The energy industry in America is undergoing remarkable transformation as the shift away from coal continues and renewable energy steps up to fill the void. Until recently, this was largely a public policy-driven shift that ebbed and flowed with the prevailing political winds.
But as wind and solar power now compete with fossil fuels on a cost basis alone, a new champion for clean energy and serious climate action has emerged.
Across the Fortune 500 and beyond, companies of all shapes and sizes are making deliberate choices to invest in clean energy solutions. This movement is not mandated by government regulation or focused on political favouritism but has its roots in the tenets of free market economics.
Economy-wide, customers and investors are growing more alert to the risks of climate change and the importance of sustainability to protect against unforeseen price spikes. This message is resonating in boardrooms everywhere, and today ‘corporates’ are emerging as a leading proponent of the renewable energy build-out.
The ripple effect of this demand has travelled out into the heartland of America. Take the Cactus Flats wind farm, a network of turbines spread over the range-land in Concho Country, Texas. This progress generates 148MW of power: enough electricity to meet the demand of over 100,000 homes. But this wind farm was built to supply corporate buyers, including automaker GM and food giant General Mills.
Along with power purchased from another Texas wind farm, GM has sourced 100% of the electricity needs for Arlington Assembly—the only GM assembly line in the world to produce the automaker's portfolio of full-size SUVs — from clean and reliable clean-energy sources. Thanks in part to these corporate-backed investments, there are more than 96GW of wind power capacity in the US today.
Yet, organisations across America will need more — much more — power from renewable sources led by wind and solar.
Demand for electricity from modern American businesses is tremendous. While the average US home consumes 0.4MWh annually, the US' biggest retail chain, Macy's, operates more than 100 million square feet of space and consume more than 1.4TWh every year — and data centers in the lower-50 devour more than 90TWh over the same time-frame.
In 2017, according to the Environmental Protection Agency, average emissions created by each additional MWh of power drawn from the US electric grid was 1,559lbs of CO2—that’s nearly 1 gigatonne of carbon emissions to power that chain of department stores each year. If companies are going to get serious about environmental sustainability—and meet the demands of their customers—tackling electricity sector emissions is at the top of the list for many businesses.
Large, non-residential electricity customers are the best hope for dramatically reducing the emissions released by electricity generation. While electric utilities have mandates to source a small portion of their power from renewables — typically around 20% — many non-utility businesses and organisations are setting and reaching goals of sourcing 100% of their electricity from renewable sources. As a result, the market for clean electricity is exploding.
Since 2014, corporate power purchases agreements for wind and solar amounted to nearly 16GW of capacity. For perspective: in 2013, 320MW were procured; in 2018, the figure was 6.5GWW. So far, the biggest buyers of renewable energy have been technology companies like Google, Amazon, and Facebook, but major players are now found in every industrial sector, including Starbucks, GM, Walmart, and Lockheed Martin.
These buyers are paying for the construction of new renewable energy plants, not just buying renewable attributes — metadata associated with every kWh of electricity generated from a renewable source.
Concerted efforts to decarbonise the grid are not limited to Democratic states, government mandates or subsidy-driven technologies.
Today, energy users are taking control of their own power procurement, no longer willing to pay the same bill every month for electricity that makes climate change worse — not better. But the shift to renewables isn’t easy, and many companies don’t have the in-house expertise to easily adopt new energy procurement practices.
As non-residential buyers continue to enter the market for large-scale renewable energy, sharing lessons learned is critical. The community of renewable energy buyers, project developers, and service providers isn’t just sharing information on how to reproduce successful strategies, they are also pioneering new transaction methods and deploying new technologies to meet the needs of different types of buyers. And it is this growing community that will make a rapid transition to a cleaner, prosperous, zero-carbon energy future possible.
·Miranda Ballentine is the CEO of the Renewable Energy Buyers Alliance; Rob Threlkeld is the global manager for Sustainable Energy/Supply Reliability for General Motors