Slashing carbon emissions requires the rapid deployment of solar, wind and other renewable energy supplies. But the projects often require complicated, lengthy negotiations between clean energy developers and buyers to get them off the ground.
Seattle’s LevelTen Energy and Google Cloud on Wednesday announced that they’ve teamed up to develop a new platform that accelerates that deal making. Current agreements can take more than a year to hammer out, but the redesigned approach can cut that down to two or three months, they said.
The companies have developed their strategy by applying it to deals involving Google. The California tech giant is a renewable energy champion, committing in 2020 to operating on clean energy 24/7 by the decade’s end — which means it can’t rely on fossil fuels when the wind stops blowing and the sun isn’t shining.
Others in the tech sector are likewise clean power proponents: Amazon boasts it’s the world’s largest corporate buyer of renewable energy, and Microsoft has followed Google in vowing to use clean power around the clock by 2030.
The traditional route to power purchase agreement starts with a request for proposals. Then a buyer runs complex analytics on potential projects, narrowing the candidates to a long list, then a short list. The buyer and seller must negotiate term sheets, which can take many months, then settle on their agreement.
“Every passing month, week, day, things change,” said Jason Tundermann, LevelTen’s chief operating officer.
And that introduces uncertainties: prices rise, tariffs come into place, supply-chain challenges emerge, studies on grid connections and transmissions are published.
The new approach simplifies the analytics, removes the long and short list, and eliminates the term sheet. The deal goes from analytics straight to an executable power purchase agreement.
“It takes entire chunks of the process completely out,” Tundermann said.
Since its launch in 2016, LevelTen has been connecting buyers and sellers and facilitating renewable power purchases. The company has raised $68.3 million. Alphabet, Google’s parent company, was one of the investors in a $35 million round in 2021.
E8, a Seattle-based group of climate investors, was among LevelTen’s first backers.
“It’s good to see their continued traction with Google, which further validates their position and potential,” said Mike Rea, E8’s executive director.
The partnership and new contracting platform appears well-timed. Hundreds of companies have made climate pledges, many with initial deadlines coming up quickly. At the same time, the marketplace is getting more complex with commitments like the 24/7 pledges. Sellers are navigating tricky economics, with headwinds from inflation and permitting delays, and tailwinds including Inflation Reduction Act funding for clean energy.
LevelTen and Google plan to make the new tool “widely available” later this year. Their aim, according to Google’s blog, is for the platform “to become a new standard for clean energy procurement.”