8 Tips to Help Close that Renewable Energy Deal

Jan 7, 2016 4:50 PM ET

The benefits of clean energy are clear, but procuring renewables can often be a muddy process given up-front investments, long contracts, and the need to build consensus among various internal company departments.

GM’s first renewable energy project dates back to 1995 with landfill gas generation and its first solar array followed 10 years later. Now equipped with 106 megawatts of renewable energy at its global facilities and $80 million in savings as a result, the company shares some of the tips that help ensure a smooth procurement process.

1. Ready, set, goal: Start with a corporate renewable energy goal and identify a champion to help drive it and see it through. If it’s a public commitment that the company reports progress against, odds are there will be motivation to allocate resources and make it a priority.

2. Look inside. Leverage your own company’s expertise at your facilities; odds are you have electrical and mechanical engineers onsite. Use your own internal resources to build a project to continue driving out cost.

3. Consider the communications value. When building internal consensus, look at other business benefits beyond a long-term, stable energy supply. Think about the education and visibility opportunities an acre of arrays would provide. That becomes a noticeable proof point to your environmental commitment and can be more powerful than an ad on a billboard. On any given day, 100,000 drivers see our solar arrays when they pass our Lordstown Ohio Assembly plant.

4. Seek legal and accounting advice: Get good legal and accounting counsel from your team. These professionals are comfortable with some of the technical financial nuances of a deal, from tax equities and the impact of embedded derivatives to creating hedges against rising costs.

5. Build new financial models.  All of our renewable energy deals result in financial savings. We keep a close watch on the fuel and gas industry and use it as a benchmark when reviewing electricity costs. Because the renewable energy market is still relatively new, there aren’t standard transaction terms. Many deals come with high investments and long contracts spreading payment over many years, so we’ve developed new financial models and forecasts for each deal. After negotiating several of them, we find the process becomes shorter every time so we’re able to turn around deals – and reap their rewards – faster.

6. Phone a friend. Talk to companies who’ve done this before. A group of us handling renewable energy buys at Yahoo, Facebook, Procter & Gamble and Microsoft call one another to talk through challenges and get advice. Engage with the Business Renewables Center to connect with others doing similar buys. GM was one of the founders of this organization where members benefit from the shared knowledge of the industries involved.

7. Collaborate with energy suppliers. This is a driving principle of the Corporate Renewable Energy Buyers' Principles, which are six criteria to help advance renewable energy procurement, such as longer- and variable-term contracts, streamlined third-party financing and access to new projects that significantly reduce emissions. The central ask is a collaborative process among all parties to makes using renewable energy obtainable.

8. Don’t discount the discounts. Maximize state and federal renewable energy incentives. Seek out what rebates and incentives are available in your region, and use it to strengthen the business case. Overlay where the incentives are and where you get the biggest bang for your buck and build the financial model around that. If you have a lot of empty parking spaces or a big rooftop in that area, it could be a match.

Rob Threlkeld is General Motors’ manager of renewable energy.