Speaker 1: Hi, This is Dana Perkins, and this is Mark Taylor,
Speaker 1: and you're listening to Switched on the BENF podcast. Today
Speaker 1: we're going to talk about power purchase agreements, which fit
Speaker 1: quite well into the narrative at the moment, because earlier
Speaker 1: is this last September, there was Climate Week in New York.
Speaker 1: There were climate strikes around the world had by Greta Thornberg.
Speaker 1: I believe they approximated about seven million people attended those.
Speaker 1: The United Nations held their twenty nineteen Climate Change Summit,
Speaker 1: and Bloomberg Philanthropies held an event called the Global Business Forum,
Speaker 1: where countries and companies continue to talk about various things
Speaker 1: facing the world, including emissions. An ever increasing number of
Speaker 1: countries and companies are coming up with what are called
Speaker 1: science based targets that are aligned with the Paris Agreement
Speaker 1: and the goals that were outlined there. Companies are just
Speaker 1: doing a lot of things to clean up. One thing
Speaker 1: that comes to mind when I hear power purchase agreements
Speaker 1: and companies cleaning up is the Mickey Mouse shaped solar
Speaker 1: farm in Florida. It sits out Disney World, and it's
Speaker 1: just one thing that that Disney is trying to do
Speaker 1: to clean up its act. It's the happiest solar farm
Speaker 1: on I'm sure it is. Um then there are several
Speaker 1: efforts like this around the world. Mike Bloomberg at the
Speaker 1: at the Global Business Forum had a cool quote that
Speaker 1: he said, we've only scratched the surface of what we
Speaker 1: can achieve when government and business leaders work together on
Speaker 1: climate change. So I guess that's what last week was
Speaker 1: all about. What businesses can do really and how they
Speaker 1: can cooperate with government. So it's not all just governments
Speaker 1: sitting in the U N or in a room or whatever,
Speaker 1: going back and forth. But there are things that businesses
Speaker 1: can do on their own end together. But back to
Speaker 1: the Paris Agreement, I thought the US was out of it,
Speaker 1: so not technically, the United States is still technically in
Speaker 1: the Paris Agreement, even if they're not necessarily moving towards
Speaker 1: their targets. Now. This is because and actually I was
Speaker 1: informed by Al Gore who was in London for part
Speaker 1: of Climate Week and gave a talk and he where
Speaker 1: he reminded everyone that the US is technically still in
Speaker 1: the Paris Agreement until the day after the next inauguration.
Speaker 1: So the US is in limbo they're in Paris. Not
Speaker 1: in Paris, the US is still signing the majority of
Speaker 1: back to power purchase agreements. Of the power purchase agreements
Speaker 1: signed throughout the world are signed in the United States,
Speaker 1: So pretty big amount for a country that isn't quite
Speaker 1: sure what they think about Paris. Okay, So so we're
Speaker 1: not going to get too far into politics today, but
Speaker 1: we are going to talk, as you said, about what
Speaker 1: companies are doing, and signing p p a s is
Speaker 1: one of those things because they have these sustainability targets
Speaker 1: they're trying to achieve and p p a s are
Speaker 1: a pretty well trodden path to achieving them. So sustainability aside.
Speaker 1: Given how cheap renewables have gotten, it seems p pas
Speaker 1: make a lot of sense for companies that just want
Speaker 1: to secure cheap energy for the companies. And today we'll
Speaker 1: be speaking with Kyle Harrison, who is BNFS Corporate Sustainability Analyst,
Speaker 1: and he's going to be speaking with us regarding a
Speaker 1: research note that is titled to h Corporate Energy Market Outlook.
Speaker 1: Benef Users can get this report on benf dot com,
Speaker 1: the BENF Mobile, Apple, the bloomber terminal at BENF Go
Speaker 1: and please note that benif does not provide an investment
Speaker 1: or strategy advice, and you can hear a full disclaimer
Speaker 1: at the end of the show without much further ado,
Speaker 1: let's hear what Kyle has to say. Kyle, thank you
Speaker 1: for joining us today. Thanks for having me. We are
Speaker 1: here today to talk about p p A s and
Speaker 1: I think the first thing that we should do is
Speaker 1: actually explain what a power purchase agreement actually is, so
Speaker 1: let us know. Yeah, that's definitely a good place to start.
