Starbucks announced another large-scale renewables deal Wednesday, with enough power to supply 3,000 of its U.S. shops.
LevelTen Energy, the renewable energy marketplace that brokered the deal, said the transaction’s portfolio approach is a first in the industry.
“Starbucks is setting an important precedent in the corporate energy procurement space by demonstrating the way the single offtaker can safely and easily procure shares of renewable energy from many different new wind and solar projects,” said Bryce Smith,” LevelTen’s CEO, in a statement.
Rather than signing on to several projects with a single developer — as Starbucks did in April, contracting for a total of 70-megawatts from eight Cypress Creek Renewables jobs — the LevelTen portfolio includes three different jobs from different programmers, located in different regions.
The projects are also located within three different wholesale electricity markets, overseen by ERCOT, PJM and the Southwest Power Pool.
“As corporations move toward higher and higher standards of sustainability and carbon-neutrality, they’re going to have to do more and more complex deals. This seems to be a good example of this,” said Colin Smith, a senior solar analyst at Wood Mackenzie Power & Renewables.
“They clearly thought long and hard about how to structure energy procurement for not only one region or one information center, but for thousands of locations. […] From this standpoint, it’s fairly unique,” Smith stated.
Starbucks will buy a portion of power from every project: 50 megawatts from a wind project in Oklahoma owned by Allete Clean Energy (acquired from Apex Clean Energy); 50 megawatts from a Cypress Creek solar project in Texas; and 46 megawatts by a BayWa r.e. solar job in North Carolina. The coffee company said sourcing both wind and solar allows it to more effectively meet electricity demand, as its shops do use some power overnight when wind production is strongest.
“Buying renewable energy from multiple jobs across the U.S. reveals how we use electricity across our shop portfolio,” said Patrick Leonard, Starbucks’ energy manager, in an email to Greentech Media.
“Starbucks’ analysis showed a significant reduction in value in danger from the portfolio approach vs. sourcing out of any one of the projects in the portfolio,” Leonard explained. “Inherently, diversity of technology (wind, solar), location [independent system operator], and programmer should result in a much better balance of risks than picking a single job.”
The developments are slated to come online by 2021. In the meantime, Apex Clean Energy stated one of its Texas wind projects, with a capacity of 151.2 megawatts, will provide Starbucks with 1.5 million renewable energy credits to meet its goal under the RE100 initiative.
In the past, technology companies with enormous electricity demands, like google and Facebook, have dominated corporate renewables deals.
But Leonard said Starbucks’ transaction version”opens the door for many new buyers to cost-effectively source smaller amounts of renewable energy.”
In a recent interview, LevelTen’s Smith told Greentech Media that his company’s market aims to open up the renewables market to different types of corporate buyers by offering additional ways for them to engage with renewable energy. That includes aggregation deals.
“Buyers are open to aggregation,” he said. “But the details of the must be solved for them. We enable buyers to purchase [power-purchase agreements] from individual assets, but we also aggregate buyers using software and information science, where they don’t have to identify other like buyers.”
LevelTen said the Starbucks deal used its Dynamic Matching Engine software, which analyzes renewables projects in development and helps corporates choose projects, or portions of projects, that work for them. In January, LevelTen announced an aggregated deal involving Bloomberg, Gap and others. Each offtaker contracted between 5 and 10 megawatts of a overall 42.5-megawatt solar thing.
Earlier this week, the company announced it had secured financing of $20.5 million, in part to expand its marketplace into Europe.
