A Facebook First: tech giant invests directly in a Renewable Project.

Analysts say the social media company’s tax-equity investment in a 379-megawatt solar project in Texas could be an indication of deals to come in the company renewables market.

Facebook announced Thursday it has finalized an agreement to provide tax-equity financing for a 379-megawatt solar project developed by Longroad Energy Partners in West Texas. It’s the first time the social media company, which last year committed to reaching 100% renewables by 2020, has directly invested in a wind or solar project.

Shell Energy North America, another corporation that’s shown increasing interest in renewables, signed a 12-year power-purchase agreement for the project’s power. Both Facebook and Shell will use the renewable energy credits from the project, although Facebook told Greentech Media it’d receive the majority of those credits.

Facebook will be the only tax-equity investor for the Prospero project, saying its investment could give a brand new model for corporations investigating renewables procurement.

“We hope such investments can be a new avenue of meaningfully engaging with projects, which could be easier for some firms than a long-term power-purchase agreement, thereby unlocking new options for more organizations to fulfill their goals and grow the market,” said Peter Freed, Facebook’s energy strategy manager, in a statement.

Longroad Energy Partners, the Boston-based wind and solar developer behind the Prospero project, will use initial solar panels and trackers from NEXTracker. The engineering, procurement and construction contractor for the project is California’s Swinerton Renewable Energy. It’s slated for completion in 2020.

Separately on Thursday, 1st solar announced a deal that will see it supplying Facebook with solar power from its Cove Mountain two project in Utah, through a PPA with utility Rocky Mountain Power. Due for completion in 2020, the 122-megawatt (AC) plant will expand on the 58-megawatt Cove Mountain array that’s already planned to provide power to a Facebook information center in Utah.

In recent months Facebook has signed deals for solar in states including Virginia, North Carolina and New Mexico. The corporate reported that it reached the edge of 75 % renewable energy in 2018. That doesn’t necessarily equate to 75 %renewables all of the time, as noted in a recent report out from Stanford University, due to the variability of wind and solar resources. At times, data centers will draw power produced by traditional sources from the grid if solar and wind aren’t available.

Facebook says it’s reduced its greenhouse gas emissions by 44 % since 2017, and plans to achieve a 75 % reduction by 2020.
The Texas project adds a brand new dimension to Facebook’s attempts to reach its sustainability targets.

“Facebook was trying to find new flexibility to fulfill our renewable energy goals, which was totally different than the numerous purchases we’ve made up to now,” a spokesperson for the corporate told Greentech Media. “Investing in this project offers us that flexibility, whereas giving us the chance to meaningfully impact the development of new, further projects.”

While the deal may be novel, analysts say it shouldn’t shock those watching the corporate renewables market. Tracking by the Renewable Energy Buyers Alliance shows that corporations procured 6.63 gigawatts of renewables within the U.S.A. in 2018 and so far in 2019 have contracted for 1.49 gigawatts. Facebook led the pack in 2018 and has already signed the most deals in 2019.

“In its pursuit to contract renewable energy for all of its electricity consumption by 2020, it’s not surprising that Facebook would go further and leverage its tax equity in a solar project,” said Colin Smith, a senior solar analyst at Wood Mackenzie Power & Renewables.
“As company entities continue to pursue carbon-neutrality and sustainability, it’s possible we will see additional investment that allows firms like Facebook to see returns on investment instead of just savings on electricity,” Smith said.

Facebook declined to disclose the PPA’s price; however Smith said it’s probably comparable to other “bottom-of-the-barrel” utility-scale solar prices seen in the Texas market, which has regularly come in at under $30 per megawatt-hour.

“Texas has great solar and wind resources, and the restructured market makes many various kinds of power sales arrangements possible,” said a spokesperson. “Those factors, coupled with the fact that we’ve got facilities within the region, made it an excellent location for our initial investment.”

The short length of Shell’s PPA suggests that Facebook plans to sell the project’s output on a merchant basis into ERCOT’s wholesale market down the road. The project’s life will likely extend decades beyond the 12-year PPA.

Facebook and Shell acknowledged that the power Shell purchases will be used in connection with the oil and gas company’s “assets in the Permian,” however Shell didn’t give further details. Shell said the project helps it meet “sustainability goals” for its assets within the area. This year the fossil fuel company committed to marginally reducing its carbon footprint and linking executive pay to success in achieving this initiative.

Andrews County, where the solar project will be located, is in the Permian Basin, where Shell produces 145,000 barrels of oil daily. The oil and gas company has plans to expand that production, even as it invests in renewable energy projects.