Fear Not the Decahedron of Truth
During Rocky Mountain Institute’s Business Renewables Center’s (BRC’s) fourth Buyer’s Boot Camp, participants were presented with the “Decahedron of Truth.” Ponder that phrase a moment. Does the terrifying prospect of a work-mandated, metaphysical, bare-all group confession intervention come to mind? Or perhaps an obscure string theory aspect of quantum gravity? Maybe the most intense and fear-inducing roller-coaster ride ever built… in deep space? Actually, the reality behind the Decahedron of Truth is less intimidating and more practical. It is a simple, useful decision-making support tool.
Plugging into the Power of Buyer Experts
Of the many valuable takeaways that boot camp participants enjoyed over this two-and-a-half-day deep dive in mid-May 2018, the 10-faced polyhedron graphic was a key touchpoint for collegial collaboration and valuable discussions.
The BRC team hosted almost a dozen buyer member attendees and expert faculty in the bucolic mountain town of Basalt, Colorado—very near the ski slopes of Aspen. At RMI’s net-zero energy Innovation Center, just a fly-cast away from the Roaring Fork River, quotidian work and life were suspended for a time. Instead, the order of the day was to zero in with laser focus on unpacking and analyzing the big, juicy pros, cons, and risks inherent in commercial and industrial renewable energy (RE) purchasing. Attendees were fortunate to learn from the collective expertise and experience of this trio of faculty experts: Bruce Frandsen of Equinix, Nicola Peill-Moelter of Akamai, and Max Scher of Salesforce.
Through questions, deep conversations, and group dialogue, the attendees furthered their understanding by getting the real story from faculty—who were keen to share their insights into the impacts and pitfalls they and their teams have encountered in completing several RE procurement deals in the US markets.
But the education took place horizontally in three directions: to attendees, faculty, and facilitators. “Everyone leaves having learned something new. We as facilitators continue to learn more as we shepherd this process. And it’s clear that both the faculty who have transacted multiple power purchase deals and the attendees are learning new, relevant, and valuable information they can immediately put into place,” said BRC manager Mark Porter, lead boot camp facilitator.
Boot camp attendee Moritz Bernhoerster, global procurement manager, renewable energy with Anheuser-Busch InBev, said, “The boot camp was a great experience with relevant content for my current role. I would highly recommend it to anyone negotiating PPAs [power purchase agreements] or more broadly driving the sustainability agenda for their respective firms.” Bernhoerster also reported that shortly after the event, he and his team were using some of the learnings for PPA negotiations across several countries. Anheuser-Busch InBev has effectively utilized the BRC Buyer’s Boot Camp as a RE procurement crash course for new employees. Almost every BRC boot camp has included a representative from the company.
Similarly, Michelle Redfield, director, safety, environment & process improvement, global supply chain at Schneider Electric, shared that she felt very fortunate to have attended the Buyer’s Boot Camp. “I have been applying the learnings immediately and incorporating the lessons into the RFP [request for proposals] and term sheet for our utility-scale VPPA [virtual PPA].”
An Opportunity to Learn—the Good, the Bad, and the Ugly
Boot camp faculty excelled in truth-telling and had very strong views and advice as to why certain transaction-motivating factors—although initially appealing—could lead to undesired outcomes. They explained that sometimes it’s a case of “nice from far, but far from nice.” An example of this was the discussion regarding hedging against future electricity costs—one of the important downside-risk protection conversations for this boot camp cohort. The faculty explained that, unless one’s organization is in the specific business of understanding and predicting long-term electricity price fluctuations, gambling hard on future cost savings driven by changes in market prices as the primary power purchase objective is unadvisable. Price hedging is a tough promise to consistently deliver on for internal stakeholders.
Additional New Content: Preplanning for Post-Commercial Operation Date
In addition to the “Decahedron of Truth,” new content for the latest Buyer’s Boot Camp included discussions concerning issues that arise post-commercial operation date (COD). The faculty framed and detailed specific examples of where the buyers can be more proactive in preventing known post-COD pitfalls. Setting up an appropriate invoice structure and format is just one example. A buyer can negotiate up-front the receipt of a summary invoice rather than, or in addition to, a detailed invoice that takes far more effort to analyze and to use to determine whether the energy output equates to a credit or a debit. This summary format is easier for both developers and buyers to handle while eliminating the need for difficult-to-decipher transactional statements that report out in five-minute intervals and can stretch over many pages. Leave that format to the utilities and grid operators. Having such conversations about administration early in the process and building agreements into the pre-COD stage makes a positive difference once the energy system is live and running.
A Japanese proverb reminds us that “Asking a question is a momentary shame. Not asking a question is an eternal shame.” No shame was experienced, as attendees were in the perfect environment that afforded them the time, the expert answerers, and the luxury of a smaller group to ask any question. Sometimes the most insightful conversations took place over shared dinner or drinks. Buyers appreciated this chance to safely test and discuss ideas, concepts, and plans. An example of safe sharing came from a buyer whose organization sought to transact at a node—to make a deal that is transaction-priced at the node point on a grid. The buyer heard detailed feedback from the faculty, who have dealt with different sizes, locations, and types of deals (e.g., node and hub), and can assist with a road test.
Close bond-building between boot camp attendees and faculty is an electrifying outcome of the deep-dive discussions and shared camaraderie among each cohort. Attendees report maintaining communication with each other and continuing boot camp dialogues long after the event. Faculty are ready and willing to answer post-event questions and are considered to be active advisors and resources.
The BRC has developed two boot camp tracks, the first for buyers and the second for project developers. BRC’s Boot Camp Facilitation Team is already noticing the positive feedback loop occurring between the Buyer’s and Developer’s Boot Camps. The two groups of industry collaborators are naturally weaving together advantages for each other. In fact, the Decahedron of Truth’s 10-points-of-decision construction was originally designed for the Developer’s Boot Camp. We trust that all market actors appreciate the continual testing and refining of industry tools—leading to better educated and more prepared parties as they enter into nonutility RE transactions. BRC boot camps strive to have galvanizing effects on the future of RE procurement and catalyze the frequency, replicability, speed, and ease of those market transactions.
If you or your company are interested in attending a future boot camp, please reach out to Alex Klonick (email@example.com) with the subject line ‘Boot camp waitlist’.
Read here about BRC’s second Buyer’s Boot Camp, held in February 2017.