Renewable Energy PPA: Pattern Energy signs PPA with Shell and the University of California (UC) for the largest wind project in US

published on 19 May 2023

Deal details: Under the long-term power purchase agreement (PPA), Shell and the University of California will contract electricity from the 3.5 GW SunZia wind project. Although the capacity off-taken by the companies was not announced in the press release, Enerdatics understands that UC will tap 85 MW of the project’s capacity for use across its 10 California campuses and five medical centers. With the deal, Pattern Energy has secured its first customers for the SunZia project. The company will continue to have conversations with other potential off-takers throughout the western region for the project’s output.

Project Details: SunZia project is located across private and state trust lands in Lincoln, Torrance, and San Miguel counties in the state of New Mexico. The asset is currently under development with commercial operation scheduled in 2026. The project will host nearly 1,000 wind turbines and will connect them to a 550-mile transmission line, which recently secured the final federal permit from the US government. Together, the projects will represent ~$8bn of investment, while the total economic impact over the full 30-year life of the assets could reach ~$20.5bn.

PPA activity in the US: The Pattern Energy deal brings a welcome boost to the PPA market in the US, which has faced several macroeconomic headwinds recently. Rising interest rates and cost inflation due to supply chain issues have delayed several projects and impacted off-takers' appetite to lock in long-term contracts at prevailing rates. Enerdatics data suggests that the corporate PPA market, in particular, has contracted the most, with capacity off-taken during the first five months of the year declining by nearly 4X compared to the figures observed during the same period, last year.

Some of the major PPAs announced in 2023 include EDP Renewables’ virtual off-take agreement with Google for 500 MW of distributed solar project portfolio, EDF’s deal with Indiana Michigan Power for 180 MW Sculpin solar, and Avangrid's PPA with Meta for the 240 MW True North solar project.

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.

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