How LevelTen’s Price Transparency Declutters the Renewable Energy Debate

As we have long covered on TriplePundit, renewable energy now competes on cost with fossil fuels across the U.S. That price parity helps to ease the political sensitivities surrounding the nation’s energy transition. However, businesses can still face a price transparency obstacle when they try to make the bottom-line case for including renewables in their balance sheets.

The startup LevelTen is one company that has spotted an opportunity in the price transparency problem. Let’s take a look at its solution.

The problem with power purchase agreements

One key obstacle to price transparency has to do with power purchase agreements (PPAs).

PPAs have played a significant role in driving the U.S. energy transition. These agreements provide a low-risk tool for financing wind and solar projects.

The problem is that the U.S. renewable energy market is incredibly complex. PPA contracts are generally not available for public view, and buyers need to expend resources on research and negotiation.

On top of that, the nation’s electricity grid is chopped up into different sections, each with its own market managed by a different service operator. Large companies have the resources to do the research and negotiate deals, but this current reality leaves smaller companies in the lurch. In other words, a large sector of the U.S. economy has not yet engaged with the PPA market. But that’s where the opportunities lie.

The LevelTen solution

Quite simply, LevelTen assembles data on PPAs and shares it publicly. The object is to help both renewable developers and clients understand the renewable energy marketplace in their own area.

LevelTen compiles a quarterly PPA Price Index that provides a snapshot of price trends. Currently the company has 1,200 projects in its database. The company also provides real-time information in key areas like project value, risk and cash flow, and it provides guidance on tax policy and other areas that have an impact the PPA market.

Driving the cost of renewable energy down

In an email exchange with 3p, LevelTen CEO and co-founder Bryce Smith explained how price transparency in the PPA market can help accelerate the demand for renewable energy.

“Renewable procurement becomes easier as wind and solar become more economic,” he explained. “And, the mass adoption of renewables allows manufacturers to lower the per unit cost of renewables. It’s a highly complementary cycle.”

Smith also noted a shift in political attitudes about energy policy: “What this means, politically, is that it's easier and less risky for elected officials to promote renewable standards, now, than it was just a year or two ago,” he added. “It’s far easier for people to envision an economically-vibrant fossil-fuel free world.”

Somewhat ironically, the company’s Q4 2018 report showed a slight overall increase in PPA prices.

However, Smith noted that prices actually dropped in some areas of the country, and he does not foresee any strength in the uptick. “We don’t expect this marginal increase to have an immediate or dramatic effect on the industry,” he said. “As corporations and their stakeholders demand renewable energy, we certainly expect to see more well-executed PPA contracts.”

The rise of aggregation

LevelTen is also beginning to focus on aggregation as a way to accelerate the renewable energy PPA market.

In some states, community choice aggregation programs enable local policymakers to negotiate for more wind and solar—and lower rates—with their utility company. That leverage can benefit companies of all sizes across the board.

Unfortunately, community choice is only available in a handful of states. In addition, the broad-based approach may not be optimal for companies with more aggressive renewable energy goals.

Earlier this year LevelTen introduced a Dynamic Matching Engine service to help fill those gaps for businesses seeking more wind and solar. The new service passed its first big test in February, when a five-member aggregation deployed Dynamic Matching to kickstart a new 100-megawatt solar farm in North Carolina.

The five companies—Bloomberg, Cox Enterprises, Gap Inc., Salesforce and Workday—together claimed a full 42.5 megawatts of the project’s capacity. With these “anchor tenants” in hand, the developer had enough incentive to move forward with the project.

LevelTen foresees a new wave of renewable energy development if smaller and mid-sized companies adopt this dynamic matching model.

Renewable energy reaches across the aisle

As for the political debate, that is rapidly becoming a moot point. Last month, 3p noted that the bottom-line benefits of wind and solar are already motivating businesses to advocate for more renewables-friendly policies at the state government level. Hence improved price transparency can help to provide additional support for the business case of investing in renewables.

The bottom-line crisis associated with climate change impacts is also beginning to receive attention among Republican representatives in the U.S. Congress. In addition, businesses are finding areas of commonality between their corporate social responsibility goals and broader social policies, most notably the United Nations Sustainable Development Goals.

A national Green New Deal is probably a long way off—after all, that policy is still in the form of a proposal—but with companies like LevelTen smoothing the path, demand for renewable energy has nowhere to go but up.

Image credit: LevelTen