WEBVTT - Big Business Says: I've Got the Power 0:00:00.360 --> 0:00:03.760 Hi, This is Dana Perkins, and this is Mark Taylor, 0:00:03.840 --> 0:00:06.960 and you're listening to Switched on the BENF podcast. Today 0:00:07.200 --> 0:00:10.639 we're going to talk about power purchase agreements, which fit 0:00:10.800 --> 0:00:14.400 quite well into the narrative at the moment, because earlier 0:00:14.520 --> 0:00:17.560 is this last September, there was Climate Week in New York. 0:00:17.840 --> 0:00:21.160 There were climate strikes around the world had by Greta Thornberg. 0:00:21.239 --> 0:00:25.040 I believe they approximated about seven million people attended those. 0:00:25.480 --> 0:00:28.920 The United Nations held their twenty nineteen Climate Change Summit, 0:00:29.440 --> 0:00:32.720 and Bloomberg Philanthropies held an event called the Global Business Forum, 0:00:32.880 --> 0:00:36.720 where countries and companies continue to talk about various things 0:00:36.720 --> 0:00:40.920 facing the world, including emissions. An ever increasing number of 0:00:40.960 --> 0:00:43.520 countries and companies are coming up with what are called 0:00:43.600 --> 0:00:47.600 science based targets that are aligned with the Paris Agreement 0:00:47.600 --> 0:00:50.680 and the goals that were outlined there. Companies are just 0:00:50.720 --> 0:00:52.479 doing a lot of things to clean up. One thing 0:00:52.520 --> 0:00:55.040 that comes to mind when I hear power purchase agreements 0:00:55.040 --> 0:00:57.880 and companies cleaning up is the Mickey Mouse shaped solar 0:00:57.880 --> 0:01:01.280 farm in Florida. It sits out Disney World, and it's 0:01:01.360 --> 0:01:03.280 just one thing that that Disney is trying to do 0:01:03.360 --> 0:01:05.679 to clean up its act. It's the happiest solar farm 0:01:05.680 --> 0:01:09.480 on I'm sure it is. Um then there are several 0:01:09.560 --> 0:01:12.440 efforts like this around the world. Mike Bloomberg at the 0:01:12.480 --> 0:01:14.679 at the Global Business Forum had a cool quote that 0:01:14.680 --> 0:01:16.520 he said, we've only scratched the surface of what we 0:01:16.560 --> 0:01:19.280 can achieve when government and business leaders work together on 0:01:19.319 --> 0:01:21.880 climate change. So I guess that's what last week was 0:01:21.880 --> 0:01:24.520 all about. What businesses can do really and how they 0:01:24.520 --> 0:01:26.960 can cooperate with government. So it's not all just governments 0:01:26.959 --> 0:01:28.760 sitting in the U N or in a room or whatever, 0:01:28.840 --> 0:01:31.040 going back and forth. But there are things that businesses 0:01:31.040 --> 0:01:33.440 can do on their own end together. But back to 0:01:33.480 --> 0:01:36.240 the Paris Agreement, I thought the US was out of it, 0:01:36.560 --> 0:01:40.680 so not technically, the United States is still technically in 0:01:41.200 --> 0:01:44.480 the Paris Agreement, even if they're not necessarily moving towards 0:01:44.520 --> 0:01:48.280 their targets. Now. This is because and actually I was 0:01:48.320 --> 0:01:50.680 informed by Al Gore who was in London for part 0:01:50.680 --> 0:01:53.120 of Climate Week and gave a talk and he where 0:01:53.120 --> 0:01:56.880 he reminded everyone that the US is technically still in 0:01:57.120 --> 0:02:00.720 the Paris Agreement until the day after the next inauguration. 0:02:01.520 --> 0:02:04.800 So the US is in limbo they're in Paris. Not 0:02:04.920 --> 0:02:08.760 in Paris, the US is still signing the majority of 0:02:08.800 --> 0:02:14.720 back to power purchase agreements. Of the power purchase agreements 0:02:14.760 --> 0:02:17.960 signed throughout the world are signed in the United States, 0:02:18.040 --> 0:02:20.960 So pretty big amount for a country that isn't quite 0:02:20.960 --> 0:02:23.520 sure what they think about Paris. Okay, So so we're 0:02:23.520 --> 0:02:25.240 not going to get too far into politics today, but 0:02:25.240 --> 0:02:26.640 we are going to talk, as you said, about what 0:02:26.800 --> 0:02:28.680 companies are doing, and signing p p a s is 0:02:28.680 --> 0:02:31.560 one of those things because they have these sustainability targets 0:02:31.560 --> 0:02:33.120 they're trying to achieve and p p a s are 0:02:33.120 --> 0:02:36.840 a pretty well trodden path to achieving them. So sustainability aside. 