By the time a corporate buyer issues an RFP for renewable power, most of the decisions that determine whether the deal works have already been made — usually by accident.
The RFP itself is downstream. The problems are upstream: in the baseline, the credit strategy, and the internal terms nobody wrote down.
The baseline has to come first
You cannot procure your way to a target you have not measured. A defensible program starts with a real emissions baseline across Scope 1, Scope 2, and the Scope 3 categories that actually move the number.
Two issues show up again and again:
- Scope 2 accounting method. Location-based and market-based results can tell different stories. Choosing one after the fact, to flatter the result, is not a strategy.
- Boundaries and data quality. A baseline built from estimates and assumptions will be challenged — internally, and increasingly externally. Know which numbers are measured and which are modeled.
The baseline defines what a megawatt-hour is worth to you, in carbon terms. Without it, procurement is shopping.
Decide what you are buying
"Renewable energy" is not a single product. The options differ in cost, risk, and what they actually claim:
- Unbundled RECs are inexpensive and easy, and they carry the least additionality. They are a reasonable bridge, not a decarbonization plan.
- Physical PPAs deliver power and attributes, and put shape and basis risk on the buyer in exchange for potentially better economics.
- Virtual PPAs provide attributes and a financial hedge without physical delivery, and introduce settlement risk that has to be managed.
- On-site and distributed generation can reduce load directly, with its own siting and interconnection constraints.
The right mix depends on your load shape, your credit, your risk tolerance, and your timeline — not on what a developer is selling this quarter.
Define terms before you ask for prices
An RFP that goes out without internal alignment produces proposals that cannot be compared. Before issuing, a buyer should know:
- The target volume, tenor, and start date
- Which risks they will hold (shape, basis, curtailment, change-in-law) and which they will not
- The credit support they can realistically provide
- How the deal will be approved internally, and by whom
- How success will be measured against the baseline
Answer those, and the RFP becomes a decision. Skip them, and you will collect a stack of proposals that look similar and mean different things.
Decarbonization is a capital and contracting program dressed up as a sustainability initiative. The corporates that get it right treat the strategy, the accounting, and the contracts as one problem — and settle the important terms long before the RFP is drafted.
Working through something like this on a live portfolio?