Speaker 1: So it's a long term, typically fixed agreement UM for
Speaker 1: clean energy between an off taker typically a corporation or
Speaker 1: a utility, and then a developer of a clean energy project.
Speaker 1: So for every unit of generation that a solar or
Speaker 1: wind project generates, the off takers agreeing to pay that
Speaker 1: fixed amount. And what it actually does is it gives
Speaker 1: a developer the revenue certainty they need to go ahead
Speaker 1: and secure financing. So as a corporate buyer, I can
Speaker 1: actually say I signed a p p A for this
Speaker 1: solar project in Texas because of my demand for clean
Speaker 1: energy that solar project was built. Why would anybody want
Speaker 1: Why would a company want to sign a p p A.
Speaker 1: Companies are are increasingly setting emissions reductions goals UM, and
Speaker 1: a big portion of those emissions from companies comes from
Speaker 1: the purchasing of electricity, which is called the scope to emission.
Speaker 1: So a lot of companies are actually setting renewable energy
Speaker 1: targets alongside these emissions reductions goals, and that's actually guiding
Speaker 1: them and kind of the key component of their strategy
Speaker 1: when they're setting out and reducing emissions UM. So for
Speaker 1: some companies, you can actually go ahead and reduce your
Speaker 1: energy consumption by locking into one of these clean energy
Speaker 1: contracts UM. But for a lot of other companies, and
Speaker 1: we'll talk about this a little bit later, but as
Speaker 1: you get more of these industries and sectors beyond the
Speaker 1: technology space that are getting into this clean energy buying sector,
Speaker 1: a lot of these companies are avoiding what we would
Speaker 1: call transition risk, so they're increasingly getting pressure from investors
Speaker 1: UM and internal employees to actually be more sustainable UM.
Speaker 1: So these companies that are actually getting ahead in the
Speaker 1: game and buying clean energy to be more sustainable UM,
Speaker 1: they're less susceptible to that investor pressure. Is the objective
Speaker 1: to these p p a s is it mostly around
Speaker 1: clean energy and sustainability and emissions reductions or is there
Speaker 1: cost advantage to it as well. There's definitely a cost advantage, So,
Speaker 1: like you mentioned, Mark, part of it definitely comes down
Speaker 1: to sustainability UM because again it's an effective way to
Speaker 1: reduce emissions. But for a lot of companies when they
Speaker 1: go ahead and sign a clean energy deal UM. So
Speaker 1: for example, if you install solar on your rooftop UM,
Speaker 1: that could potentially be cheaper than your retail electricity bill um.
Speaker 1: So companies can save in that regard. But at the
Speaker 1: same time, a lot of these power purchase agreements that
Speaker 1: we're discussing, they're structured as financial hedges where a company
Speaker 1: is actually hedging against a wholesale market price. So if
Speaker 1: you sign a p p A and you lock into
Speaker 1: that fixed rate for clean energy and it's actually cheaper
Speaker 1: than the wholesale market price, companies actually save money in
Speaker 1: the long term. So there definitely is an economic incentive
Speaker 1: for this as well. Well. And that's what some of
Speaker 1: our other research reports at BIENNA for saying that the
Speaker 1: price of renewable energy actually is in some regions actually
Speaker 1: beating other sources of energy. So it may just be
Speaker 1: good financial sense for companies. My question is what types
Speaker 1: of companies actually want to buy p p A s.
Speaker 1: Are they the big data heavy companies that have really
Speaker 1: energy intensive storage needs, or are they manufacturers or something else.
