An analysis to promote additional renewable energy resources in the European marketplace

Client Organization: 
ECOHZ AS
Project Location : 
Oslo, Norway
Summary of Project Idea: 

The goal of this project is to develop a framework to help small and medium-sized commercial and industrial (C&I) energy customers in Europe procure affordable renewable energy that provides ‘additionality,’ or when new renewable energy demand results in the construction of new renewable power generation. The market presently provides three primary options for C&I customers:

Option Downsides
Procure ‘green tariffs’ from local utilities in the form of Guarantees of Origin (GO) Lacks additionality
Negotiate and procure renewable energy through a PPA May involve additionality, but at high cost and complexity, long timelines, and may not be appropriate for smaller companies with uncertain future energy needs
Build distributed generation systems specific to the company’s needs Complex and outside most companies’ traditional business model

ECOHZ has created a new option that allows small and medium-sized companies to adopt renewable energy while providing additionality resulting in building new wind and hydro plants – a product called a GO2. Many renewable energy projects in Europe are able to aggregate funding up to around 85% of the total required funds, but requires outside sources to fully fund the project. In this scenario, a C&I customer provides a years’ down payment of GO2 as upfront financing. These funds are pooled and used to fulfill the last 5-15% of a new renewable project’s overall financing, or capital stack. Thus, ECOHZ uses the funds from the GOto get the project fully funded and ready to break ground.

However, the GO2 product has been challenging to market to customers. The purpose of this project is to help ECOHZ identify the environmental and economic benefits for the GO2 product relative to other options on the market.

As a result of this project, ECOHZ will be able to ease the adoption of new renewable energy generation for the small and mid-size C&I market in Europe and allow these customers to reduce their carbon emissions. This project will help bridge the divide between companies that desire to reduce their environmental footprint while meeting business objectives.

The following project deliverables are anticipated:

  1. Identify countries in Europe where PPAs are attractive or unattractive due to existing regulatory and market conditions (Environmental Policy & Planning)
    • Identify top 3-5 countries that are the most attractive for the GO2 product due to complex/expensive PPA or alternative renewable energy products
  2. Segment the market to identify companies that best fit the GO2 model. Specifically, look at company power demand, geographic locations, geographic instability - likelihood of moving plants/offices, whether they or other comparable companies have RE100 goals, and consider their customers' demand for green products (Sustainable Systems, Environmental Informatics)
  3. Estimate the price for PPAs in the target European markets and compare these prices to the cost for a GO(Sustainable Systems, Env Informatics)
  4. Create an integrated model that illustrates the economic and environmental benefits from procuring renewable energy (SS, Env Informatics, EPP, BEC)
  5. Develop messaging to show why renewable energy credits and the GO2 instrument provide value for businesses and the environment (BEC)
SNRE Program Areas: 
Environmental Policy and Planning
Behavior, Education, and Communication
Environmental Informatics
Sustainable Systems
Role for each program area: 

Environmental Policy and Planning: One Environmental Policy and Planning student is needed for the completion of Objective #1. The student will help the group identify governmental policy that impacts the attractiveness of PPAs and other existing renewable energy procurement instruments, understand the energy regulatory landscape, and identify beneficial grants or subsidies. Experience with energy regulation concepts and renewable energy incentives is preferred.

Behavior, Education, and Communication: One Behavior, Education, and Communication student is needed for the completion of Objective #5. The student will help the group investigate the priorities for companies in different focus countries, select the most critical issues, and then develop materials to best influence these stakeholders. The final results of the project will be integrated and a final statement will be prepared for the client.

Environmental Informatics: One Environmental Informatics student is needed for the completion of Objective #3. The student will help compare PPAs and other renewable energy options to the GO2 product and identify the benefits and challenges for C&I customers.

Sustainable Systems: Two Sustainable Systems track students are needed for the completion of Objectives #2 - 4. One student will be responsible for identifying the target customer types for the model. The other student will conduct the financial modeling to identify PPA pricing and develop the draft integrated model for the GO2. Experience with project finance, renewable energy technology and system sizing is preferred.

Professional Career Development Benefits: 

Students will gain in-depth knowledge of renewable energy systems, how renewable energy companies function on an operational and economic basis, international renewable energy policy, carbon offset solutions, and renewable energy project finance. Additionally, students will have exposure to executives at ECOHZ and experience presenting to senior leaders. Interaction with international environmental consultants is expected.

Funding Sources: 

No funding requirements are anticipated.

Identify expected products/deliverables: 

Refer to the project idea for complete details on the intended deliverables. The key output areas are:

  • Prioritize European countries that have attractive or unattractive PPA regulations
  • Identify types of C&I customers that are the best fit for the GO2
  • Investigate European PPA frameworks and identify their pricing structure
  • Create an integrated model that compares costs, time, and complexity for different renewable energy options
  • Prepare messaging to influence C&I customers to adopt renewable energy procurement
Contact full name: 
Daniel Bier
Job title: 
SNRE student (SS)
City: 
Ann Arbor
State or Country: 
Michigan
SNRE Faculty Advisor: 
Peter Adriaens
Contact Phone: 
773-860-1011
Advisor Confirmed: 
to be determined (not confirmed)
Contact e-mail: 
Contact information: 
SNRE student
Master Students Involved in Project: 
  • Daniel Bier
  • Marwan Charara
  • Snehal Chopade
  • Tara Mahon
  • Param Singh
Project Status: 
In Progress