0:02:36.880 --> 0:02:39.840 Given how cheap renewables have gotten, it seems p pas 0:02:39.880 --> 0:02:41.639 make a lot of sense for companies that just want 0:02:41.639 --> 0:02:44.359 to secure cheap energy for the companies. And today we'll 0:02:44.360 --> 0:02:48.880 be speaking with Kyle Harrison, who is BNFS Corporate Sustainability Analyst, 0:02:49.200 --> 0:02:51.040 and he's going to be speaking with us regarding a 0:02:51.080 --> 0:02:56.200 research note that is titled to h Corporate Energy Market Outlook. 0:02:56.520 --> 0:02:58.760 Benef Users can get this report on benf dot com, 0:02:58.880 --> 0:03:01.440 the BENF Mobile, Apple, the bloomber terminal at BENF Go 0:03:01.840 --> 0:03:03.840 and please note that benif does not provide an investment 0:03:03.919 --> 0:03:05.640 or strategy advice, and you can hear a full disclaimer 0:03:05.680 --> 0:03:07.320 at the end of the show without much further ado, 0:03:07.400 --> 0:03:12.520 let's hear what Kyle has to say. Kyle, thank you 0:03:12.520 --> 0:03:15.200 for joining us today. Thanks for having me. We are 0:03:15.240 --> 0:03:17.120 here today to talk about p p A s and 0:03:17.160 --> 0:03:19.560 I think the first thing that we should do is 0:03:19.760 --> 0:03:23.880 actually explain what a power purchase agreement actually is, so 0:03:24.040 --> 0:03:26.520 let us know. Yeah, that's definitely a good place to start. 0:03:27.000 --> 0:03:30.760 So it's a long term, typically fixed agreement UM for 0:03:30.960 --> 0:03:34.880 clean energy between an off taker typically a corporation or 0:03:34.880 --> 0:03:38.000 a utility, and then a developer of a clean energy project. 0:03:38.280 --> 0:03:40.640 So for every unit of generation that a solar or 0:03:40.680 --> 0:03:43.920 wind project generates, the off takers agreeing to pay that 0:03:44.000 --> 0:03:46.400 fixed amount. And what it actually does is it gives 0:03:46.400 --> 0:03:49.400 a developer the revenue certainty they need to go ahead 0:03:49.400 --> 0:03:52.080 and secure financing. So as a corporate buyer, I can 0:03:52.080 --> 0:03:54.480 actually say I signed a p p A for this 0:03:54.520 --> 0:03:57.800 solar project in Texas because of my demand for clean 0:03:57.880 --> 0:04:02.080 energy that solar project was built. Why would anybody want 0:04:02.200 --> 0:04:04.160 Why would a company want to sign a p p A. 0:04:05.320 --> 0:04:09.600 Companies are are increasingly setting emissions reductions goals UM, and 0:04:09.680 --> 0:04:12.960 a big portion of those emissions from companies comes from 0:04:13.000 --> 0:04:16.440 the purchasing of electricity, which is called the scope to emission. 0:04:16.760 --> 0:04:19.719 So a lot of companies are actually setting renewable energy 0:04:19.760 --> 0:04:23.679 targets alongside these emissions reductions goals, and that's actually guiding 0:04:23.720 --> 0:04:26.720 them and kind of the key component of their strategy 0:04:26.960 --> 0:04:29.599 when they're setting out and reducing emissions UM. So for 0:04:29.640 --> 0:04:32.680 some companies, you can actually go ahead and reduce your 0:04:32.800 --> 0:04:35.440 energy consumption by locking into one of these clean energy 0:04:35.480 --> 0:04:38.200 contracts UM. But for a lot of other companies, and 0:04:38.320 --> 0:04:40.560 we'll talk about this a little bit later, but as 0:04:40.560 --> 0:04:43.600 you get more of these industries and sectors beyond the 0:04:43.640 --> 0:04:47.279 technology space that are getting into this clean energy buying sector, 0:04:47.800 --> 0:04:49.880 a lot of these companies are avoiding what we would 0:04:49.880 --> 0:04:53.680 call transition risk, so they're increasingly getting pressure from investors 0:04:54.160 --> 0:04:57.760 UM and internal employees to actually be more sustainable UM. 0:04:57.800 --> 0:04:59.960 So these companies that are actually getting ahead in the 0:05:00.080 --> 0:05:03.400 game and buying clean energy to be more sustainable UM, 0:05:03.440 --> 