Tinder for Utilities Matches Power Buyers and Sellers
(Bloomberg) -- It can be hard for a company to find that special wind or solar farm that ticks all the right boxes.
As businesses and governments set targets to reduce their greenhouse gas emissions, contracts to buy power directly from renewable energy producers are becoming more popular than ever. Last year a record $1.4 billion of contracts were signed in Europe, according to an estimate from renewable energy company Pexapark AG.
New matchmaking programs likened to the iconic app built by Tinder LLC aim to eliminate the costs of looking for the right supplier. It opens new possibilities for smaller companies that don’t have the resources to employ whole procurement teams.
This has been a banner year for clean these power purchase agreements. Companies already have signed contracts to buy a record 15.5 gigawatts of clean energy, 14% more than in all of last year, according to research from BloombergNEF. But the vast majority of those deals have been in the U.S., where the biggest technology companies have built data centers hungry for more electricity.
“If you’re a small company, it’s difficult to know where to start,” said Helen Dewhurst, an analyst at BloombergNEF. “What the platforms do is allow smaller companies to look for projects that match their demand in a cheaper way, but also saves time.”
On the Instatrust platform from Norwegian risk assessment and quality assurance company DNV GL Group, renewable energy developers and companies create profiles with projects or energy needs. An interactive map displays the various projects, with more information available at the click of a mouse. The potential buyer can see features such as the size of the project, credit rating and when the development is set to be complete.
An upcoming feature will automate the process. Rather than have to look for the right purchaser or provider, an algorithm will make the connection between buyers and sellers.
“If you get a match, you’ll get a notification,” Caroline Brun Ellefsen, global head of Instatrust, said in an interview. “It is a bit like Tinder.”
Starting next year, DNV GL will have more competition from General Electric Co.’s renewables unit and Swiss utility Axpo Holding AG. A new platform known as The Green Accelerator will launch in Spain and Sweden early next year before being rolled out in other European markets, said Uli Suedhoff, director of business development for GE Renewable Energy in Europe, the Middle East and Africa.
The Green Accelerator doesn’t display all the available projects like Instatrust does. Instead it takes in all the suppliers’ offers and buyers’ demands and pairs them up in a monthly auction. Once the parties are connected, the program offers a standardized contract, which helps reduce the time and cost of the transaction, Suedhoff said. Participation is free, but if the parties sign a contract, then the platform takes a fee.
“We can accelerate the PPA market in Europe,” Suedhoff said. “Creating more transparency and a more efficient form for buyers and sellers to match their needs and provide as much standardization is the way to go.”
So what does the future hold for these platforms?
Ultimately they could capture as much as 20% of the market in Europe, Suedhoff said.
©2019 Bloomberg L.P.