10 Steps to Becoming a Carbon Neutral Business

Page 27 How do PPAs work? YOUR ORGANIZATION THE POWER GRID RENEWABLE ENERGY PRODUCER 1. Your organization terminates its existing energy contract and negotiates a new, long-term agreement directly with a renewable energy producer 2. Electricity is physically delivered to your site to power your operations, according to the contract terms of the PPA 3. At the same time, the RECs associated with the renewable energy generated are transferred from the renewable energy producer to your organization , proving that your electricity is green STEP 07: SWITCH TO RENEWABLE ENERGY / Option 3: On-site installations The electricity generated by an on-site installation is usually consumed “behind the meter” or without being fed into an electricity grid, depending on the local regulations. Sometimes the technology used is wind, hydro or biomass. Most on-site installations are solar solutions that are built for example on the rooftops of buildings or on unused areas next to facilities. Especially in the case of solar technology, only a fraction of the site’s total electricity demand is typically covered as you need considerable space for the panels. Your organization owns the on-site installations. This ownership means you are also responsible for project development, permitting, maintenance and everything else that comes with it. It also provides opportunities to generate income from excess power generation but the attractiveness of this option varies greatly across regions and countries. Contracts tend to run between 10 and 20 years and the price for electricity from self-generation can be well below the wholesale market price. Setting up on-site installations needs dedicated resources and significant time to realize as it requires in-depth, country-specific knowledge about the technical, regulatory and economic environment. When pursuing this option, work with specialized, local partners who have experience with setting up similar projects, so they are aware of the local conditions. In some locations on-site installations may not even be feasible from an economic, technical or regulatory standpoint.