0:05:07.080 they're less susceptible to that investor pressure. Is the objective 0:05:07.240 --> 0:05:09.480 to these p p a s is it mostly around 0:05:09.680 --> 0:05:13.080 clean energy and sustainability and emissions reductions or is there 0:05:13.160 --> 0:05:17.600 cost advantage to it as well. There's definitely a cost advantage, So, 0:05:18.520 --> 0:05:20.800 like you mentioned, Mark, part of it definitely comes down 0:05:20.880 --> 0:05:24.080 to sustainability UM because again it's an effective way to 0:05:24.120 --> 0:05:26.880 reduce emissions. But for a lot of companies when they 0:05:26.880 --> 0:05:29.400 go ahead and sign a clean energy deal UM. So 0:05:29.440 --> 0:05:33.320 for example, if you install solar on your rooftop UM, 0:05:33.360 --> 0:05:36.640 that could potentially be cheaper than your retail electricity bill um. 0:05:36.680 --> 0:05:39.000 So companies can save in that regard. But at the 0:05:39.040 --> 0:05:41.320 same time, a lot of these power purchase agreements that 0:05:41.320 --> 0:05:45.200 we're discussing, they're structured as financial hedges where a company 0:05:45.240 --> 0:05:48.240 is actually hedging against a wholesale market price. So if 0:05:48.279 --> 0:05:49.920 you sign a p p A and you lock into 0:05:49.960 --> 0:05:52.880 that fixed rate for clean energy and it's actually cheaper 0:05:52.920 --> 0:05:55.880 than the wholesale market price, companies actually save money in 0:05:55.880 --> 0:05:58.760 the long term. So there definitely is an economic incentive 0:05:58.760 --> 0:06:00.960 for this as well. Well. And that's what some of 0:06:01.000 --> 0:06:04.480 our other research reports at BIENNA for saying that the 0:06:04.520 --> 0:06:08.280 price of renewable energy actually is in some regions actually 0:06:08.320 --> 0:06:10.640 beating other sources of energy. So it may just be 0:06:10.760 --> 0:06:14.960 good financial sense for companies. My question is what types 0:06:14.960 --> 0:06:17.080 of companies actually want to buy p p A s. 0:06:17.160 --> 0:06:20.039 Are they the big data heavy companies that have really 0:06:20.160 --> 0:06:25.719 energy intensive storage needs, or are they manufacturers or something else. 0:06:26.200 --> 0:06:29.760 When we saw the first corporate clean energy purchases, UH, 0:06:29.760 --> 0:06:33.880 this space was really dominated by big technology companies um so, 0:06:33.960 --> 0:06:36.880 I think these companies that have big data centers that 0:06:37.080 --> 0:06:39.760 utilize a lot of power demand um and for these 0:06:39.800 --> 0:06:44.080 companies that was an effective way to hedge against the 0:06:44.120 --> 0:06:46.719 prices that they'd be paying for power. Um So, those 0:06:46.760 --> 0:06:50.960 big buyers like Google, Microsoft, Facebook, Amazon, they were really 0:06:50.960 --> 0:06:53.720 the first to get ahead in this game. But increasingly 0:06:53.880 --> 0:06:56.400 data as you mentioned, as the cost of clean energy 0:06:56.440 --> 0:06:59.520 has come down and there's actually an economic incentive for 0:06:59.600 --> 0:07:02.720 company to start buying clean energy, we're seeing all these 0:07:02.720 --> 0:07:05.640 new industries enter this market. Um SO. To give you 0:07:05.920 --> 0:07:09.680 a sense of scale, there's now roughly two hundred companies 0:07:10.000 --> 0:07:14.080 that have established a one Renewable Electricity target UM and 0:07:14.200 --> 0:07:16.080 joined a campaign that we call the r E one 0:07:16.160 --> 0:07:18.760 hundred um so, these companies are actually going to go 0:07:18.800 --> 0:07:21.720 ahead over the next couple of years and offset one 0:07:22.480 --> 0:07:26.280 of the electricity they consume with clean energy purchases. So 0:07:26.360 --> 0:07:30.480 that's really exciting. UM. You're seeing manufacturing companies, big retailers 0:07:30.480 --> 0:07:33.200 like Walmart UM. But what I would say is actually 0:07:33.200 --> 0:07:35.720 the most exciting is we're starting to see the oil 0:07:35.760 --> 0:07:38.280 and gas industry get into the space. So at the 0:07:38.360 --> 0:07:42.280 end of x on Mobile actually went ahead and signed 0:07:42.600 --> 0:07:45.280 two