Speaker 1: When we saw the first corporate clean energy purchases, UH,
Speaker 1: this space was really dominated by big technology companies um so,
Speaker 1: I think these companies that have big data centers that
Speaker 1: utilize a lot of power demand um and for these
Speaker 1: companies that was an effective way to hedge against the
Speaker 1: prices that they'd be paying for power. Um So, those
Speaker 1: big buyers like Google, Microsoft, Facebook, Amazon, they were really
Speaker 1: the first to get ahead in this game. But increasingly
Speaker 1: data as you mentioned, as the cost of clean energy
Speaker 1: has come down and there's actually an economic incentive for
Speaker 1: company to start buying clean energy, we're seeing all these
Speaker 1: new industries enter this market. Um SO. To give you
Speaker 1: a sense of scale, there's now roughly two hundred companies
Speaker 1: that have established a one Renewable Electricity target UM and
Speaker 1: joined a campaign that we call the r E one
Speaker 1: hundred um so, these companies are actually going to go
Speaker 1: ahead over the next couple of years and offset one
Speaker 1: of the electricity they consume with clean energy purchases. So
Speaker 1: that's really exciting. UM. You're seeing manufacturing companies, big retailers
Speaker 1: like Walmart UM. But what I would say is actually
Speaker 1: the most exciting is we're starting to see the oil
Speaker 1: and gas industry get into the space. So at the
Speaker 1: end of x on Mobile actually went ahead and signed
Speaker 1: two of the largest power purchase agreements that we've seen
Speaker 1: in the United States to date UM and for them,
Speaker 1: kind of going back to your question, Mark, this is
Speaker 1: a way for them to go ahead and mitigate this
Speaker 1: transition risk UM and this investor pressure that they're going
Speaker 1: to inevitably get to go ahead and reduce their emissions
Speaker 1: and conduct business more sustainably. So can you describe that
Speaker 1: those p p as in a bit more details? So
Speaker 1: who wins when Excen signs a big p p A.
Speaker 1: Both contracts were signed with orstad UM, and I actually
Speaker 1: think that brings up a good point is that you're
Speaker 1: seeing a lot of big European companies get involved in
Speaker 1: this space, both in Europe and in the United States. UM.
Speaker 1: And it was for a solar and wind project in Texas,
Speaker 1: which has really been the hottest market globally for these
Speaker 1: corporate pp as. This brings me to another question that
Speaker 1: I was really wondering about. So you were talking about
Speaker 1: in in the note you mentioned how of corporate pp
Speaker 1: A volumes this year, So nineteen are in the US.
Speaker 1: This project is being built by European company. And one
Speaker 1: thing I do know being in London is that we
Speaker 1: have a higher density of E s G investors in
Speaker 1: Europe than the you do in the US. Yet we've
Speaker 1: got so many more p p as being signed in
Speaker 1: the US. What's kind of driving that big difference and
Speaker 1: why are they so popular in the US. It really
Speaker 1: comes down to the ease of signing one of the contracts.
Speaker 1: So in the United States, you have this blueprint for
Speaker 1: signing one of these power purchase agreements. You have all
Speaker 1: of these advisory companies like Schneider Electric and Edison Energy
Speaker 1: that now exists in this space, and they'll actually go
Speaker 1: ahead and hold your hand through this entire negotiating process.
Speaker 1: So as you get all of these new entrants into
Speaker 1: the corporate procurement market, whether they are from Europe or
Speaker 1: Asia or the United States or anywhere else, typically they're
Speaker 1: actually going to go to the United States first to
Speaker 1: sign these deals. Because there was so much experience in
Speaker 1: the market and it's a lot more comforting for them.
