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.