It is important for procurement groups to develop a governance structure early on that establishes how key decisions are made. Effective governance structures for aggregation will enable efficient decision-making during deal negotiations with a project developer.
Buyer-led aggregated deals can take on many different forms, but they generally fall into three categories: the anchor offtaker model, the equal offtaker model, and the tiered model (see Exhibit 7).
One buyer decides to pursue a large-scale renewable procurement and invites others to join. The anchor buyer plays a critical role in creating momentum for the deal and moving the project forward. The anchor buyer often purchases a larger portion of output and makes key decisions about the project on behalf of the group, although smaller buyers can also serve as an anchor by convening and facilitating a group.
Multiple buyers make key decisions jointly and tend to split the project’s output more evenly.
A core group of partners take primary responsibility for managing the procurement and decision-making of a broader group. This approach of centralizing decision-making authority can be particularly useful to help larger groups continue to make steady progress. However, when new parties are invited to join, the core group of decision makers should clearly communicate this structure and explain which terms have been decided and which are negotiable.
The video below provides an overview of the three different procurement group governance structures and presents a case study for each.
When setting up a procurement group, participants should do the following things collectively:
The video below presents three examples of procurement group processes and governance structures.