Speaker 1: So that's really been the big driver, because I agree
Speaker 1: with you that overall you're seeing so many companies from
Speaker 1: around the world and outside of the United States make
Speaker 1: these really ambitious clean energy commitments. To give you a
Speaker 1: sense of scale, there's actually over twenty companies in Japan
Speaker 1: alone that have now set this r E one hundred
Speaker 1: goal that I mentioned earlier. But all of these companies
Speaker 1: are setting these targets out to, and what that tells
Speaker 1: me is that there's a public acknowledgement from all of
Speaker 1: these companies that there's no immediate term option for them
Speaker 1: to buy clean energy domestically in Japan. So what these
Speaker 1: companies are actually doing is moving to the United States
Speaker 1: to sign the contracts. So if we look at Japan,
Speaker 1: for example, you now have over twenty companies that are
Speaker 1: based in Japan that have set one of those already
Speaker 1: one hundred goals that I mentioned earlier. But all of
Speaker 1: these companies are setting their targets out to and to me,
Speaker 1: that's a public acknowledgement that there's no short term solution
Speaker 1: for them to buy clean energy domestically. They're instead looking
Speaker 1: at the United States to sign these deals, um, and
Speaker 1: this is a trend that we expect to see moving
Speaker 1: forward in the US. Then you're saying it's fairly straightforward
Speaker 1: to sign a p p A in Japan. My understanding
Speaker 1: is that they do this through auctions, and that there
Speaker 1: was one fairly recently that maybe didn't quite get the
Speaker 1: uptake that was planned. Can you explain more what is
Speaker 1: so complex about Japan exactly? And I should have mentioned
Speaker 1: this earlier, but there actually is no p p A
Speaker 1: mechanism in Japan currently. So if I'm a Japanese company
Speaker 1: and I want to buy clean energy at a large scale,
Speaker 1: well again, making an effort to incentivize new clean energy
Speaker 1: build on the grid, which a pp A does, I
Speaker 1: have no option to do that in Japan right now.
Speaker 1: What I instead have to do is tap into this
Speaker 1: non fossil market that was rolled out in the last
Speaker 1: couple of years. So I can actually have go ahead
Speaker 1: and have a energy retailer in Japan go ahead and
Speaker 1: buy these non fossil certificates for me, which correlate with
Speaker 1: a unit of clean energy generation, and then they can
Speaker 1: actually go ahead and retire those non fossil certificates on
Speaker 1: my behalf. Um, so for companies, that's kind of the
Speaker 1: most accessible way for them to tap into this clean
Speaker 1: energy market UM. But as you mentioned, it's kind of
Speaker 1: the market is very small right now and it's really
Speaker 1: not living up to its potential UM and to me,
Speaker 1: that signals again that Japanese companies acknowledge UM that they
Speaker 1: need to take away and see approach for this. They're
Speaker 1: either going to buy clean energy in the United States
Speaker 1: or they're going to continue to push for more accessibility
Speaker 1: for clean energy at a large scale UM domestically because
Speaker 1: right now they don't have that access. What would facilitate
Speaker 1: a faster rollout in Japan or pretty much anywhere else.
Speaker 1: Is it largely a regulatory environment or is it down
Speaker 1: to how the utilities do things. It's a combination of both.
Speaker 1: I think what you need is boots on the ground
Speaker 1: from large multinational companies that have a footprint in some
Speaker 1: of these Asian markets. To give you an example, UM,
Speaker 1: Google has spent years and years lobbying with regulators in Taiwan,
Speaker 1: which has a very similar power market structure UM and
Speaker 1: historically did not allow for p P a s UM,
Speaker 1: so they spent a lot of time working with the
Speaker 1: regulators to allow them an option to do so, and
Speaker 1: actually in the beginning of twenty nineteen they signed a
Speaker 1: ten megawatt solar p PA. So it's small volume, but
Speaker 1: it's still a step in the right direction. You need
Speaker 1: to see that type of lobbying in markets like China
Speaker 1: and Japan and India, UM and even some markets in
Speaker 1: Europe as well. So I think that's one big driver.
