By Glenn Barbi
Given the specter of climate change and other environmental concerns, the global need for additional renewable energy has become a topic of increasing relevance and urgency. While over the medium- to long-term, renewable sources such as solar and wind offer encouraging economic and environmental benefits, the initial capital cost can be a substantial obstacle when compared with the lower cost of continued operation of existing fossil fuel plants. This challenge can be exacerbated in areas served by publicly-owned utilities, wherein maintaining low pricing for customers is critical.
Despite these obstacles, Becton, Dickinson and Co. (BD), a New Jersey-based medical devices and supply company, established a unique partnership with the Nebraska Public Power District (NPPD) to develop an option for renewable energy generation and usage in Nebraska, focusing on the needs of industrial and commercial businesses. Through an unprecedented agreement with NPPD focused on purchasing the green-attributes of renewable wind energy, BD ensured that the renewable energy it purchased was “additional” (i.e. newly created for this specific purpose), reached an important milestone in its own worldwide sustainability program, and established a model for other industries interested in purchasing renewable energy within the state.
Currently, approximately 40 percent of the electricity that BD purchases in the U.S. is generated in Nebraska. Having large manufacturing sites in a state that relies heavily on coal to generate electricity, we at BD identified a clear opportunity to further our pursuit of renewable energy targets while potentially saving on long-term operating costs. As a result, we approached NPPD in 2011 with an interest in purchasing renewable energy for two manufacturing plants located in Columbus and Holdrege. Our intention was to obtain the environmental attributes of the renewable energy while also providing a hedge against the possibility of future carbon taxes increasing the price of electricity in the state.
Unfortunately, a few obstacles interfered with the potential agreement. Unlike other states that have a combination of public and private providers, Nebraska is the only state in the U.S. where all homes and businesses receive electric service from publicly-owned electric utilities. Nebraska state statute requires the utility to ensure the lowest cost of electricity for its customers, and NPPD’s initial proposal called for BD to act as a utility. However, our expertise is in the medical manufacturing area and we therefore did not feel comfortable effectively entering the utility business. Because this wasn’t a workable option for BD, the idea of a potential partnership dissolved. Despite this hurdle, we were still determined to find a way to power our operations in Nebraska with renewable energy.
Shortly after abandoning the initial proposal with NPPD, we began exploring other renewable energy options, and soon learned about the South Table wind project in Kimball County in the western panhandle of Nebraska. BD signed a power purchase agreement (PPA) with the wind farm, however, several challenges, including the lack of adequate transmission lines to eastern Nebraska, eventually rendered the project unfeasible. After a year, the PPA expired, and we were back on the hunt for a viable renewable energy source.
In 2008, NPPD had established a board-mandated goal of having 10 percent of its energy generated through new renewable energy resources, primarily wind power, by 2020. Two years after the South Table PPA expired, NPPD approached BD with a concept for a 75 megawatt wind farm and expressed interest in meeting our initial requirements — which included purchasing 75 percent of the electrical consumption of our Nebraska facilities by utilizing renewable energy credits (RECs) amounting to 40 percent of the energy generated by the Steele Flats wind farm.
NPPD received several unsolicited wind PPA proposals and eventually selected NextEra Energy, a Fortune 200 company and wholesale electricity supplier based in Juno Beach, Fla. As part of the proposal, NextEra built the 75 megawatt Steele Flats Wind Farm in Nebraska, located between Steele City and Odell. The Steele Flats Wind Farm utilizes 44, 1.7-megawatt turbines that have been constructed near Highway 8 in Jefferson and Gage counties and has been in operation since December 2013. Based on the data of 57 percent capacity, the project can provide power to approximately 25,000 average-sized Nebraska homes when the wind is available.
Nebraska law made it necessary to establish a new way of purchasing the renewable attributes of the energy, without specifically signing a long-term contract for the electricity. Thankfully, we were able to do this and guarantee 20 years of wind-energy supply covering 75 percent of our electricity requirements.
“Under this agreement, BD is not actually buying the electrons generated by the wind turbines at Steele Flats; therefore the BD sites continue to pay the retail rate at the meter. What they are buying are the “green attributes” of that energy,” explains David D. Rich P.E., sustainable energy manager at NPPD. The agreement is structured such that when NextEra produces power at Steele Flats, they sell the power and equivalent generated RECs to NPPD. The utility then values those RECs at the power cost from NextEra minus the selling price into the Southwest Power Pool, and this is the cost that BD pays for the RECs.
BD is the first industrial customer in Nebraska to reach an agreement with the public utility for the purchase of RECs. The agreement enables us to utilize 30 megawatts of generation from the wind farm to offset electricity use from its manufacturing sites in Columbus and Holdrege and is an important milestone for the company’s worldwide sustainability program. Through the successful execution of this agreement, we have created a model that other industrial and commercial businesses may utilize. With the addition of the Steele Flats Wind Farm, coupled with the planned Broken Bow II Wind Farm (to be completed by the end of 2014), NPPD will be within 22 megawatts of its renewable energy goal.
“The opportunity with BD was a unique situation, where an industrial customer of our wholesale customers was seeking the opportunity to meet its sustainability goals,” said NPPD President and CEO Pat Pope. “Through many discussions and negotiations, we were able to get BD what they were seeking for their Nebraska operations and their sustainability goal, while at the same time adding to our energy portfolio and moving us closer to our board-established goal for renewable energy.”
As of the end of 2013, BD has achieved four out of five of its 2015 Sustainability Goals which were set forth in 2009, including a target to source 25 percent of its global energy use from renewable energy. The agreement to purchase energy credits from the Steele Flats Wind Farm helped add additional megawatts of wind-power generation in Nebraska and is also well-aligned with our long-term renewable energy goals, which globally reached 43 percent of total electricity and 37 percent of total energy for the company in 2013.
“BD’s 20-year purchase of wind power from Steele Flats demonstrates a commitment to renewable energy that goes beyond a near-term strategy to one that is about creating real, long-term value for the company and our planet,” said Bryn Baker, manager of renewable energy at World Wildlife Fund, who provided early consultation that was instrumental in buttressing the decision to move to long-term purchasing agreements. “Their innovative approach and persistence in making this deal happen puts BD squarely in the leader’s circle.”
BD’s commitment to renewable energy was recognized with the U.S. Environmental Protection Agency’s Green Power Partner Leadership designation in 2011, 2012 and 2013. BD was given the EPA Green Power Leadership Award in 2010 and currently is listed at #12 on the EPA Fortune 500 list of Top Green Power Partners.
Looking forward, BD intends to continue pursuing further renewable energy options. Around the world, the company is looking for appropriate wind, solar, co-generation, wood gasification, biomass, combined heat and power, multi-year renewable energy certificates and other options to ensure the long-term sustainability of its power use.
Image courtesy of Becton, Dickinson and Co.
Glenn Barbi has served as Vice President of the Office of Global Sustainability since BD formed the department in 2009. Leading BD’s global sustainability efforts, Glenn is responsible for driving environmental performance and strategy throughout BD’s organization. His focus includes advancing the Company’s progress globally in the areas of product stewardship and sustainable operations. Prior to his current role, he had served as Corporate Director of Environment, Health and Safety (EHS) since 1990. In addition to his EHS responsibilities, Glenn was appointed BD’s Chief Ethics Officer in 2001, a position he held until his current appointment. In this capacity, he managed a Company-wide Ethics Helpline and drove a variety of ethics and compliance training programs throughout the organization. He also serves as a member of BD’s Leadership Team.