of the largest power purchase agreements that we've seen 0:07:45.280 --> 0:07:47.680 in the United States to date UM and for them, 0:07:47.800 --> 0:07:50.120 kind of going back to your question, Mark, this is 0:07:50.160 --> 0:07:52.080 a way for them to go ahead and mitigate this 0:07:52.200 --> 0:07:55.480 transition risk UM and this investor pressure that they're going 0:07:55.480 --> 0:07:58.480 to inevitably get to go ahead and reduce their emissions 0:07:58.880 --> 0:08:02.320 and conduct business more sustainably. So can you describe that 0:08:02.480 --> 0:08:04.080 those p p as in a bit more details? So 0:08:04.120 --> 0:08:06.480 who wins when Excen signs a big p p A. 0:08:07.000 --> 0:08:10.239 Both contracts were signed with orstad UM, and I actually 0:08:10.360 --> 0:08:12.120 think that brings up a good point is that you're 0:08:12.120 --> 0:08:16.080 seeing a lot of big European companies get involved in 0:08:16.080 --> 0:08:19.120 this space, both in Europe and in the United States. UM. 0:08:19.200 --> 0:08:21.480 And it was for a solar and wind project in Texas, 0:08:21.840 --> 0:08:24.560 which has really been the hottest market globally for these 0:08:24.600 --> 0:08:27.400 corporate pp as. This brings me to another question that 0:08:27.440 --> 0:08:29.600 I was really wondering about. So you were talking about 0:08:29.720 --> 0:08:33.600 in in the note you mentioned how of corporate pp 0:08:33.679 --> 0:08:37.040 A volumes this year, So nineteen are in the US. 0:08:37.600 --> 0:08:40.120 This project is being built by European company. And one 0:08:40.160 --> 0:08:43.360 thing I do know being in London is that we 0:08:43.440 --> 0:08:45.840 have a higher density of E s G investors in 0:08:45.880 --> 0:08:48.240 Europe than the you do in the US. Yet we've 0:08:48.280 --> 0:08:50.840 got so many more p p as being signed in 0:08:50.880 --> 0:08:54.200 the US. What's kind of driving that big difference and 0:08:54.200 --> 0:08:57.080 why are they so popular in the US. It really 0:08:57.080 --> 0:09:00.280 comes down to the ease of signing one of the contracts. 0:09:00.280 --> 0:09:02.680 So in the United States, you have this blueprint for 0:09:02.760 --> 0:09:05.520 signing one of these power purchase agreements. You have all 0:09:05.559 --> 0:09:09.199 of these advisory companies like Schneider Electric and Edison Energy 0:09:09.240 --> 0:09:11.480 that now exists in this space, and they'll actually go 0:09:11.520 --> 0:09:15.199 ahead and hold your hand through this entire negotiating process. 0:09:15.200 --> 0:09:17.400 So as you get all of these new entrants into 0:09:17.400 --> 0:09:20.480 the corporate procurement market, whether they are from Europe or 0:09:20.520 --> 0:09:24.040 Asia or the United States or anywhere else, typically they're 0:09:24.040 --> 0:09:25.800 actually going to go to the United States first to 0:09:25.840 --> 0:09:28.440 sign these deals. Because there was so much experience in 0:09:28.480 --> 0:09:30.720 the market and it's a lot more comforting for them. 0:09:31.040 --> 0:09:33.040 So that's really been the big driver, because I agree 0:09:33.080 --> 0:09:35.959 with you that overall you're seeing so many companies from 0:09:35.960 --> 0:09:38.640 around the world and outside of the United States make 0:09:38.720 --> 0:09:42.320 these really ambitious clean energy commitments. To give you a 0:09:42.320 --> 0:09:45.600 sense of scale, there's actually over twenty companies in Japan 0:09:45.640 --> 0:09:48.200 alone that have now set this r E one hundred 0:09:48.240 --> 0:09:50.840 goal that I mentioned earlier. But all of these companies 0:09:50.840 --> 0:09:53.920 are setting these targets out to, and what that tells 0:09:53.960 --> 0:09:56.440 me is that there's a public acknowledgement from all of 0:09:56.440 --> 0:10:00.160 these companies that there's no immediate term option for them 0:10:00.160 --> 0:10:03.120 to buy clean energy domestically in Japan. So what these 0:10:03.120 --> 0:10:05.640 companies are actually doing is moving to the United States 0:10:05.640 --> 0:10:07.880 to sign the contracts. So if we look at Japan, 0:10:07.960 --> 0:10:11.439 for