Speaker 1: And the other way that companies can actually make a
Speaker 1: big impact here is by targeting their supply chain. So
Speaker 1: some of these multinational companies, they might not have operations
Speaker 1: in some of these Asian markets, but they do have
Speaker 1: a heavy supply chain presence there. So actually going ahead
Speaker 1: and setting sustainability goals for your suppliers is actually going
Speaker 1: to go ahead and pressure them to further pressure regulators
Speaker 1: and actually open the door. UM and the same goes
Speaker 1: for utilities. They're facing the exact same type of pressure
Speaker 1: that Asian regulators are already at this point. Para purchase
Speaker 1: agreements are going to lead to additional capacity needing to
Speaker 1: be built to hit the shortfalls. So you mentioned that
Speaker 1: ninety four gig watts are roughly ninety seven billion U
Speaker 1: S dollars in New investment will be needed in order
Speaker 1: to reach this is this big number, small number and
Speaker 1: kind of what dent does this make in emissions? Yeah,
Speaker 1: it's it's a big number, um, you know, compared to
Speaker 1: global clean energy investment, it's still a small portion. But
Speaker 1: what you have to remember is that this is still
Speaker 1: a very small grouping of companies. So again, it's roughly
Speaker 1: two hundred multinational companies that have set these R E
Speaker 1: one hundred goals um, and that group of companies continues
Speaker 1: to grow over time. So as you have more R
Speaker 1: E one hundred companies making these types of clean and commitments,
Speaker 1: this demand this ninety four giga watts of clean energy,
Speaker 1: build this nine billion dollars of clean energy investment. It's
Speaker 1: only going to grow. And what we've seen in the
Speaker 1: last couple of years that we've been doing this forecast
Speaker 1: is that demand for the R A one hundred continues
Speaker 1: to keep pace or even outstrip the actual existing activity
Speaker 1: from R one hundred members UM. So again just kind
Speaker 1: of the short answer would be the number is not
Speaker 1: huge right now, but it's going to get a lot bigger.
Speaker 1: So power purchase agreements are going to grow in size,
Speaker 1: but then also energy demand is growing, population is growing.
Speaker 1: Is this even going to make a dent? And I
Speaker 1: guess the real question here is our power purchase agreements
Speaker 1: growing at a rate that is at least faster than
Speaker 1: energy demand is growing. It depends on what industry you
Speaker 1: look at. So in the financial space, a lot of
Speaker 1: banks actually have decreasing electricity demand UM, so they're implementing
Speaker 1: energy efficiency UM. But at the same time, a lot
Speaker 1: of banks are actually letting go employees and shrinking their
Speaker 1: workforce UM. So the financial industry demand is going down UM.
Speaker 1: And overall, I think if you were to look at
Speaker 1: the financial financial industry alone, these p pas and this
Speaker 1: activity will eventually outstripped demand. However, if you look at
Speaker 1: an industry like technology, it's the complete opposite. So we
Speaker 1: actually just put out a report on a big Google
Speaker 1: clean energy announcement UM and going ahead and doing that research,
Speaker 1: what we discovered was that between two thousand and ten,
Speaker 1: Google's electricity demand has actually grown four hundred and fifty percent,
Speaker 1: So they now consume over ten terra watt hours of
Speaker 1: electricity on an annual basis, and that's equivalent to a
Speaker 1: small country. So even if we used a conservative growth forecast,
Speaker 1: for Google's electricity demand moving forward, their demand is still
Speaker 1: going to exceed twenty terra wat hours or thirty terra
Speaker 1: watt hours of electricity in the next couple of years UM.
Speaker 1: So for them, they're going to going to need to
Speaker 1: continue to sign clean energy deals at a very rapid pace, um,
Speaker 1: more rapid than they've even currently been signing deals at UM.
Speaker 1: So again, I think it really comes down to the
Speaker 1: industry UM. But as a whole electricity demand continues to
Speaker 1: grow at a faster rate, the project to meet that
Speaker 1: is definitely one of the bigger questions we have in
Speaker 1: the space. So currently, uh, this market wall big is
Speaker 1: still small enough. Um. We're developers, like or said in
Speaker 1: a lot of other European and US developers are actually
Speaker 1: turning their attention to selling clean energy to corporations. So
Speaker 1: if there's demand from a corporate buyer, there will be
Speaker 1: a seller to provide them the project. That's where the
Speaker 1: space is at currently. But again, as more companies set
Speaker 1: these goals, as electricity demand goes up, there's definitely the
Speaker 1: risk that there won't be enough supply to meet all
Speaker 1: of this demand. We haven't seen that yet, but I
Speaker 1: think it's something that all of the stakeholders in this
Speaker 1: space need to start thinking about more and more companies
Speaker 1: are signing up to the R one hundred or Renewable
Speaker 1: Energy one hundred. But you also mentioned two other frameworks
Speaker 1: that companies are using to I've down emissions, So the
Speaker 1: e P one hundred and the e V one hundred.
