A novel idea makes it possible for businesses of all sizes to use energy contracts previously available to only the largest
Spotted: In this time of energy price rises, many businesses are finding their energy bills rocketing. Now, climate tech startup Reel is working to change the way businesses procure electricity by offering a way for companies to buy green electricity on commercially attractive terms. Reel’s solution is based on a type of renewable energy contract called a Power Purchase Agreement (PPA) in which companies buying energy from renewable energy producers agree to pay fixed prices for the long term.
Renewable energy producers use the long-term nature of a PPA to secure financing for constructing new facilities, such as new solar and wind parks. Companies benefit, in turn, by securing attractive and reliable long-term energy prices. Although PPAs have been in use for some time, they were previously only available to the largest companies, those who used huge amounts of energy, employed in-house lawyers, and enjoyed excellent credit ratings. Reel’s innovation lies in making PPAs available to all companies – big and small.
Reel has achieved this by simplifying the legal framework needed for PPAs while optimising the conditions needed to sign PPAs. Their solution is based on using large amounts of data related to credit ratings, energy consumption, and a host of other factors – which smaller organisations can draw on. Reel also provides automated CO2 reporting.
One of the most important aspects of Reel’s offering is that it directly leads to new green electricity being added to the grid. Reel ties the electricity consumption of its customers to a specific solar or wind farm, with the company sourcing attractive projects by working with renewable energy developers. By contrast, Reel argues that the certificates conferred by conventional green energy contracts do not actually lead to new CO2 reductions.
Reel was founded in 2020, and the timing is right for its approach—the commercial and industrial sectors together account for around two-thirds of global electricity consumption. Solutions like Reel’s will be necessary to reduce the carbon emissions from this sector. Some of the other innovations in financing renewables recently covered by Springwise include a pay-as-you-go financing model for buying renewable energy and a blockchain infrastructure for pre-purchased carbon credits.
Written By: Lisa Magloff