EDPR NA CEO breaks down new Environmental Justice solar PPA structure with Microsoft
In an interview with NPM, EDP Renewables North America CEO Sandhya Ganapathy broke down the firm’s new PPA with Microsoft and Volt Energy Utility in Illinois and the environmental justice components that it expects to take into future contracts.
EDPR recently announced the PPA for offtake of its 110 MW Hickory Solar project in Jerseyville, Illinois with Microsoft and Volt Energy Utility. Microsoft is the offtaker of the project and has agreed to purchase electricity and RECs for 15 years with Volt Energy Utility acting as the concept and design counterpart, according to Ganapathy.
The contract is unique in that it utilizes an “environmental justice PPA” (EJ PPA) concept formed by Volt Energy Utility in tandem with Microsoft. Ganapathy says while the contract is ultimately very similar to a standard PPA, it adds an element of commitment to fostering environmental justice.
Specifically, a portion of the project’s revenue will be for the Sharing the Power Foundation, which is itself tasked with contributing funds into “mission-aligned programs” designated toward clean energy investments in rural and urban communities disproportionately impacted by “environmental injustices.” EDPR says the funds are specifically geared toward communities deemed as “behind in securing the benefits of a clean energy economy.”
The contract also includes a commitment that the project’s remaining development and construction will be with institutions that are minority or women owned. Finally, it requires EDPR to purchase and retire carbon offsets proportionate to the emissions generated by the project’s material components and on-site construction throughout the lifetime of the project.
Ganapathy says the cost of these carbon offsets is being factored into and absorbed by the contract.
“When we agree and determine a price with the offtaker and when we are actually taking the capital allocation decision internally, we are estimating and including the assumptions we have with regards to how much we will have to spend over the life of the project,” Ganapathy said.
Ganapathy says she considers the contract “a fantastic step in the right direction” and says she is hopeful that “many more players and offtakers in the market will embrace these kinds of things because our community needs it.”
“It hits many buttons in the right place because there’s this massive push toward the energy transition, but this ensures we are doing it in the most sustainable and just way,” Ganapathy continued.
While Ganapathy is not sure whether EDPR will replicate this EJ PPA contract specifically, she points to areas where the company is carrying out work with similar environmental justice goals. This includes a collaboration between Google and EDPR NA DG announced last year on a pipeline of 500 MW of DG and community solar in “areas dominated by low- and medium-income households.” It also includes the company’s recent opening of a workforce training center in Bloomington, Illinois specifically geared toward the training of solar and wind technicians.
The new contract marks the first time EDPR has worked with Volt Energy Utility, but it continues a longer standing relationship with Microsoft. In July 2019, Microsoft signed an offtake agreement with EDPR for its 125 MW Timber Road IV Wind project in Payne, Ohio. The tech company also executed PPAs with EDPR’s 140 MW Wolf Run Solar project in Illinois and 150 MW Cattlemen Solar Park II project in Texas, both of which are expected to be operational by the end of the year. Volt Energy Utility also signed an earlier EJ PPA to supply Microsoft with over 220 MW of solar in 2021.
Ganapathy says Microsoft has been “an incredible partner” for EDPR and says she has her eyes set on future offtake agreements with the company as it continues to expand its development of data centers.
“Microsoft has so much demand coming, particularly from AI and data centers,” Ganapathy said. “For a developer like EDPR with projects throughout the country, it should be a perfect match. So I’m expecting this relationship to continue and build upon what we already have.”
EDPR says its focus for the remainder of the year will be on engaging diverse customers, supply chain partners and local EPCs. On that front, Ganapathy says the company already has a “number of suppliers on the books” including such equipment as panels, turbines and transformers.
“It’s super important to have a diversified source of supply, which we’ve learned particularly over the last two or three years with all of the supply chain challenges we’ve faced,” Ganapathy said. “It is also important to ensure that supply chain has the same sort of value systems that we have like, for example, making sure no forced labor is involved. At the end of the day, we are committed to our sustainability standards and to what we have committed not only to our stakeholders and offtakers but also the communities where we are present.”
*This story was originally published exclusively for NPM subscribers last month.
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