Commercial, Demand Management, Energy Efficiency, Industrial, Utilities, Commercial, Finance, Industrial, Solar, Sourcing Renewables, Wind - December 29, 2016 - By Amy Poszywak
2016's top 3 corporate energy management trends
As the clock winds down on 2016, we've taken a look back at the year in corporate energy management with an eye toward the most impactful storylines. From surging corporate demand for green power to advancing energy efficiency technology and strategies, the year saw the emergence of a number of trends we expect will continue to evolve in the New Year.
Here are some of the biggest corporate energy management stories of 2016:
1. Corporate renewable energy commitments soar, driving new procurement trends: Following a banner year for corporate renewable energy purchases in 2015, more businesses than ever before joined early movers in making a commitment to powering their operations with 100% renewable energy. Between January and December, more than 20 new companies joined the RE100 initiative, bringing the total to 83, according to the organization's website.
Among the new additions this year was General Motors Co., which in September announced its pledge to generate or source all electrical power for its 350 operations in 59 countries with 100% renewable energy — such as wind, solar and landfill gas — by 2050. GM is the first and only U.S. auto manufacturer to commit to 100% renewable energy, and the announcement sent a signal that the pursuit of clean power has expanded far beyond the initial movers from the tech industry.
The increased demand has led to new trends in renewable energy procurement strategies among corporates, including a shift toward more direct procurement of renewable energy in place of more indirect forms such as unbundled renewable energy credits and an increased pursuit of wind generation over solar.
The need for greater amounts of green power among corporates has also led some utilities to get creative in their offerings to large C&I organizations, signaling progress within an industry that has historically been slow to move at best and prohibitive at worst toward accelerating the use of clean energy. Dominion Virginia Power, for example, inked a new type of renewable energy agreement with Amazon.com Inc.'s cloud-computing arm this summer.
That said, the flexibility seen at some utilities has not happened at others — as Whole Foods Market Inc.'s global director of energy management explained in a recent interview, saying the company's relationships with its utilities "varies dramatically" — which in 2016 led some large energy users to pursue other options for securing their electricity supply needs.
2. The pursuit of energy independence accelerates: The culmination of months back and forth between some of the largest energy users in Nevada and their electric utility, NV Energy subsidiary Nevada Power, Las Vegas casino owners MGM Resorts International and Wynn Resorts Ltd. both stopped buying power from the Berkshire Hathaway Inc. company in 2016.
In a letter to the Nevada Public Utilities Commission notifying the regulators of its intent, MGM Resorts cited an aggressive pursuit of green power as a key driver of its decision to leave the utility and pay a commission-imposed exit fee of more than $86 million to do so.
Power and utility industry observers have for years argued that the evolving needs of large electricity customers would drive them to leave utilities that can't meet them, particularly as distributed energy technologies advance and demand for renewable energy sources continues to grow. The news put a real face on the threat such actions may pose to utility revenues; MGM, with its many Las Vegas properties, was the utility's largest buyer of electricity, representing nearly 5% of its annual sales.
Beyond MGM and Wynn, a number of other large Nevada businesses are at various stages of following suit; most recently, in late November, Caesars Entertainment Corp. filed with the Nevada commission for permission to buy its electricity elsewhere.
There were also a host of Nevada businesses taking a different route to energy independence: Voters in Nevada on Nov. 8 approved a ballot initiative backed by data center company Switch and the Las Vegas Sands Corp. called the Energy Choice Initiative, aimed at "breaking up the monopoly" of NV Energy. Other businesses that supported the initiative included Patagonia, Wal-Mart and Wolfgang Puck Dining. The business-backed initiative following unsuccessful attempts by both Switch and Las Vegas Sands to stop buying power from NV Energy.
3. The emergence of the "energy-as-a-service" supplier model: As the role and responsibilities of corporate energy managers continued to expand and grow increasingly complex, suppliers to large commercial and industrial energy users have attempted to do some problem solving in refining their offerings to the space.
This was evidenced before 2016 even began, with the October 2015 launch by General Electric of a $1 billion "startup" energy services company called Current. Although it was best known for its lighting as a service offering, the company has a vision that goes far beyond LEDs, intending to combine renewable energy generation, energy storage and electric vehicle infrastructure into a "sustainable energy ecosystem" for C&I customers through Current's "industrial internet" software platform called Predix.
Then in March, Edison International made waves in the utility world and beyond when it announced the launch of a new, nonregulated business subsidiary that will work in a consultancy/advisory capacity for large energy users. The creation of the new unit, Edison Energy, marked the first leap by a large investor-owned utility into the advisory and energy management services arena, though industry observers had long-speculated a trend in that direction may begin to unfold. The company, which has branded itself as a provider of "energy as a service," says it wants to simplify things for C&I companies and the employees tasked with their energy management by acting as a trusted partner.
And while Current spent the first half of 2016 making headlines in the energy space with numerous acquisitions and product launches, but by the end of the year confirmed a restructuring was underway, leaving its plans 2017 as a question mark. Regardless, the march toward supplying energy efficiency or organizational energy management more broadly, as a service to large commercial and industrial energy users is expected to continue.