The nature of renewable energies calls for a diversified approach toward energy production, storage, and consumption. However, there is still the desire for most large energy users to seek a one-stop-shop solution.
Atlas’s focus on tailor-made power purchase agreements (PPAs) is guided by the understanding that renewable energy efforts are more successful when they incorporate a variety of resources and methods of storage and distribution.
In a system that’s no ‘one size fits all,’ making the step towards an electricity supply that is renewable, clean, and green can present a challenge for corporations who are increasingly looking at going beyond 100% renewables to 24/7 green power.
In this ever-evolving field, it’s important for large energy buyers to work with providers who take on the necessary risk assessments and analyses and who seek to position themselves at the forefront of technological developments. Ultimately, the goal is to build a long-term collaborative relationship that will keep clients at the vanguard of renewable energy options.
Atlas’s Head of Commercial, Renato Valdivia, walks us through these points and more in our interview below:
Q: How does the intermittency issue present itself in your discussions with potential clients?
A: We’ve noticed that the main concern of potential clients with large 24/7 renewable electricity requirements, who are looking to absorb solar and wind power within their overall PPA, is being able to find a single solution that solves all their electricity needs.
By the very nature of how renewable energy works – after all, there are days when the sun isn’t shining, or the wind isn’t blowing – there is an inherent need for risk management. However, it’s important to remember that energy markets have two layers to them: there’s the physical level of energy production, which is where we experience the intermittency issue, and then there’s the financial layer. When we speak of the financial layer, we’re referring to the financial instruments that overlay PPAs.
Financial instruments go a long way to mediate intermittency risks – and a PPA will always define how risks are assigned in accordance to delivery obligations – but renewable energy providers like Atlas are themselves evolving to tackle the issue of intermittency by transitioning towards a portfolio approach that allows them to offer clients a combination of energy assets that are tailored to meet specific energy needs.
One example is the recent PPA that Atlas established with Enel, which harnesses wind energy from three different locations in Chile in order to ensure constant energy production. Portfolio-styled PPAs can also include a combination of different energy sources as well as battery storage. This is becoming more and more the paradigm by which Atlas operates.
Q: How exactly do you structure that kind of portfolio?
A: To be able to do this, you need very strong analytical capabilities and risk management tools. While everything can look good on an as-expected basis, you need to move toward risk analysis in order to take into account the natural variability of our business. This variability can be in the form of wind patterns or changes in power grid prices. The client’s demand or grid conditions can also change. These are all things that need to be modeled to gain a good assessment of how well your assets are able to deliver and how, as an energy provider, you’re going to manage the outstanding exposure so that you can provide clients with what they are looking for at a reasonable risk level for you, as a generator, and at a reasonable price for them.
Essentially, it becomes critical to evolve your commercial and risk sophistication as a company. In this sense, Atlas is operating from a more complex order of magnitude, where we want to integrate the concept of risk management and intermittency within a more flexible and diversified understanding of how to truly achieve clean energy targets.
Q: Speaking of energy targets, many corporations rely on energy attribute certificates such as I-RECs as a way to make renewable electricity claims. Is this still a valid option?
A: It is still a valid option, but over the last decade, we have seen that corporations – especially in the tech space – are going one step further. For example, Google, Microsoft, and most recently, the U.S. Department of Defense have all joined an initiative that pledges not only 100% renewables but also 24/7 clean energy.
It’s important to note the difference because a 100% renewable energy target might lead you to procure a PPA that only includes solar energy, for example, because that may be the cheapest option – but if your target is to meet 100% clean energy, then that gives you the incentive to procure a PPA that includes wind power, or PPAs that are backed by battery storage and other technologies that would allow you to receive clean energy even in the hours or days in which renewable resources are most scarce.
Q: Battery storage is often seen as an obvious way to tackle intermittency issues. Is current technology at the level that allows for batteries to function as a viable storage option yet?
A: Batteries have experienced an incredible run of technological improvement and cost decrease over the last five years. Is the technology there? It’s still improving, but it’s there, and as more investment flows into the space, we’ll start to see even greater innovation and cost reductions.
An added benefit of batteries is that they serve to stabilize the grid. Sometimes you have a large influx of solar and wind energies in power markets, given that these are variable technologies, and having a certain amount of battery or storage capacity in the grid helps to reduce volatility, which ultimately adds value.
However, it’s important to stress that batteries are not an all-encompassing solution. If the aim is to reach 100% renewables or 100% clean electricity, we need to see the role that batteries play as a complementary, albeit very important, one.
Seasonal patterns require innovative solutions and the road to 100% renewable and clean energy is fundamentally about finding ways to harness and distribute energy through the most ecologically and economically sound methods. This inherently rules out a one-focus solution.
Ultimately, It’s never going to be about only solar or only wind. Of course, the exciting part is that we are in the process of discovery. New chemistries and technologies are constantly springing up, but the bottom line is that it’s not enough with only solar, wind, and batteries: there’s got to be something else. So, while we keep deploying and making efforts to invest more in solar, wind, and batteries, we also need to keep funding the startups that can deliver the solutions that will get us all the way and not just 80% or 90% of the way.
Q: It’s precisely the quest for new solutions that leads Atlas towards new partnerships and collaborations, such as your most recent partnership with Hitachi ABB Power Grids. Could you share some insights on what you’ve learned by working alongside ABB?
A: ABB has been a great partner by helping Atlas jump-start our know-how about battery solutions that complement our PPAs. We’ve learned so much about the range of technologies that are available.
From the outside, it’s easy to bundle the idea of battery storage as a single concept. But there is a range of technologies, and it’s important to distinguish which are best suited for different applications. To do so, clients must have a detailed understanding of their business case.
For instance, you may want your PPA to shift power from solar hours to peak hours – and there are certain batteries that are designed to do that. There’s also the option to choose between Alternating Current (AC) or Direct Current (DC) solar batteries, both of which have a range of implications in terms of cost but also in the flexibility you have to operate on the grid.
With so many options available and more on the way, it’s definitely a complex but highly interesting and dynamic field. I think the most important thing to take away from all this is the need to work with savvy companies that are prepared to take advantage of all these technologies and provide clients with a range of tools to play in the power market.
Q: With your current strategy, is Atlas guaranteed to meet any and all requirements from big energy clients?
A: I’d love to be able to say yes, but the reality is more complex. There’s not always going to be a single generator that can solve all of a client’s needs if those needs are very complicated. I’m thinking of energy users with unusual load profiles, for example – although these are very rare. But, I would say that in most cases, we can design solutions that solve a good part of any client’s electricity needs and sustainability targets.
If you’re a client with a big load profile, my advice would be to shop around. You need to see what the range of potential providers can offer to you. I would always encourage you to talk to Atlas – I think we’ve proven by our track record in innovative solutions in different markets and the awards that we’ve received that we are not afraid to think outside the box. Our clients come from a whole range of industries, with hugely different electricity needs, from large utility companies to the chemicals sector, mining companies, and IT service providers. Above all, we’re ready to go the extra mile to try to deliver our clients the solutions that they’re looking for.
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