5.5

Role of the BRC

BRC’s members have highlighted the particular need for coordination and industry-level support to enable them to decarbonise their physical operations. BRC’s role may change over the course of the implementation of the Roadmap by the industry, and to begin with will focus on two target areas:

1.   Support the retail industry to shift to sourcing responsible, competitive renewable electricity

The majority of offsite corporate power purchase agreements have been relatively large in size. Buyers of these contracts have high electricity consumption, are creditworthy, are comfortable with long-term contracts and are familiar with risks to achieve the economic and environmental benefits from the power purchase agreement. However, smaller buyers or even larger buyers with smaller projects are an emerging customer class among corporate power purchase agreements. 

There are a range of reasons why smaller buyers might be hesitant to negotiate a PPA. In many cases, their consumption may not be large enough to meet the threshold over which transaction costs and administrative burden justify the PPA. However, there are mechanisms to enable smaller sized power purchase agreement and, depending on the market, there are a few proven collaborative contract structures that can be leveraged.^[52]

• Aggregation (or ‘buyer consortium’) models, in which corporate buyers partner to aggregate their energy offtake, achieve an economy of scale, and contract together to optimize energy prices and the offtake profile.

• Anchor or joint tenancy models, in which smaller parties purchase small volumes of power from larger (‘anchor’) entity with an already established contract. The anchor tenant serves as the sole executor of the PPA in this case.
  
  Reseller contracting, in which smaller parcels of a PPA are sold on to other parties from a large-scale buyer.

There is potential for the BRC to facilitate the sourcing of renewable electricity on behalf of retailers, especially smaller retailers. For example, the BRC could organise a buyer consortium or investigate mechanisms to purchase tranches of existing PPAs from resellers.

2.   Support retailers in leveraging collective power in landlord discussions to assist in shift to 100% renewable energy sites

For retailers who rent the spaces where they operate, there can be considerable challenges in obtaining renewable electricity, especially from on-site generation, without landlord support. Landlords that are hesitant to invest (or co-invest) in renewable infrastructure can be an obstacle to retailers who would commit to more substantial energy reforms under their own agency. 

The BRC, as a representative of the collective interests in this space, has a role to play in negotiating with landlords on behalf of retailers. The BRC should endorse and stand behind the most progressive lease models that encourage landlords to invest in renewable generation capacity or empower retail tenants to make improvements on their own. While the exact stipulations of each lease will differ between all landlords and lessees, there is room for innovation in exploring the mutual benefits resulting from renewable power. For example, retailers could cover the financing of renewable infrastructure using avoided future costs from utility savings that they would otherwise be unable to realise without permission from the landlord, perhaps even sharing a portion of savings with the landlord in the long-term.

[] Joining the Club: Collaborative Offsite PPA Structures for Renewable Energy Buyers (2018). Bird & Bird, Schneider Electric.