subsidy-free development," he said in a statement. But to date, it has largely been the preserve of very large companies, requiring substantial commitments from buyers. By acting together in a collaborative approach facilitated by the energy expertise here at TEC, these institutions, whether large or small, have been able to navigate a previously inaccessible market. The combined challenge facing the wider public sector is to secure reduced carbon emissions whilst saving money and I am delighted that these universities have secured both.”
In 2008 Mr Murphy helped arrange one of the first major corporate energy deals in Europe supplying supermarket, Sainsbury’s, with renewable energy.
According to Richard Murphy, because most energy developers require substantial deals over long contract periods PPAs have up until now remained the preserve of larger multi-site corporations.
Last year one of the UK’s largest deals was struck between Budweiser brewer AB In Bev and solar developer Lightsource BP to build 100MW of solar power, without subsidy, to help power their nationwide operations.
Even bigger still on 19th September this year Google, the search engine giant announced that it was making a major investment in renewable energy. The company’s $2bn plan is made up of 18 separate agreements to supply Google with 1,600MW of electricity from wind and solar projects across the world.
In recent news UK based Green Investment Group has declared that its Kisielice onshore wind farm in Poland has signed a 10-year virtual power purchase agreement (VPPA) with lighting technology giant Signify.
Carbon emissions will be cut by 73kt CO2e for four of Signify's factories and several offices throughout Poland with the application of the output sourced under the VPPA from the 42MW wind farm.
Nicola Kimm, head of sustainability, environment, health and safety at Signify said:
"This VPPA is a major milestone on our journey to become carbon neutral in 2020. It's crucial for our transition to 100 per cent renewable electricity next year, as well as supporting Poland's energy transition."
PPAs are generally regarded as a means of hedging against future energy price volatility at the same time as giving developers a route to market for new onshore renewable projects that are currently unable to access government-backed clean energy contracts.
Despite this, though the market is growing rapidly in the US and parts of Europe observers have seen the UK struggling to scale in the UK blaming limited liquidity in the market and a reluctance amongst corporate customers to take on new contract arrangements.
Mr. Murphy put forward a clear case for the environmental and commercial benefits offered by PPAs.
He said:
"It allows members to protect budget, they know what they are going to pay for power over the term, but it also provides flexibility - because they are not committing 100 per cent of annual baseload volume to the agreement," he explained. "For example, by committing to 20 per cent of baseload via the PPA, if a university subsequently outsources part of its campus, such as student accommodation and volume falls, or they add self-generation energy assets they have sufficient headroom to allow for future developments. The combined challenge facing the Higher Education and wider public sector is to secure reduced carbon emissions whilst saving money and I am delighted that the TEC team have secured both through this ground-breaking deal."
