In 2021, outdoor apparel brand Patagonia announced the signing of a power purchase agreement with Energy Garden – a first of its kind in the UK. As a result, the energy for both its Bristol and Manchester stores, and Manchester showroom, are powered by community-owned renewable energy. Alongside the deal, Patagonia opted to pay an additional social premium, which will be used – amongst other things – to fund training and workshops for the communities in which the energy is generated.
It’s also launched a website that shows the metrics of the organisation, mapped against the UN Sustainable Development Goals, including social returns on investment.
At you’ll see that every £1 invested in Energy Garden (beyond the 5%-6% financial returns) generates a social return of over £3. It shows that the organisation has raised £2.5m, worked with 140 communities, spent just under 30,000 hours on physical activity in its gardens and that 131kg of produce has been grown and sold in the past year.
How power purchase agreements work
A typical energy bill is broken down into two costs – commodity costs and non-commodity costs. Commodity costs cover the actual cost of the energy that you use and this is the money that goes to the generator of the energy. In the case of the PPA between Patagonia and Energy Garden, this is the bit that goes to Energy Garden.
The non-commodity part of the bill covers system costs, like distribution and network charges, and taxes such as VAT and the climate change levy. Between 2009 and 2021, the non-commodity proportion of the average energy bill jumped from 29% of the bill to 64% of the bill.
Energy Garden offers two types of PPA – the first is an onsite PPA, where the energy is produced on the site of the business that then purchases the energy. An energy export PPA sees the energy taken from the place it is generated, to the business premises. Onsite PPA agreements contain only commodity costs, as the energy is generated and used on the same site.
The Energy Garden PPA is comparable in price to other providers, but with the added benefit of giving both social and environmental returns on investment and funding the work of Energy Garden in communities. Businesses can further boost this social return by paying an optional social premium on top of their monthly energy payment.