example, you now have over twenty companies that are 0:10:11.440 --> 0:10:13.880 based in Japan that have set one of those already 0:10:13.920 --> 0:10:16.800 one hundred goals that I mentioned earlier. But all of 0:10:16.840 --> 0:10:20.480 these companies are setting their targets out to and to me, 0:10:20.600 --> 0:10:23.560 that's a public acknowledgement that there's no short term solution 0:10:23.880 --> 0:10:27.000 for them to buy clean energy domestically. They're instead looking 0:10:27.040 --> 0:10:29.560 at the United States to sign these deals, um, and 0:10:29.600 --> 0:10:31.439 this is a trend that we expect to see moving 0:10:31.480 --> 0:10:35.120 forward in the US. Then you're saying it's fairly straightforward 0:10:35.200 --> 0:10:37.240 to sign a p p A in Japan. My understanding 0:10:37.280 --> 0:10:39.439 is that they do this through auctions, and that there 0:10:39.520 --> 0:10:42.880 was one fairly recently that maybe didn't quite get the 0:10:43.000 --> 0:10:46.880 uptake that was planned. Can you explain more what is 0:10:46.960 --> 0:10:50.320 so complex about Japan exactly? And I should have mentioned 0:10:50.360 --> 0:10:53.320 this earlier, but there actually is no p p A 0:10:53.400 --> 0:10:56.520 mechanism in Japan currently. So if I'm a Japanese company 0:10:56.559 --> 0:10:58.760 and I want to buy clean energy at a large scale, 0:10:59.240 --> 0:11:02.760 well again, making an effort to incentivize new clean energy 0:11:02.760 --> 0:11:05.240 build on the grid, which a pp A does, I 0:11:05.280 --> 0:11:07.320 have no option to do that in Japan right now. 0:11:07.720 --> 0:11:09.560 What I instead have to do is tap into this 0:11:09.720 --> 0:11:12.440 non fossil market that was rolled out in the last 0:11:12.440 --> 0:11:15.199 couple of years. So I can actually have go ahead 0:11:15.240 --> 0:11:18.400 and have a energy retailer in Japan go ahead and 0:11:18.440 --> 0:11:21.760 buy these non fossil certificates for me, which correlate with 0:11:21.800 --> 0:11:24.360 a unit of clean energy generation, and then they can 0:11:24.400 --> 0:11:27.960 actually go ahead and retire those non fossil certificates on 0:11:28.040 --> 0:11:31.280 my behalf. Um, so for companies, that's kind of the 0:11:31.320 --> 0:11:34.240 most accessible way for them to tap into this clean 0:11:34.320 --> 0:11:36.880 energy market UM. But as you mentioned, it's kind of 0:11:37.360 --> 0:11:39.240 the market is very small right now and it's really 0:11:39.240 --> 0:11:41.640 not living up to its potential UM and to me, 0:11:41.920 --> 0:11:45.800 that signals again that Japanese companies acknowledge UM that they 0:11:45.840 --> 0:11:47.920 need to take away and see approach for this. They're 0:11:47.960 --> 0:11:50.000 either going to buy clean energy in the United States 0:11:50.400 --> 0:11:53.520 or they're going to continue to push for more accessibility 0:11:53.559 --> 0:11:56.880 for clean energy at a large scale UM domestically because 0:11:56.960 --> 0:12:01.480 right now they don't have that access. What would facilitate 0:12:01.520 --> 0:12:04.200 a faster rollout in Japan or pretty much anywhere else. 0:12:04.280 --> 0:12:06.840 Is it largely a regulatory environment or is it down 0:12:06.880 --> 0:12:09.760 to how the utilities do things. It's a combination of both. 0:12:09.880 --> 0:12:12.800 I think what you need is boots on the ground 0:12:12.880 --> 0:12:15.840 from large multinational companies that have a footprint in some 0:12:15.880 --> 0:12:18.600 of these Asian markets. To give you an example, UM, 0:12:18.679 --> 0:12:22.280 Google has spent years and years lobbying with regulators in Taiwan, 0:12:22.840 --> 0:12:25.560 which has a very similar power market structure UM and 0:12:25.640 --> 0:12:28.520 historically did not allow for p P a s UM, 0:12:28.559 --> 0:12:30.040 so they spent a lot of time working with the 0:12:30.120 --> 0:12:32.920 regulators to allow them an option to do so, and 0:12:32.920 --> 0:12:35.680 actually in the beginning of twenty nineteen they signed a 0:12:35.760 --> 0:12:39.320 ten megawatt solar p PA. So it's small volume, but 0:12:39.400 --> 0:12:41.559 it's still a step in the right direction. You need 0:12:41.600 --> 0:12:44.400 to see that type of lobbying in markets like China 0:12:44.480 --> 0:12:47.600 and Japan and India, UM and even some markets in 0:12:47.640 --> 0:12:50.040 Europe as well. So I think that's one big driver. 