There is an established trend of businesses and other organisations taking steps to reduce their carbon footprint.
In the current general context of the climate emergency, high gas prices and the reporting of carbon emissions - we can expect an acceleration in the rate of electrical vehicle charge points (EVCP) installations and adoption of electric heating.
Installing EVCPs at a property has many upsides for a business, such as:
In terms of electrification of heat, organisations may be encouraged to electrify heat in order to:
In either case, where the organisation already produces electricity on a behind-the-meter basis, increasing demand for electricity through EVCPs and electric heating systems can deliver better value. The logic here is that behind-the-meter usage is more valuable than exporting electricity to the grid, especially where the electricity is being exported under a typical smart export guarantee (SEG) export tariff.
Some behind-the-meter generation projects are set up though a leasing or service arrangement, where the solar assets are owned by a separate company to the building owner/occupier. That separate entity sells the electricity to the building owner/occupier under a power purchase agreement (PPA).
One aspect that can be overlooked is whether the building owner/occupier is permitted to use the electricity, for the purposes of charging electric vehicles (EVs) and as a heat source under the terms of the PPA.
PPAs will often prohibit the storage of electricity (sometimes this prohibition may be expressed in terms of “energy” rather than “electricity”) or the location at which the electricity/energy may be used (Site).
In the case of EVs, the issue arising from such a prohibition/restriction is obvious. An EV stores electricity and uses that electricity at a location beyond the confines of the Site, at which the electricity is generated.
The impact of these clauses will depend on the exact drafting of the PPA, however:
Faced with such provisions in a PPA, the organisation has three main options:
Each option has its drawbacks and the approach adopted in any particular case will need to be considered in its specific circumstances, balancing:
Good governance would demand that an organisation planning on installing an EVCP or electrification of heat project:
If generators under PPAs are asked to vary their agreement to accommodate an EV or heating project, they should consider whether agreeing to an amendment will have any adverse effects on:
Any amendments to the PPA should be formally documented in a binding variation agreement/amended PPA.
Our energy efficiency and decarbonisation team are specialists in advising on the installation of EVCPs, the retrofit of heating solutions into buildings and the terms of PPAs, having acted for both offtakers, generators and funders.
If you are involved in the installation of an EVCP or electrical heating system powered by electricity supplied under a PPA, please contact our team to discuss how we can support the due diligence and negotiation relating to your project.