Corporate power purchase agreements (PPAs) enabled well over 9 GW of wind and solar development in the United States last year, and now they’re bringing new renewable opportunities to Canadian businesses—a PPA recently made Alberta’s first utility-scale solar project possible. We launched Bullfrog’s PPA solutions last year, and we believe in these agreements so strongly that we signed one ourselves! We’re delighted to be supporting the upcoming Burdett and Yellow Lake Solar Project, made up of two solar farms with a combined capacity of 39 MW, to be built southwest of Medicine Hat.
Once completed, the Burdett and Yellow Lake Solar Project will be Canada’s eighth largest solar project, producing enough renewable energy to power 6,400 homes.
We’re partnering with RBC in this initiative, with each of us taking equal parts of the solar farms’ output. RBC was a cornerstone customer when Bullfrog launched 15 years ago, at a time when a project like this would have been impossible—but it’s always been our goal to bring major new solar energy generation to the Canadian grid, and we’re thrilled to be doing so alongside RBC. Between RBC’s expertise in finance and knowledge in energy, and the capabilities of our PPA solutions in power markets, project modeling, and deal structuring, it’s been an excellent partnership.
BluEarth Renewables, the Burdett and Yellow Lake Solar Project’s developer, has also been terrific to work with throughout this journey. They’ll begin construction of the solar project in August 2020, expecting to start producing power in the second quarter of 2021.
Learn more about power purchase agreements in the short video below.
So why did we sign a power purchase agreement?
In essence, we see PPAs as a major part of the future of renewable energy in Canada. PPAs allow companies to shrink their carbon footprint while enabling a specific renewable project to get off the ground. In these contracts, a buyer like Bullfrog or RBC guarantees the developer, BluEarth in this case, a fixed price for energy from a project that has yet to be built. This guarantee gives the developer the financial security they’ll need to get their project approved, secure its funding, and build it.
These deals are a great way to bring new renewable projects online, but the deals are complex. Should I choose a physical or virtual PPA? If the latter, should I enter a hedge or other risk management arrangement? What are the accounting implications? These are all elements we know intimately from having lived it, in the buyer’s shoes—we’ve shared some of our experience below, and we’d be happy to lend our expertise to your organization.
PPAs come with risk. Here’s how you can mitigate it.
Unlike Bullfrog’s traditional green electricity, PPAs carry inherent risk. Depending on the Alberta power pool price, the buyer will be subject to the ups and downs of the power market.
But with the right advice to mitigate risk, PPAs can offer a hedge against fluctuating energy prices. You may even procure renewable power for less than you would otherwise pay for conventional energy.
To mitigate the risk involved with the Burdett and Yellow Lake Solar Project, Bullfrog has developed a hedging strategy that reduces our exposure to the power market. But not every company will want or need to go that route—for example, companies with power load in Alberta can essentially lock in their power price. If you think a PPA might be right for your organization, Bullfrog can work with you to evaluate your risk tolerance and develop a risk mitigation strategy that suits your needs.
Project selection is key. And it’s about more than location, location, location.
Choosing the right project for a PPA is critical. We work with businesses to determine whether wind or solar is a better fit, to find locations with the most energy potential, and to select the right project based on size, timing, commercial terms, and economic feasibility.
Selecting the right project is also an important way to mitigate risk. We assess potential projects like the Burdett and Yellow Lake Solar Project to ensure they have the right permits, won’t negatively impact communities or the environment, and will be economically viable. In short, we make sure the project will get built before signing on or recommending the project to a partner.
We consult with WWF-Canada and their Renewables for Nature tool, which helps choose sites with minimal environmental and community impact—not only is this better for the planet, it also helps avoid costly delays that can result from conflict with nature.
We can meet our climate goals with power purchase agreements
In order to shrink our carbon footprint and meet our Paris targets, we need to quickly expand renewable energy in Canada. Businesses can use power purchase agreements to make that happen, and we’re proud to show our community what’s possible by supporting the Burdett and Yellow Lake Solar Project. If you’d like to join us in building a renewably powered future, contact us at firstname.lastname@example.org to learn more about our PPA solutions.