0:12:50.559 --> 0:12:52.400 And the other way that companies can actually make a 0:12:52.400 --> 0:12:55.000 big impact here is by targeting their supply chain. So 0:12:55.040 --> 0:12:58.559 some of these multinational companies, they might not have operations 0:12:58.679 --> 0:13:00.960 in some of these Asian markets, but they do have 0:13:01.000 --> 0:13:04.160 a heavy supply chain presence there. So actually going ahead 0:13:04.160 --> 0:13:07.920 and setting sustainability goals for your suppliers is actually going 0:13:07.960 --> 0:13:11.160 to go ahead and pressure them to further pressure regulators 0:13:11.200 --> 0:13:13.240 and actually open the door. UM and the same goes 0:13:13.280 --> 0:13:15.959 for utilities. They're facing the exact same type of pressure 0:13:16.400 --> 0:13:19.600 that Asian regulators are already at this point. Para purchase 0:13:19.640 --> 0:13:22.800 agreements are going to lead to additional capacity needing to 0:13:22.840 --> 0:13:25.560 be built to hit the shortfalls. So you mentioned that 0:13:25.679 --> 0:13:28.600 ninety four gig watts are roughly ninety seven billion U 0:13:28.679 --> 0:13:31.280 S dollars in New investment will be needed in order 0:13:31.320 --> 0:13:34.400 to reach this is this big number, small number and 0:13:34.600 --> 0:13:38.040 kind of what dent does this make in emissions? Yeah, 0:13:38.120 --> 0:13:40.640 it's it's a big number, um, you know, compared to 0:13:40.800 --> 0:13:43.680 global clean energy investment, it's still a small portion. But 0:13:43.720 --> 0:13:45.560 what you have to remember is that this is still 0:13:45.559 --> 0:13:48.640 a very small grouping of companies. So again, it's roughly 0:13:48.679 --> 0:13:51.319 two hundred multinational companies that have set these R E 0:13:51.400 --> 0:13:54.560 one hundred goals um, and that group of companies continues 0:13:54.600 --> 0:13:57.120 to grow over time. So as you have more R 0:13:57.120 --> 0:14:00.719 E one hundred companies making these types of clean and commitments, 0:14:01.160 --> 0:14:04.520 this demand this ninety four giga watts of clean energy, 0:14:04.559 --> 0:14:08.240 build this nine billion dollars of clean energy investment. It's 0:14:08.280 --> 0:14:10.520 only going to grow. And what we've seen in the 0:14:10.600 --> 0:14:12.800 last couple of years that we've been doing this forecast 0:14:13.559 --> 0:14:15.920 is that demand for the R A one hundred continues 0:14:15.960 --> 0:14:19.960 to keep pace or even outstrip the actual existing activity 0:14:20.000 --> 0:14:23.600 from R one hundred members UM. So again just kind 0:14:23.600 --> 0:14:25.920 of the short answer would be the number is not 0:14:26.080 --> 0:14:28.520 huge right now, but it's going to get a lot bigger. 0:14:28.840 --> 0:14:31.320 So power purchase agreements are going to grow in size, 0:14:31.560 --> 0:14:35.880 but then also energy demand is growing, population is growing. 0:14:36.840 --> 0:14:38.480 Is this even going to make a dent? And I 0:14:38.520 --> 0:14:42.680 guess the real question here is our power purchase agreements 0:14:42.680 --> 0:14:45.360 growing at a rate that is at least faster than 0:14:45.920 --> 0:14:48.960 energy demand is growing. It depends on what industry you 0:14:48.960 --> 0:14:51.800 look at. So in the financial space, a lot of 0:14:51.840 --> 0:14:56.600 banks actually have decreasing electricity demand UM, so they're implementing 0:14:56.720 --> 0:14:59.160 energy efficiency UM. But at the same time, a lot 0:14:59.160 --> 0:15:01.720 of banks are actually letting go employees and shrinking their 0:15:01.760 --> 0:15:06.480 workforce UM. So the financial industry demand is going down UM. 0:15:06.520 --> 0:15:08.200 And overall, I think if you were to look at 0:15:08.200 --> 0:15:11.480 the financial financial industry alone, these p pas and this 0:15:11.560 --> 0:15:16.320 activity will