Corporate scale-up on renewables driving key market shifts - Smart Energy Decisions

Commercial, Finance, Industrial, Solar, Sourcing Renewables, Wind  -  October 18, 2016

Report: Clean energy goals drive new buying strategies

As more and more U.S. businesses lay out highly ambitious renewable energy targets, the trends and strategies in corporate procurement of clean energy are shifting, according to a new report.

The report, produced by World Wildlife Fund and Corporate Eco Forum, highlights key trends in how the U.S. private sector is mobilizing around clean energy. Released Oct. 18, it draws on reactions from 37 companies who are members of the Corporate Eco Form and/or the Renewable Energy Buyers Principles

Two of the most notable trends in 2016 are a shift toward more direct procurement of renewable energy in place of more indirect forms such as unbundled renewable energy credits, and the pursuit of wind energy over solar, according to Bryn Baker, manager of WWF's renewable energy program and co-author of the report. Those two trends, she said, are likely the result the rapidly accelerating number of companies striving to reach 100% renewables. 

In September, it was announced that eight new businesses recently joined the RE100 initiative, pledging to power 100% of their operations with renewable energy. Those eight followed Apple Inc., Bank of America Corp. and General Motors Co., each of which only recently joined the initiative.

"Even considering that this is a select group of leaders that responded to the survey, the high number of companies that have 100% renewable energy targets was shocking, even to us that work in this space," Baker told Smart Energy Decisions on Oct. 18. "I think that's significant because it means that they are not just asking for direct forms of renewable energy, but they're asking their suppliers to get them to 100%. And that's the game changer as you think about it at an implementation level, or practical level. " 

That's primarily because for most large, multinational corporations, getting to 100% requires a tremendous scaling up of their renewable energy portfolios. The need for larger amounts of renewable energy, Baker said, has lead to different methods of purchasing, which WWF primarily attributes to the shift to more direct procurement.

That being said, use of unbundled RECs is still significant, according to the survey: They were the most commonly used renewable energy procurement instrument among  the 37 respondants. Physical power purchase agreements, or PPAs, came next, followed by self-owned generation, including onsite and offsite projects. 

"I'm going to surmise that because these companies have really aggressive renewable energy targets, they're feeling like they are under a lot of pressure to meet them, and most of them are pretty short-term," Bryn said. "They realize that the business cases behind the direct forms of procurement, so they're moving in that direction but they're using the unbundled RECs basically as gap fillers or bridges within their own commitments." 

Another key finding that WWF attributes to the need for larger amounts of clean energy: Wind has emerged as the largest source of renewable energy for corporations who responded to the survey, accounting for more than half of overall procurement in 2016. 

"Wind is really the most cost effective way to gain scale," Baker said. "Though solar payback is improving dramatically, even in the last year." 

Among other key findings of the report, which also examined the role of policy in shaping corporate energy procurement strategies, include:

  • Ambition is increasing: more than half of companies surveyed have set a renewable energy target, with approximately half of those targets for 100% renewable energy.
  • Companies want access to offsite PPAs: Companies are pursuing a wide variety of policy instruments to increase access to renewable energy options but companies distinctly prioritize access to offsite PPAs.
  • Companies identify priority states: Companies surveyed have identified California, North Carolina, New Jersey, Texas and Virginia as the highest-priority states for renewable energy policy activities.
  • The specifics of the U.S. EPA's Clean Power Plan, or CPP, are a barrier to engagement: The majority of companies surveyed would like to encourage state-level utilities to design programs that meet their renewable procurement needs while complying with the CPP, but only a third of surveyed companies feel prepared to speak about the CPP more broadly. A knowledge deficit exists around the CPP and how it will impact corporate renewable energy procurement.
Keywords: CEF, wwf

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