Commercial, Solar, Sourcing Renewables, Wind - September 23, 2019
Honda signs largest auto VPPA
Honda signed two VPPAs that will result in 320 MW of wind and solar power, totaling over 1 million MWh of electricity annually, the largest renewable energy purchase within the automobile industry.
The deals are expected to reduce emissions from its North American manufacturing operations by 60% and fully offset the remaining carbon-intensive grid-supplied electricity being used in its Ohio, Indiana and Alabama manufacturing operations.
In an effort to mitigate financial risks in the VPPA market, Honda implemented a new “collar” structure in their contract with the Boiling Springs Wind Farm. This innovative structure sets upper and lower bounds on Honda’s exposure to energy market price fluctuations in any given quarter, resulting in strong and stable revenues for the renewable power operators.
"These combined VPPAs will help Honda meet its CO2 reduction goals by adding clean renewable electricity and by de-carbonizing the electricity grid," Ryan Harty, manager of connected and environmental business development at Honda, said in a statement. "We hope the addition of a 'collar' to the Boiling Springs project will encourage other companies to consider VPPAs as a method to secure renewable power and reduce climate-altering carbon emissions."
Honda will purchase 530,000 MWh a year from 120 MW of wind power generated by the Boiling Springs Wind Farm in Oklahoma starting in the fall of 2020. Additionally, in the fall of 2021, they will get an additional 482,000 MWh a year from 200 MW of solar power from a Texas facility. More details on the Texas project are expected to follow in 2020.
The auto manufacturer will continue to purchase electricity from the local utility but will receive RECs resulting in net-zero emissions from electricity used within the Ohio, Indiana and Alabama plants. The VPPAs are expected to raise the total use of renewable electricity to 80% for its North American operations.
In addition to Honda’s efforts to purchase renewable energy, they have also installed 7.3 MW to date of renewable wind and solar power at its facilities across North America.
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