eventually outstripped demand. However, if you look at 0:15:16.360 --> 0:15:19.840 an industry like technology, it's the complete opposite. So we 0:15:19.880 --> 0:15:22.680 actually just put out a report on a big Google 0:15:22.720 --> 0:15:26.320 clean energy announcement UM and going ahead and doing that research, 0:15:26.360 --> 0:15:30.400 what we discovered was that between two thousand and ten, 0:15:30.920 --> 0:15:34.600 Google's electricity demand has actually grown four hundred and fifty percent, 0:15:34.880 --> 0:15:37.680 So they now consume over ten terra watt hours of 0:15:37.720 --> 0:15:40.720 electricity on an annual basis, and that's equivalent to a 0:15:40.760 --> 0:15:44.840 small country. So even if we used a conservative growth forecast, 0:15:44.920 --> 0:15:48.480 for Google's electricity demand moving forward, their demand is still 0:15:48.520 --> 0:15:52.680 going to exceed twenty terra wat hours or thirty terra 0:15:52.720 --> 0:15:55.720 watt hours of electricity in the next couple of years UM. 0:15:55.760 --> 0:15:57.920 So for them, they're going to going to need to 0:15:57.960 --> 0:16:01.840 continue to sign clean energy deals at a very rapid pace, um, 0:16:01.960 --> 0:16:05.240 more rapid than they've even currently been signing deals at UM. 0:16:05.320 --> 0:16:07.080 So again, I think it really comes down to the 0:16:07.120 --> 0:16:10.560 industry UM. But as a whole electricity demand continues to 0:16:10.600 --> 0:16:12.800 grow at a faster rate, the project to meet that 0:16:13.640 --> 0:16:15.640 is definitely one of the bigger questions we have in 0:16:15.680 --> 0:16:19.720 the space. So currently, uh, this market wall big is 0:16:19.720 --> 0:16:23.040 still small enough. Um. We're developers, like or said in 0:16:23.080 --> 0:16:26.160 a lot of other European and US developers are actually 0:16:26.160 --> 0:16:29.400 turning their attention to selling clean energy to corporations. So 0:16:29.440 --> 0:16:31.960 if there's demand from a corporate buyer, there will be 0:16:32.000 --> 0:16:34.680 a seller to provide them the project. That's where the 0:16:34.680 --> 0:16:37.960 space is at currently. But again, as more companies set 0:16:38.000 --> 0:16:42.120 these goals, as electricity demand goes up, there's definitely the 0:16:42.200 --> 0:16:44.400 risk that there won't be enough supply to meet all 0:16:44.400 --> 0:16:47.080 of this demand. We haven't seen that yet, but I 0:16:47.080 --> 0:16:49.640 think it's something that all of the stakeholders in this 0:16:49.680 --> 0:16:52.280 space need to start thinking about more and more companies 0:16:52.280 --> 0:16:54.480 are signing up to the R one hundred or Renewable 0:16:54.560 --> 0:16:58.520 Energy one hundred. But you also mentioned two other frameworks 0:16:58.520 --> 0:17:01.560 that companies are using to I've down emissions, So the 0:17:01.720 --> 0:17:04.359 e P one hundred and the e V one hundred. 0:17:04.440 --> 0:17:07.159 Can you explain what those are? Sure? So the e 0:17:07.280 --> 0:17:09.840 P one hundred UM or I'll take a step back 0:17:09.880 --> 0:17:11.879 and say that both of these campaigns work in a 0:17:11.960 --> 0:17:14.560 very similar way to the R one hundred UM. The 0:17:14.600 --> 0:17:17.800 e P one hundred happens to focus on energy productivity 0:17:17.920 --> 0:17:20.879 or energy efficiency. So the e P one hundred actually 0:17:20.920 --> 0:17:24.120 encourages companies to double their energy productivity over a set 0:17:24.160 --> 0:17:27.159 amount of time, so forever unit of a product that 0:17:27.200 --> 0:17:30.800 they produce, they'll actually use half the electricity that's needed 0:17:30.880 --> 0:17:33.720 compared to where they currently set that target. The e 0:17:33.800 --> 0:17:37.320 V one hundred applies to electric vehicles, as the name implies, 0:17:37.800 --> 0:17:40.200 companies will go ahead and make some type of commitment 0:17:40.280 --> 0:17:45.040 to electrify their commercial vehicle fleet or install vehicle charging infrastructure. 