Corporate Renewable Energy Sourcing: Selected challenges and possible solutions

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1 Corporate Renewable Energy Sourcing: Selected challenges and possible solutions Jochen Hauff, Head of Business Development, Energy Industry & Policy, BayWa r.e. renewable energy GmbH

2 BayWa r.e. is a global player in renewable energy solutions WIND POWER > 1,200 MW realized PV PROJECTS > 500 MWp realized SOLAR TRADE >1,500 MWp Module delivered BIO ENERGY > 30 plants installed GEOTHERMAL POWER > Engineering consulting ENERGIE TRADE H BayWa r.e. Presence Project and active trade activities > Green power & gas 2

3 For corporations, successfully purchasing of renewable energy is more complex than mere power procurement Renewables are a fast moving industry: Multiple technologies Price/ cost evolution Different national regulations Wide range of business models and offerings (on-site and off-site, intermediaries ) Difficult to anticipate over a longer period: Future market price evolutions Dynamic technology evolution Long term partner for operations and maintenance Regulatory & financing barriers Complex procurement questions: multiple attributes, needs a strategic process Requires long-term thinking Internal and external barriers to be overcome 3

4 00:00 01:00 02:00 03:00 04:00 05:00 06:00 07:00 08:00 09:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00 kwh For example: Udo, energy procurement manager of a large retailer with CSR commitment Power demand and cost Consumption 3 GWh/a Cost ca /a 6-day week, sometimes 7, depending on opening hours of sites Load-curves: Base load from HVAC. Daily peaks due to light and additional cooling requirements when shops are open 0,7 0,6 0,5 0,4 0,3 0,2 0,1 0 Udo s requirements/ wishes: 1. Cost-efficient, competitive energy supply with a high degree of planning certainty (no surprises) 2. Step-wise fulfillment of climate protection objectives as defined in corporate CSR report 3. High credibility to avoid any damage to reputation of retail brand 4. Visible solution to enhance the marketing value of the renewable procurement 5. Ideally a solution that can be replicated/ rolled out to many sites/ geographies Wochentag Samstag Sonntag 4

5 Udo looks at several options to purchase green energy to fulfill his companies CSR objectives Key objective: Procure green energy associated with a named installation and secured against energy price increases 3 Options relevant for the German market in 2017 are compared: A Procure from a solar park based on a PPA (>2MW, 20km away from site of consumption) Delivery via the public B Installation and procurement from a local solar park (5MW, 4km apart from site of consumption) Delivery via the public C Construction of a 749kWp solar roof-top installation on own building Self-consumption with some feed in of excess production (e.g. on Sundays) 5

6 Udo has 5 key questions. He wants to understand which of the options might provide a solution for him (German market in 2017) Would be permissable and how? Is it economically viable? Is it credible? Is the viability ensured for contract duration? How complex is implementation? Solarpark, public Yes, using a direct marketing provision in the EEG No. Not viable in 2017 A B C Partly, as only volume can be sourced, but time of use difficult Level of EEG-Surcharge and charges uncertain. Risk of duration of plant operation Direct contract from one site requires complex contract with operator. For Udo simple, complexity managed. Solarpark, local proximity, public Yes Marginally viable, partial power tax excemption helps. Yes Tax exemption and cost charges uncertain Direct contract from one site requires complex contract with operator. For Udo simple, complexity managed. Solar-Rooftop Self-consumption Yes, connected before the meter Yes, based on saved charges and surcharges. excess can be fed into Yes, but negative reaction possible due to saved charges and surcharges Partial surcharge payment can increase, charge system due to be revised Complex: Investment, Financing, Installation, Direkt marketing, Operations 6

7 As of today, each option is possible in principle - but each also has specific drawbacks work on the regulatory framework is needed! A B C Would be permissable and how? Is it economically viable? Is it credible? Is the viability ensured for contract duration? How complex is implementation? Solarpark, public Yes, using a direct marketing provision in the EEG Key needs: No. Not viable in 2017 Partly, as only volume can be sourced, but time of use difficult Level of EEG-Surcharge and charges uncertain. Risk of duration of plant operation Direct contract from one site requires complex contract with operator. For Udo simple, complexity managed. Solarpark, local proximity, public Yes Marginally viable, partial power tax excemption helps. Carbon price increase to close price gap Yes Tax exemption and cost charges uncertain Direct contract from one site requires complex contract with operator. For Udo simple, complexity managed. Solar-Rooftop Self-consumption Yes, connected before the meter Yes, based on saved charges and surcharges. excess can be fed into Yes, but negative reaction possible due to saved charges and surcharges Positive, dedicated EU-wide regulation rather than making it work with current national rules, somehow Clear framework to reduce uncertainty Partial surcharge payment can increase, charge system due to be revised Complex: Investment, Financing, Installation, Direkt marketing, Operations Reduce red-tape and complexity for self-consumption 7

8 But not all barriers are external: Internal challenges can be overcome with vision and a systematic approach Strategy definition and change management Develop a vision Set ambitious shared goals Discuss internally with key stakeholders, possibly with external support to challenge the status quo Build the business case taking into account all factors to be considered Define action plan by segment/ geography/ business Internal process management Implementation Contract and tendering management Start with low hanging fruits Celebrate the first successes Communicate regularly Build supplier relationships Roll-out across company Strive for leadership/ innovation once first successes are secured 8

9 Thank you for your attention happy to answer your questions Jochen Hauff Head of Business Development, Energy Industry & Policy Mobile: Company presentation 9

10 r.e.think r.e.cycle r.e.levant r.e.lation r.e.duce r.e.newable r.e.flect r.e.sponsible r.e.liable r.e.spect Responsible: Jochen Hauff BayWa r.e. renewable energy GmbH Arabellastr. 4 D Munich, Germany Telephone r.e.sponsible for your success. 10