Speaker 1: Can you explain what those are? Sure? So the e
Speaker 1: P one hundred UM or I'll take a step back
Speaker 1: and say that both of these campaigns work in a
Speaker 1: very similar way to the R one hundred UM. The
Speaker 1: e P one hundred happens to focus on energy productivity
Speaker 1: or energy efficiency. So the e P one hundred actually
Speaker 1: encourages companies to double their energy productivity over a set
Speaker 1: amount of time, so forever unit of a product that
Speaker 1: they produce, they'll actually use half the electricity that's needed
Speaker 1: compared to where they currently set that target. The e
Speaker 1: V one hundred applies to electric vehicles, as the name implies,
Speaker 1: companies will go ahead and make some type of commitment
Speaker 1: to electrify their commercial vehicle fleet or install vehicle charging infrastructure.
Speaker 1: Is Amazon part of that. So they signed the deal
Speaker 1: the other day with Ryvan Right for a hundred thousand
Speaker 1: electric bands. I believe is that what you're talking about. Yeah, no,
Speaker 1: it definitely is. Amazon is very gung ho about not
Speaker 1: setting sustainability like joining sustainability campaigns. So they did set
Speaker 1: that commitment and that would technically apply to the e
Speaker 1: V one hundred, but I don't think they're actually a member. UM.
Speaker 1: I don't know for specific reason why they're all they
Speaker 1: also have a one renewable energy goal, but they're not
Speaker 1: an r A one hundred member. Is there a reason
Speaker 1: that the company would be or wouldn't be part of
Speaker 1: these campaigns? I think for a lot of companies, the
Speaker 1: reason that they would join one of these things is
Speaker 1: to for the pr purposes, Right, So you're actually making
Speaker 1: a large commitment that you're going to go ahead and
Speaker 1: buy one dred percent clean energy or electrifier fleet. The
Speaker 1: downside of setting one of these commitments is that you're
Speaker 1: now holding yourself accountable to hitting that target in a
Speaker 1: certain time frame. Exactly who has the most aggressive target
Speaker 1: in the r like in terms of a year, Yeah,
Speaker 1: a lot of the big tech companies um or I
Speaker 1: should say Google and Apple UM they had one clean
Speaker 1: energy goals UH last year and the year before and
Speaker 1: they've actually hit them. Um, so they have really been
Speaker 1: the last forward thinking here. Going back for a second,
Speaker 1: I'm used to seeing pp as that you know, historically
Speaker 1: have been signed between a developer and utility. Right, So
Speaker 1: I'm going to build a wind farm that I'm going
Speaker 1: to sell to Envy Energy or or whoever it might
Speaker 1: be for X amount of years, for X amount of
Speaker 1: dollars um. Are these these p p a s are
Speaker 1: are heavily regulated. Are corporate pp as regulated the same
Speaker 1: way as one between a developer and utility? Yeah, and
Speaker 1: in a lot of ways um. On the surface level,
Speaker 1: the structure of a corporate pp A versus utility p
Speaker 1: p A are very similar. So, as you mentioned, markets,
Speaker 1: a fixed agreement between a buyer and a seller, and
Speaker 1: for every unit of generation, that buyer pays that fixed
Speaker 1: price to the seller. When you actually dig in a
Speaker 1: little bit deeper to these contracts, there's a lot of
Speaker 1: nuances that make a corporate pp A very different than
Speaker 1: the utility p PA. For example, a lot of utility
Speaker 1: p pas are what we would say settled at the node.
