The growth in wind and solar energy over the past several years has been impressive, but the pace of change has been achingly slow for companies that want more renewable energy than the market can provide. With that in mind, 12 leading U.S. companies have partnered with the World Wildlife Fund (WWF) and the World Resources Institute to make one thing perfectly clear: There is a huge, unmet renewable energy demand by businesses, and a change in energy markets will be required in order to meet that need.
The linchpin of the collaboration is a set of strategic guidelines called the Renewable Energy Buyers’ Principles. Most of the 12 companies that have signed on are familiar names at Triple Pundit for their proactive approach to renewable energy or other sustainability issues, including Bloomberg, Facebook, General Motors, Hewlett-Packard, Intel, Johnson & Johnson, Mars, Novelis, Procter and Gamble, REI, Sprint and Walmart.
8.4 million megawatt-hours of renewable energy demand
According to WWF, the 12 companies signing on to the Renewable Energy Buyers’ Principles have calculated that their renewable energy demand adds up to 8.4 million megawatt-hours per year through 2020.
That’s just those 12 major companies, so 8.4 million is just for starters. These companies represent a noticeable level of interest in renewable energy among major business sectors in the U.S., including IT, media, retail (Ikea also comes to mind, though it is not headquartered in the U.S.) and manufacturing.
When you consider other sectors of the U.S. economy that are proactively adopting renewable energy, including professional sports, government agencies, and nonprofit stakeholders like religious organizations and academic institutions, you can see that the unmet renewable energy demand in the U.S. is astronomical.
As for why utilities have been acting so slowly, some have been acting much more quickly than others, but overall the problem is that the traditional, centralized model of power supply does not easily embrace the local, distributed sourcing that is a key attraction of renewable energy.
The Renewable Energy Buyers’ Principles
The Buyers’ Principles are focused on shifting the market as applied narrowly to the traditional centralized power plant model. They are not meant to address political and legislative obstacles that have burdened renewable energy development in the U.S.
However, those obstacles are not set in stone, and once they start falling there will still be a need for a clear path toward a market that accommodates both renewable energy and advanced energy storage opportunities.
With that in mind, the Buyers’ Principles (here’s that link again) lays out six areas in need of change:
- Greater choice in procurement options. This principle is clearly aimed at enabling businesses to reach outside of their local utility for energy suppliers.
- More access to cost competitive options. This part of the strategy embraces the potential for renewable energy to compete on price with other fuels on a long-term basis, whether supplied by utilities or other parties.
- Longer- and variable-term contracts. Aside from its potential for costing the same or less than conventional energy, locally-sourced renewable energy provides a critical, long-term buffer against the price spikes that bedevil conventional energy markets.
- Access to new projects that reduce emissions beyond business as usual. As companies build a sustainable identity, they want to be able to claim sole ownership of the renewable energy projects they support. This involves local sourcing wherever possible, and eliminating the “double-counting” renewable credits.
- Streamlined third-party financing. Of particular interest to smaller companies is this item, which would make it easier for companies to access power purchase agreements and other third-party arrangements.
- Increased purchasing options with utilities. Recognizing that some utilities have the flexibility, opportunity and will to embrace distributed energy generation, this item admits the potential for companies to get more and cheaper renewable energy within the existing utility and regulatory framework.
Collaboration = Accelleration
The aim of the Buyers’ Principles is to rally major energy consumers around a strategy that will pick up the pace of renewable energy generation in the U.S.
It’s a good example of the collaborative, shared-platform model for sustainability progress that has been emerging as a global force. A large portion of the focus is on streamlining renewable energy procurement, which obviously benefits the big players, but it will also enable smaller consumers to jump into the market without having to reinvent the wheel.
Amy Hargroves of Sprint sums it up this way:
Very few companies have the knowledge and resources to purchase renewable energy given today’s very limited and complex options. Our hope is that by identifying the commonalities among large buyers, the principles will catalyze market changes that will help make renewables more affordable and accessible for all companies.
For a parallel example you can look at the U.S. Army, which has emerged as a standout example of trail-blazing new strategies to meet its renewable energy demand.
The Department of Defense initially began installing large-scale solar power plants on an individual, ad hoc basis at its facilities. The pace picked up considerably after 2012, when the Army established the Energy Initiatives Task Force to cover all of its opportunities for building utility-scale solar power plants, and combined it with the streamlined procurement process of the Army Corps of Engineers.
The over-arching goal, aside from greenhouse gas management, is to reduce DoD’s dependence on grid-supplied energy.
Image courtesy of the World Wildlife Fund