0:17:46.000 --> 0:17:48.160 Is Amazon part of that. So they signed the deal 0:17:48.160 --> 0:17:50.439 the other day with Ryvan Right for a hundred thousand 0:17:51.680 --> 0:17:56.119 electric bands. I believe is that what you're talking about. Yeah, no, 0:17:56.400 --> 0:17:59.400 it definitely is. Amazon is very gung ho about not 0:17:59.760 --> 0:18:04.320 setting sustainability like joining sustainability campaigns. So they did set 0:18:04.320 --> 0:18:07.200 that commitment and that would technically apply to the e 0:18:07.280 --> 0:18:10.880 V one hundred, but I don't think they're actually a member. UM. 0:18:10.920 --> 0:18:13.600 I don't know for specific reason why they're all they 0:18:13.640 --> 0:18:15.960 also have a one renewable energy goal, but they're not 0:18:15.960 --> 0:18:17.920 an r A one hundred member. Is there a reason 0:18:17.960 --> 0:18:20.600 that the company would be or wouldn't be part of 0:18:20.640 --> 0:18:23.159 these campaigns? I think for a lot of companies, the 0:18:23.160 --> 0:18:24.879 reason that they would join one of these things is 0:18:24.920 --> 0:18:27.879 to for the pr purposes, Right, So you're actually making 0:18:28.320 --> 0:18:31.359 a large commitment that you're going to go ahead and 0:18:31.400 --> 0:18:34.520 buy one dred percent clean energy or electrifier fleet. The 0:18:34.600 --> 0:18:37.680 downside of setting one of these commitments is that you're 0:18:37.720 --> 0:18:40.159 now holding yourself accountable to hitting that target in a 0:18:40.200 --> 0:18:44.320 certain time frame. Exactly who has the most aggressive target 0:18:44.440 --> 0:18:47.040 in the r like in terms of a year, Yeah, 0:18:47.119 --> 0:18:50.280 a lot of the big tech companies um or I 0:18:50.280 --> 0:18:53.440 should say Google and Apple UM they had one clean 0:18:53.520 --> 0:18:56.119 energy goals UH last year and the year before and 0:18:56.119 --> 0:18:58.520 they've actually hit them. Um, so they have really been 0:18:58.560 --> 0:19:01.280 the last forward thinking here. Going back for a second, 0:19:01.359 --> 0:19:03.640 I'm used to seeing pp as that you know, historically 0:19:03.680 --> 0:19:06.159 have been signed between a developer and utility. Right, So 0:19:06.200 --> 0:19:07.639 I'm going to build a wind farm that I'm going 0:19:07.680 --> 0:19:10.800 to sell to Envy Energy or or whoever it might 0:19:10.800 --> 0:19:13.040 be for X amount of years, for X amount of 0:19:13.080 --> 0:19:16.679 dollars um. Are these these p p a s are 0:19:16.720 --> 0:19:20.400 are heavily regulated. Are corporate pp as regulated the same 0:19:20.440 --> 0:19:22.879 way as one between a developer and utility? Yeah, and 0:19:23.080 --> 0:19:26.160 in a lot of ways um. On the surface level, 0:19:26.200 --> 0:19:29.199 the structure of a corporate pp A versus utility p 0:19:29.280 --> 0:19:32.320 p A are very similar. So, as you mentioned, markets, 0:19:32.760 --> 0:19:35.879 a fixed agreement between a buyer and a seller, and 0:19:35.960 --> 0:19:38.679 for every unit of generation, that buyer pays that fixed 0:19:38.680 --> 0:19:40.520 price to the seller. When you actually dig in a 0:19:40.560 --> 0:19:42.960 little bit deeper to these contracts, there's a lot of 0:19:43.040 --> 0:19:45.600 nuances that make a corporate pp A very different than 0:19:45.640 --> 0:19:48.720 the utility p PA. For example, a lot of utility 0:19:48.720 --> 0:19:51.560 p pas are what we would say settled at the node. 0:19:51.920 --> 0:19:53.879 So what that means is that they're hedged against a 0:19:53.960 --> 0:19:57.119 nodal power price so a very specific power price and 0:19:57.160 --> 0:19:59.880 a specific part of a wholesale market. Corporate pp as, 0:19:59.880 --> 0:20:02.600 on the other hand, are actually settled at the hub 0:20:02.680 --> 0:20:06.159 level UM, which is a much larger um swath of 0:20:06.160 --> 0:20:09.240 a power market, and prices tend to vary differently from 0:20:09.240 --> 0:20:11.600 a nodal price UM, and that's actually coming from the 0:20:11.640 --> 0:20:14.360 demand of corporate buyers. I would say. The other big 0:20:14.359 --> 0:20:17.040 difference is actually term length. So a lot of utility 0:20:17.080 --> 0:20:19.440 p pas are in that twenty to thirty year range 0:20:19.760 --> 0:20:25.280