As companies look to meet their greenhouse gas and climate targets, procuring renewable energy remains an attractive approach with the promise of big gains in reducing corporate carbon footprint.
Nearly two-thirds of Fortune 100 and nearly half of Fortune 500 companies have set ambitious renewable energy or related sustainability targets, according to the Business Renewables Center (BRC), an initiative of the Rocky Mountain Institute.
Over 155 companies globally have committed to purchasing 100 percent renewable energy through the global initiative RE100. The BRC now counts 100 corporate buyers as members. Tech companies like Google, Amazon and Apple, and large businesses like Starbucks, Target, General Motors and General Mills have all made huge investments in renewable energy.
Yet despite private sector enthusiasm for renewable energy, less than one-fourth of corporate renewable energy buyers in BRC’s network have completed an off-site transaction to date. With corporate renewable energy or greenhouse gas goals tied to 2020 soon coming due, companies have even more incentive to act sooner rather than later.
“We see a lot of opportunity in today’s energy market,” Lynda Clemmons, vice president of sustainable solutions at NRG Energy, the leading integrated-power company in the U.S., told TriplePundit. “We see demand drivers from businesses and throughout the supply chain. Both suppliers and consumers say they would rather do business with a company that is focused on sustainability and the environment -- that shares the same values they do. It’s a push and pull, leading to the same thing: A desire for low-cost, reliable, sustainable energy.”
Renewables are also increasingly competitive compared to other forms of energy. Solar and wind projects made up roughly 62% of new power construction in 2017, and their costs continue to plummet.
The reduced price point for renewable energy is a definite incentive for companies to make an investment in a clean energy future now, Clemmons says.
“Renewables are one of the most economical energy commodities out there,” she adds. “As a result, we are seeing a huge amount of corporate interest as well as utility interest in buying renewables.”
Corporate renewable deals amounted to nearly 5 GW in 2018, according to BSR’s deal tracker.
“That is the most we’ve ever seen—twice as much as 2017 and three times as much as in 2015,” Clemmons notes.
“The other thing that holds a customer back is if they are in a geographical location that doesn’t offer a renewable energy option,” she explains.
One barrier to companies making the investment in off-site installations is that the process is considered cumbersome, Clemmons points out, with historical factors such as untenable contract sizes or lengths, difficult building logistics or complex financial transactions preventing companies from procuring wind and solar energy.
“In the past it’s been the larger companies with the resources and savvy to enter 25-year purchasing agreements,” Clemmons told TriplePundit. “But we wanted to make it possible for any company to incorporate renewables with the least cost and least amount of complications to buy renewable energy under a shorter agreement and be secure in knowing that there is a fixed price on their energy spend.”
The plan transforms the lengthy and complex traditional energy procurement process into a cost competitive, easy to execute transaction.
Its benefits, according to NRG, include:
“Compared to what is generally available in the market, Renewable Select offers fixed price solutions for renewable energy at very competitive rates. That is a huge benefit to companies, to be able to lock in that figure in their energy budget,” she explains.
“At the same time, companies who go for off-site installations through Renewable Select are contributing to the local grid,” she adds. “They gain the renewable energy credits as well as the ability to talk about the investment as part of their sustainability commitment.”
In one example, leading global foodservice distribution company Sysco announced in July a ten-year renewable energy agreement with NRG Energy. The company will install three solar garden sites in the Houston and Dallas areas, which will support approximately 10 percent of Sysco’s U.S. electricity usage.
NRG customized a simple electricity solution through Renewable Select, in a familiar fixed price structure that benefits Sysco’s operations, bottom line and the environment, Clemmons says.
“We connect developers and their projects with the customer and help communities get access to a solar facility at a fixed price,” Clemmons says, adding that NRG has experience contracting hundreds of MWs of community solar.
In the past, Clemmons explains, NRG had to use its own in-house shop to develop renewables projects. Then, in August 2018, NRG announced the sale of its Renewables Platform and controlling interest in NRG Yield, Inc. to Global Infrastructure Partners, which formed Clearway Energy Group, one of the largest clean energy companies in the U.S.
“With the divestiture of our in-house renewables development shop and our increased focus on the customer, we have pivoted to providing a broad range of consulting and services to customers,” Clemmons says. “Now we’re free to contract with Clearway—or any other developer (like Cypress Creek, who we partnered with for the Sysco project)—which enables us to be more flexible when it comes to pricing and other transaction features.”
Looking ahead to the next 18 months, Clemmons predicts that the approach offered by Renewable Select will generate a significant amount of business.
“We’ve had such a tremendous level of interest,” Clemmons says. “Now we’re focused on making sure that what we provide is exactly what customers need, and that the agreements with developers match up to that.”
Image: Unsplash/Tim Foster