| By David Labrador
“Salesforce is one of the leaders of the corporate renewable energy movement and we are proud to see the company move into action with this wind energy agreement,” said Hervé Touati, a managing director at RMI and head of the BRC. “2015 has proven a record-setting year, with more than 3 gigawatts of wind and solar transactions signed by corporate buyers, compared to 1.2 gigawatts in 2014. Despite this incredible success, less than 20 corporations have been active in this space since its inception. This is just a start, and Salesforce should be recognized as one of the pioneers who made it happen.”
Clean Energy for Leased Facilities
Patrick Flynn, director of sustainability at Salesforce, says, “Salesforce came upon the virtual PPA as a great fit for us because we lease our data centers.” The owners of Salesforce’s data center facilities source their own electricity, but Salesforce wanted to help bring additional renewable energy to the grid on which they operate anyway. This type of PPA secures clean energy at long-term rates like a standard PPA, and it works even if they should move from one site to another.
A virtual PPA is one that buys energy that is not actually delivered to the buyer’s facilities, but rather goes into the grid. In this they are much like residential homeowners buying a subscription into a community solar garden. The panels aren’t on their house, but they’re credited for the electricity those panels produce.
Many Companies Have Lofty Goals but Salesforce is Meeting Them
Mark Hawkins, CFO of Salesforce, called the virtual PPA, “our biggest step yet toward achieving our commitment to be powered 100 percent by renewable energy.” Salesforce is a member of the RE100, a group of companies with a 100-percent renewable commitment, and is also committed to achieving net-zero carbon emissions by 2050.
“We think it’s really a special project in a number of ways, not only as a first step but also in terms of scale,” says Flynn. The expected 125,000 MWh of energy covered in the PPA exceeds the total global energy use by Salesforce’s data centers in its most recent fiscal year.
Corporate Wind Energy in Coal Country
The deal has another feature that is very important to Salesforce. Flynn explains, “We’re also pretty happy about the fact that it’s on West Virginia’s grid, a particularly dirty part of the U.S. electric system and also the grid that’s home to a majority of our data-center load.” West Virginia’s grid and the PJM interconnection of which it forms a part carry a lot of energy from coal-fired plants. Location can play an important role as companies select projects, and West Virginia deals are not very common.
Thanks in part to this PPA, by the end of next year West Virginia’s grid will also carry 103 MW of wind power from the New Creek Wind Farm in Grant County, W. Va. Hawkins says, “This new wind farm will bring clean energy to the same regional electricity grid that serves the majority of our data center load and support a global transition to a low-carbon economy.”
Helping Create a New Path for Corporate Power Purchasing
John Powers, vice president of business development at Renewable Choice Energy (RCE), helped Salesforce develop the innovative deal. According to Powers, “The virtual PPA is a great fit for people with leased space or for people whose load profile may change,” such as if they move their facilities from one place to another during the term of the agreement. PPAs make financial sense because they are signed for a period of ten to twenty years, and a lot can happen in that time. This type of PPA offers great flexibility for corporate power purchasers.
Flynn says transactions like this one are complex. “There are a lot of stakeholders involved, there are a lot of stakeholder groups that have criteria that need to be met. Anything you can do to make sure there is cross-departmental communication, awareness, and support for a project such as this one is instrumental in its success. It’s not the sort of thing that just happens out of the sustainability team.” These complexities are what the BRC serves to address. RCE, a transaction service provider, is also a BRC founding member.
Accelerating the Practice of Corporate Renewables Procurement
As BRC members, Salesforce and RCE are not sitting on the valuable lessons learned in their groundbreaking deal. Flynn says, “We as an organization give consistent feedback into shaping the BRC’s direction.” Powers points out that “We have translated a lot of those learnings into feedback for the BRC and direction on what we felt was really missing in the market.” In fact, the BRC recently published an Accounting Primer to address gaps in the accounting treatment of PPAs in response to learnings from BRC members.
Salesforce is a large and growing company and it is just getting started with this virtual PPA. Flynn says, “It was a very successful project and, to meet our RE 100 goals now and into the future, we are going to be looking at other, similar projects.” What is more, he says, “In doing so, we hope we’ve created a blueprint for other companies in similar circumstances for them to also lead and act on climate.”
Powers says of Salesforce, “They really have been one of the pioneers in this space and, since they started, there has been an absolute explosion of these types of deals. We’re extremely bullish on this market.” Noting the more-than-doubling of corporate PPAs in 2015, he says, “2015 is a banner year for sure and, very realistically, 2016 could double that again. It’s a really exciting time.”
This blog post originally appeared on the Rocky Mountain Institute Outlet, a blog that explores topics critical to RMI’s mission to drive the efficient and restorative use of resources.