To partner or not to partner?
Is aggregation going to spearhead a growth in the renewable energy arena? This article seems to suggest so. The simple idea behind "aggregation" is as follows:
two or three companies come together for the purpose of developing a renewable energy project (wind farm/solar array) that will generate enough power to be able to cover each of the participants' energy needs;
this joint venture may or may not involve a company that specialises in renewable energy projects and which will have the necessary expertise to undertake this development;
once the project is operational each of the participants reaps the benefits (i.e. the electricity generated) under a power purchase agreement and/or other contractual arrangement.
Is this a viable model? Potentially. The proposition raises more questions than it provides answers:
how is this joint venture going to be structured? Notwithstanding the participants' joint purpose each of the participants will have its own corporate agenda and board to satisfy.
Such a venture will require a certain degree of "openness" and collaboration. How much information are participants willing to share and how will market intelligence be safeguarded;
Any arrangement for the purchase and/or use of electricity will be highly technical, as the energy profile of every participant needs to be taken into consideration;
What are the net benefits for each participant and how will these materialise (in financial terms)?
Aggregation is, as correctly pointed out to still be in its infancy. It will require some brave "new entrants" to take the time and expend the energy required in creating a viable financial/technical model, which will then need to be reflected in the legal agreements that the parties will be entering into.
However, we have met this type of challenge head on before with 5 + 5 solar parks where community entities and commercial developers have had to align interests so it can be done.
A primary knock against corporations getting into the business of backing large-scale clean energy projects is that high rollers tend to dominate the field. Think Apple's $850 million deal back in 2015 to build a California solar farm, or Google, Ikea and Walmart's $1 billion-plus renewable power portfolios.For those without 10-figure sums on hand, however, a new option soon could be on the table.Instead of relying on one blockbuster energy user to solely finance a new solar, wind, hydropower or other renewable energy project, so-called "aggregated" purchasing models hold promise to broaden the field of potential corporate backers by bringing multple companies together in one deal. That is, if different parties can get on the same page and hash out familiar obstacles related to the complexity of long-term clean energy purchases.