America's Energy CEO Series: LevelTen Energy's Bryce Smith

The US power purchase agreement market has recovered from some coronavirus pandemic-related disruptions earlier this year as corporate buyers remain committed to climate targets and the pace of renewable energy projects featuring storage picks up, PPA marketplace provider LevelTen Energy's founder and CEO Bryce Smith said July 15.

LevelTen is Smith's third company, having started a beer and wine wholesale business straight out of college and then getting into the renewable energy industry around 2000, he said in a phone interview.

Smith's second company was a utility-scale solar project development business called One Energy Renewables developing a lot of projects outside of California.

The team had to learn a lot about how wholesale power markets work and analyze large volumes of data to understand where to locate projects, Bryce said.

"It became clear the whole industry could use that and we started selling power to corporate customers," Smith said.

Smith's team realized these corporate customers did not always fully understand what they were getting themselves into with PPA contracts.

"They really didn't understand price and value or risk-adjusted value and were getting sold on transactions based on underlying assumptions that just didn't stand up," he said.

So Smith started LevelTen with a desire to bring greater rigor to companies in order to provide visibility into all the options available to them. The idea was to provide full transparency so corporate power purchasers could choose the best PPA for their companies, Smith said.

LevelTen connects PPA buyers and sellers through a digital marketplace.

He likened it to a Zillow for PPAs, referring to the real estate platform, where potential buyers can see a wide range of renewable energy project options, instead of just those contained in a single broker's network.

Most of the large project developers in North America and Europe participate in the platform, which Smith said gives them "near universal participation" from the development community.

Pandemic impact

"We certainly saw some slowdowns and temporary delays in some deals, but for the most part we've been heartened by corporates" continuing to move forward, Smith said.

The pandemic has showed in some ways how important it is to address climate change and "if anything corporates have doubled down on their carbon emissions reduction commitments," he said. Carbon emission mitigation makes a difference and LevelTen has seen companies dedicate themselves to their renewable energy commitments, "which is a hopeful sign," he added.

However, uncertainty is never helpful and the industry has seen some uncertainty around tax equity this year, Smith said.

Tax equity investment returns are based on a combination of cash flow from renewable energy projects and federal tax credits and tax deductions, according to Tax Equity Advisors' website.

"Hopefully we will see much less disruption than many feared, but that will depend on how the pandemic plays out," Smith said.

The tax equity situation appears to be a bit better now. Smith has seen some projects' commercial operational dates get pushed back by a month or a quarter but has not seen projects defaulting on obligations.

Energy storage projects are also beginning to steadily creep into the PPA market. "We are seeing more collocated storage with [wind and solar] generation but are also seeing the addition of pure energy-arbitrage storage projects," Smith said.

And asked about potential regulatory or policy changes that could significantly impact PPA prices or the PPA market more generally, Smith pointed to a July 10 federal appeals court ruling that upheld a major US Federal Energy Regulatory Commission order designed to remove barriers to energy storage participation in wholesale power markets.

The US Court of Appeals for the District of Columbia Circuit upheld FERC Order 841, which is designed to remove barriers that keep energy storage resources, such as batteries and flywheels, from more fully participating in wholesale markets.

FERC Order 841 "will be pretty important to these markets" going forward, as increasingly storage and generation "will be tied at the hip," Smith said.