A CORPORATE PURCHASER’S GUIDE TO RISK MITIGATION

The US corporate renewable energy market has grown rapidly, with 2018 seeing over 6 GW of announcements and a diversification of buyers beyond the IT sector. However, risk mitigation tools have not kept pace, leaving buyers exposed to unfamiliar wholesale electricity market risks (price, basis, shape, volume, and operational). The BRC proposes a "many-sizes-for-all" approach, identifying eight mitigation strategies—including hub-settled VPPAs, floors and collars, and long-term REC agreements—to better align with the varying risk appetites of different corporate archetypes.

• The US corporate renewable energy market has experienced rapid growth, with corporate procurement accounting for over 12% of all utility-scale wind and solar installed in the country. In 2018 alone, the market saw over 6 gigawatts (GW) of renewable energy announcements, representing a 70% increase in announced transaction volume compared to 2017.
• Corporate buyer diversity is increasing; while the IT sector remains a leader with a 29% market share, more than half of the capacity procured in 2018 came from other industries, including healthcare, manufacturing, retail, and telecommunications.
• Risk mitigation solutions have not evolved at the same pace as market expansion, leading to a "one-size-fits-all" approach. This is problematic because the dominant Power Purchase Agreement (PPA) structure introduces wholesale electricity market risks—specifically price, basis, and shape risk—that corporate buyers typically do not encounter in their standard business operations.
• The Business Renewables Center (BRC) advocates for a "many-sizes-for-all" approach to risk management to accommodate a broadening spectrum of risk appetites. The full report identifies five key risks that are difficult for buyers to manage: operational, volume, shape, basis, and price risk.
• The report details eight specific risk mitigation solutions. Five are within the Virtual PPA (VPPA) construct: fixed volume swaps, volume firming agreements, proxy generation, floors and collars, and hub-settled VPPAs. Three are outside the VPPA construct: contract tranches, project tranches, and long-term renewable energy certificate (REC) agreements.

APA

Kansal, R., & Singer, T. (2019). A CORPORATE PURCHASER’S GUIDE TO RISK MITIGATION. RMI. https://rmi.org/app/uploads/2018/12/rmi-brc-risk-mitigation-guide-executive-summary.pdf

Chicago

Kansal, Rachit, and Tim Singer. A CORPORATE PURCHASER’S GUIDE TO RISK MITIGATION. RMI, 2019. https://rmi.org/app/uploads/2018/12/rmi-brc-risk-mitigation-guide-executive-summary.pdf.

Wikipedia

{{cite report |last1=Kansal |first1=Rachit |last2=Singer |first2=Tim |title=A CORPORATE PURCHASER’S GUIDE TO RISK MITIGATION |publisher=RMI |date=January 2019 |url=https://rmi.org/app/uploads/2018/12/rmi-brc-risk-mitigation-guide-executive-summary.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kansal2019corporate, author = {Kansal, Rachit and Singer, Tim}, title = {{A CORPORATE PURCHASER’S GUIDE TO RISK MITIGATION}}, institution = {RMI}, year = {2019}, month = jan, url = {https://rmi.org/app/uploads/2018/12/rmi-brc-risk-mitigation-guide-executive-summary.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }