‘Generation and demand location will become a lot more meaningful’: John Mushriqui on power procurement ahead of Renewable Energy Revenues 2024

By PV Tech
sol systems project
“The big tech player customers, like Google and Microsoft, are going to be the ones driving the first of a kind and advanced technology growth,” says John Mushriqui. Image: Sol Systems

Next week, Solar Media’s Renewable Energy Revenues Summit will bring together more than 200 decision-makers across the renewables financing space to discuss opportunities and obstacles for the industry. With power prices inherently variable and high interest rates dissuading large-scale investments across a number of industries, questions remain as to how best to secure financing for renewable power projects.

Adding complexity to this is changing trends in power procurement, with a range of new buyers looking to invest in clean power. Last year, following the 2023 edition of the Renewable Energy Revenues Summit, David Abbott of Network Rail told PV Tech Premium that his organisation is looking to “do the right thing at the right price,” as companies without a background in renewable power become increasingly involved in the clean energy procurement space.

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Ahead of Renewable Energy Revenues 2024, we spoke to John Mushriqui, founder and CEO at InRange, who will speak at this year’s event. InRange is a power procurement platform for enterprise customers, which aims to streamline the entire renewable energy procurement process, and such projects could help level the learning curve for new companies in the renewables space and broadly accelerate the adoption of renewables across new buyers and industries.

How will renewable energy procurement change in 2024?

John Mushriqui: I see a change happening where energy buyers who have not been accustomed to directly buying renewable energy are starting to engage. Energy buyers aren’t starting to buy renewable energy because they’re altruistic or even to drive environmental, social and governance (ESG) goals; they’re doing it because it can have a positive financial impact on their organisation.

This is especially true for renewable energy technologies where the cost of capex is fundamentally dropping like solar and battery. These customers have never engaged in a power purchase agreement (PPA) or purchased renewable energy other than through their existing energy retailer, but now they’re seeing the financial opportunity.

For energy buyers who are experienced in purchasing renewable energy, I’m seeing a shift in the types of energy generation they’re considering. Whether it’s hydrogen or other advanced technology and first of a kind (FOAK) tech, if it’s cost effective, and can be deployed efficiently given grid issues. This is more isolated today to the larger buyers that have massive demand and can afford a more diversified portfolio that drives scale, but as we see the levelised cost of electricity (LCOE) of these technologies dropping I think that’s going to become more common.

Regardless of buyer type, they want the same things from their energy procurement: affordable, reliable, clean and local, and the expectation of local energy is a massive shift from what we’ve seen before. But given the current challenges with grid capacity, congestion, and blackout potential, energy being local is becoming a baseline requirement for it to deliver on being affordable, reliable and clean.

Which industry segments are you seeing as potential growth opportunities?

The big tech player customers, like Google and Microsoft, are going to be the ones driving the FOAK and advanced technology growth. Investment is growing and average capex is dropping, and those players have really driven that shift. But for those customers that are looking to purchase where they haven’t before, we’re seeing a lot of growth in the retail and logistics and distribution sectors.

These customers have a huge commercial building footprint, I’m talking millions of square feet of rooftop space. They often have plans for electric vehicle (EV) charging expansion, and they are exploring the market through on-site and sleeved PPAs.

Given their newness to this type of purchasing, we’re really seeing them challenging the norms and shifting the energy procurement mindset. Whether it’s advancing the PPA agreement terms or changing expectations around settlement and reporting, those are the segments that I think are going to be changing the game around energy procurement and driving growth.

What was the impact of the volatility in power prices in 2023 on corporate appetite for renewables?

2023 was such a unique year with the impact of volatility in power prices along with the massive uptick of the cost of financing renewable energy projects (which are, of course, related). These both created lots of question marks for renewable energy buyers.

But what we’re seeing is that even as prices had begun to flatten toward the end of 2023, buyers were still mindful of the upside and financial sense of getting a reliable fixed cost from a renewable PPA and hedging against future volatility, especially as compared with buying dirty energy from their traditional energy retailer. This impacted PPA procurement, and as a result we’re seeing those stable PPA prices continue into Q1 of 2024.

What should people be preparing for now as new regulations come into play, such as the EU Greenwashing Directive and Scope 3 reporting?

Companies have to start preparing for the impact of nodal pricing, meaning the pricing and impact of energy will be different based on location, informed by a number of factors from carbon impact at that node to grid congestion. I think that the impact of generation and demand location will become a lot more meaningful in purchasing decision making as well as in reporting – whether it’s location-based reporting or 24/7 CFE – and will drive that requirement of energy generated closer to the point of demand.

As I mentioned before, that shift toward local purchasing is also a factor for reducing congestion on the grid, reducing transmission cost and capacity issues, it’s going to be impactful in so many facets. Energy procurers must start taking locality into account in their decision-making. Local energy procurement is coming, and it’s coming fast.

As for Scope 3, it’s inherently challenging for a lot of organisations, by definition by being outside of their direct impact. Companies need to start thinking about how their power as a large organisation enables renewable energy procurement for their supply chain. Walmart is a great leader in this, but it’s similar to banks and finance deployment.

How will decentralised generation and AI/IT networks change the way power is bought and sold?

As I keep highlighting, I’m a deep believer that generation needs to get closer to demand. Day by day we’re seeing that with geothermal, EV charging and batteries, because locality provides a ton of added value at every level.

The challenge that we hear from operators and distribution network operators (DNOs) and transmission system operators (TSOs) is understanding how this distributed generation close to demand fits into the security of supply. They can’t change their grid planning till they know there’s a security of supply, and the naturally intermittent nature of solar needs to be solved. AI is going to be key in providing that security, and must work hand in hand with the grid operator to deliver it with the security, resiliency and reliability that we need.

At the end of the day, the biggest and simplest difference between centralised and decentralised generation is grid stability and resilience, and AI is key there, and that’s going to change the locality of power procurement.

How do you envisage the utility of the future?

The utility of the future is one that is customer-centric. Customer expectations of their energy retailers are changing – the market, environment and demand is changing – and customers are waking up and realising that they have a choice.

The utility of the future, the customer centric utility, focuses on trust, simplicity and savings. Its energy is affordable, abundant, reliable, clean and local. It leverages advanced technology and AI, and is transparent and collaborative with its data. It is a unified hub for all of their customer’s energy needs. 

Instead of being focused on how to get their hands on a volatile commodity and turn a profit on it, the utility of the future is focused on keeping their customers happy. And without knocking existing energy retailers, there’s a lot of room for improvement. And I think we’re starting to see that shift with the new school of decentralised energy companies.

PV Tech’s publisher Solar Media will host the Renewable Energy Revenues Summit on 21-23 May 2024 in London. The event will explore PPA design, the role of effective policy, evolving strategies for large energy buyers and more. For more information, go to the website.

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At the time of writing, Europe had had its most successful year in terms of Power Purchase Agreements (PPAs) with a record 7.8GW of renewable energy contracts signed. As we gather in May 2024 for the third edition of the Renewable Energy Revenues Summit, the energy landscape continues to evolve rapidly, influenced by the beating drum of climate change, volatility around power prices and the need to decarbonise power procurement as well as generation.
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