Speaker 1: So what that means is that they're hedged against a
Speaker 1: nodal power price so a very specific power price and
Speaker 1: a specific part of a wholesale market. Corporate pp as,
Speaker 1: on the other hand, are actually settled at the hub
Speaker 1: level UM, which is a much larger um swath of
Speaker 1: a power market, and prices tend to vary differently from
Speaker 1: a nodal price UM, and that's actually coming from the
Speaker 1: demand of corporate buyers. I would say. The other big
Speaker 1: difference is actually term length. So a lot of utility
Speaker 1: p pas are in that twenty to thirty year range
Speaker 1: because utilities are comfortable signing these volatile energy agreements. For corporations,
Speaker 1: energy is not the core component of their business. They're
Speaker 1: not energy companies UM, so for them, they're much more
Speaker 1: comfortable making shorter term UM commitments to buying clean energy.
Speaker 1: Are you seeing a lot of projects that are pas
Speaker 1: that have gone into effect? Have you seen them already expire?
Speaker 1: Since you've been studying this now, we haven't seen any
Speaker 1: corporate pp as reached that expiration level yet UM. But
Speaker 1: what I would envision happening is corporate buyers will go
Speaker 1: ahead and sign deals with new solar wind projects UM
Speaker 1: because as Dana mentioned earlier, the price for solar and
Speaker 1: wind continues to plummet UM and you're likely looking at
Speaker 1: much cheaper prices five, ten, fIF teen years down the
Speaker 1: line than what you're seeing now. Does this mean that
Speaker 1: if I signed a p p A with a with
Speaker 1: a corporation from my solar plant UH with my solar
Speaker 1: farm five years ago, and I've got another five in
Speaker 1: the contract at that end of five years, will nobody
Speaker 1: want my power and have to rebuild the cellar farm.
Speaker 1: There's a lot of other types of off tape structures
Speaker 1: that developers can take advantage of. So Yes, they can
Speaker 1: traditionally take that project merchant so actually sell that power
Speaker 1: directly into the wholesale market and get the volatile energy
Speaker 1: price at whatever it may be at that time. UM.
Speaker 1: But there's also a growing number of insurance products that
Speaker 1: exist in the market today. UM So you actually have
Speaker 1: insurance companies stepping in as off takers as alternatives to
Speaker 1: corporate buyers UM and they'll sign very complicated agreements like
Speaker 1: what we would call a proxy revenue swap UM that
Speaker 1: are actually settled as a function of revenue rather than
Speaker 1: uh a price per unit of generation like a pp
Speaker 1: A that we described earlier. UM So, for a lot
Speaker 1: of developers they'll actually go ahead and work with insurance
Speaker 1: companies as an alternative. We are b an e F.
Speaker 1: We like to talk about the future, so I want
Speaker 1: to know we're talking about in nineteen you're saying of
Speaker 1: the activity with p p as is happening in the US,
Speaker 1: what's the future going to look like? Is it still
Speaker 1: going to be really heavily in the US. In the
Speaker 1: short term, It's going to be in the U s
Speaker 1: UM And the reason is that you have the illuming
Speaker 1: step down of the production tax credit and the investment
Speaker 1: tax credit for so learned wind in the US UM.
Speaker 1: So there is this short term urgency both from developers
Speaker 1: but also off takers to go ahead and sign deals
Speaker 1: and get these projects commissioned in time to qualify for
Speaker 1: these tax credits. So the US will be the biggest
Speaker 1: market moving forward, at least in the short term UM.
Speaker 1: But we really do need to see the Asian markets
Speaker 1: and the European markets evolve UM for this truly to
Speaker 1: be a global phenomenon UM. So you need companies to
Speaker 1: continue to make commitments in Europe and Asia. You need
Speaker 1: multinational companies to continue to put boots on the ground
Speaker 1: and actually work with regulators and utilities to open up
Speaker 1: access to buying clean energy, and you need to actually
Speaker 1: go ahead and galvanize the supply chain to make similar
Speaker 1: types of commitments. UM. As these trends continue, we do
Speaker 1: anticipate that Asia and Europe will pick up some of
Speaker 1: the slack um, but for the short term, it's still
Speaker 1: going to be a U S story. Kyle, Thank you
Speaker 1: so much for joining us today. Yeah, no problem, Thanks
Speaker 1: for having guys. Bloomberg an e F is a service
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