Lightsource BP and Allianz Global sign proxy generation PPA for Texas solar project

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Image: Lightsource BP

Solar developer Lightsource BP has signed a proxy generation power purchase agreement (pgPPA) with investment group Allianz Global.

The contract, which was structured by investment risk firm Nephila Climate, relates to Lightsource BP’s 153MW capacity Briar Creek solar farm near Dallas, Texas, which is set to come online at the end of this year. It is expected to generate US$19.7 million in property tax revenue to Navarro County during its lifespan, and will create 250 jobs during construction, according to a statement from the company.

Proxy generation PPAs differ from other PPA structures in that they don’t settle energy on metered generation, but instead show an hourly index specifying the volume of energy a PV project would have produced if it had been operated under best practice standards.

Vijay Suchdev, managing director of Allianz Global’s Capital Solutions division, called the deal a “novel renewable energy hedge structure and risk management tool”.

Lightsource BP recently secured a virtual PPA agreement with US aerospace and defence firm L3Harris Technologies for 100MW of capacity at the developer’s Elm Branch solar project in Texas, which is also due to be completed later this year.

Kevin Smith, chief executive of Lightsource BP’s American business, said the deal represents a next stage in the “evolution of renewable energy products” in the US.

Smith was appointed the company’s new head of the Americas business in January 2019, tasked with leading an expansion in the region. The company recently joined the Solar Energy Industries Association in the US.

It is the latest corporate PPA agreement to come to pass in the US after a substantial rise in contracts over the past two years. A recent report from BloombergNEF showed that corporate renewables PPAs rose by 44% worldwide between 2018 and 2019 to encompass 19.5GW of capacity, driven by the US market. BloombergNEF also noted a pivot from wind to solar in the area managed by the Electric Reliability Council of Texas. Senior associate Kyle Harrison told PVTech at the time that businesses were trying to take advantage of lower energy prices during the state’s hot summer months.

Ariane West, Nephila Climate’s director of structured finance, said that contracts such as the proxy generation PPA “are essential to support investment and financing infrastructure on the scale needed to achieve net zero carbon targets.”

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