SB Energy head talks keys to massive PPA with Google
Armed with a massive new PPA with Google, SB Energy is rapidly expanding its pipeline and investigating where to stake a claim next outside of its strongholds in Texas and California.
The Google PPA for 942 MW of energy from a group of four projects in Texas, including Orion 1-3 and Eiffel Solar, is a huge step in scale for SB Energy. Not only is it the largest PPA Google has inked in Texas to date, but it also marks a significant step up in scale for SB Energy. The firm completed slightly less than 2 GW of renewable projects over the past three years in California and Texas; these projects alone will add 1.3 GW on top of that.
In an interview with NPM, SB Energy's Head of Power Marketing Supria Ranade said the firm approached and structured the deal with "both sides understanding very well each other's financing and energy risk needs and requirements," which she says has been a key for SB Energy's corporate PPA strategy. She says SB Energy's digital platform, which includes a data warehouse, data historian and project analytics and forecasting tools were also key value drivers for the transaction.
"Google is an extremely sophisticated counterparty with many expectations around project data and technology," Ranade said.
As the firm continues to engage with corporate buyers. Ranade says SB Energy's "variety of institutional capital sources," is also a key driver for success. This includes Ares Management, which invested USD 600m of equity capital into SB Energy back in March.
On the whole, Ranade characterizes the current state of the corporate PPA market as "very robust," driven by the "unprecedented" saturation of ESG mandates by corporate clients. More than 90 percent of the S&P top 500 companies published ESG reports in 2021 and this drive toward ESG mandates is bolstered by UN efforts including the UN Global Compact for ESG development and UN Task Force on climate-related financial disclosures, both of which have thousands of corporate signatories.
SB Energy's Pipeline
All in, SB Energy is now working through a development pipeline that includes 8 GW of solar and 14 GWh of storage with a goal of deploying 10 GW by 2025. This will include an expansion beyond California and Texas; Ranade tells NPM the firm is currently exploring favorable markets for expansion based on factors like interconnection and transmission, solar shape and overall, ISO dynamics as well as storage economics. Top of the list for the firm this year has been MISO and PJM, though Ranade says the firm's interests have expanded beyond those ISOs.
While Ranade admits the firm’s interconnection strategy involves a fair amount of simply “waiting in line,” she says the firm is engaged in top level discussions as ISOs grapple with how to overhaul the struggling system. In particular, the firm is engaged with SEIA and involved in FERC’s NOPR stakeholder process supporting measures that Ranade says would “bring more efficiency, transparency and cost-effectiveness to the interconnection process.” In the meantime, she says the firm is also interested in further supplementing its own development pipeline with acquisitions of projects in mid to late-stage interconnection processes.
Although optimistic, Ranade says the firm is still awaiting guidance from the federal government to understand how big a factor the IRA will have on its pipeline. In the meantime, though, she says the firm is already utilizing and “will continue to integrate” domestic content into its portfolio. The four new ERCOT projects will utilize First Solar modules manufactured at the firm’s Ohio manufacturing plant, SB Energy has also announced a partnership with long duration battery storage manufacturer ESS for 2 GWh of US-manufactured supply.
*This story was originally published exclusively for NPM subscribers last month.
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