Thursday, October 27, 2016

Renewable Energy Business Leadership: Tools and Guidance

Corporations are moving in droves to secure a supply or renewable energy to power their operations. Whether they build renewable energy generation capacity onsite or they source that power from a third party, the trend is unmistakable. There are a number of good reasons why corporations are doing so, the attractiveness of the environmental benefits are buoyed by the fact that renewable energy pricing is far less volatile than fossil fuels. The move towards renewables is being driven by the realization that such acquisitions benefit the bottom line.

A range of business initiatives show the business community is increasingly invested in renewable energy. In recent months there was the new RE100 initiative that is calling on 1000 businesses to commit to secure all of their energy from renewable sources. In the US, some 154 companies employing 11 million people have committed to 100% renewable energy. The RE100 lists 86 corporations that have made the 100% renewables commitment.

Demand

Currently, demand for renewable energy is outpacing supply. As explored in an article published in Forbes by Letha Tawney, the Director Of Utility Innovation and Polsky Chair For Renewable Energy at WRI, corporate contracts for renewable energy acquisitions in the US nearly tripled from 2014 to 2015. However, there is still a far way to go as renewables account for only around 10 percent of the total share of energy used. Almost 100 companies demonstrated interest in renewables at a REBA summit last May.

As Tawney states, "since there’s plenty of corporate demand, the problem is supply...it’s excessively difficult for large companies in the United States to buy as much renewable energy as they want."

To help address this demand shortfall multinational corporations are joining together to demand more renewable energy. A total of 60 companies and over 50 leading project developers and service providers participating in a network called the Renewable Energy Buyers Alliance (REBA), that aims to break down barriers to lower-carbon energy.

The White House has recognized REBA and WRI, for joining the Clean Energy Ministerial initiative to scale corporate procurement and drive additional deployment of renewables and help to secure agreements consistent with the Paris Climate Accord.

Market forces have already been shown to be killing the fossil fuel industry. The demand for renewables is a classic example of how market forces can be used to propel a rapid increase in renewable energy in the US. As Tawney says, this is "a market force to be reckoned with."

Support tools

There are also some changes that are making it easier for business to purchase renewable energy in the US including facilitated procurement tools. As reviewed in a Triple Pundit article by Jim Pierobon, there is a new interactive map from the World Resources Institute that enables users to click on a state to see renewable energy options and related utility offerings and see what is going on in other states.

A new resource from the World Resources Institute, called the interactive Corporate Renewable Energy Strategy Map shows where heavy energy users can buy renewable electricity. The state-by-state map displays options at the scale companies need from local utilities and at prices the Institute considers "affordable."

The data for each state includes renewable energy mandates, tax incentives, green tariff programs, and other utility or government offerings for states in which the aforementioned are available.

The WRI plans to track and update the map with deals utilities are cutting with customers. This map will drive renewable energy by helping businesses to make decisions about where they may want to expand based on the existence and cost of renewables in that state. This will also help states to compete among one another to ensure that they have an attractive renewable energy offerings that encourage businesses to build in their state. States without renewables (such as Southeast U.S.) will lose out unless they begin to provide corporate clients with the renewable energy supply they are seeking.

This map reflects the fact that each state has something different to offer prospective corporate buyers. To make it easier for corporations to buy renewables, WRI and its three partners created “Buyer Principles” organized for the REBA Summit.

Greater choice in our options to procure renewable energy Cost competitiveness between traditional and renewable energy rates Access to longer-term, fixed-price renewable energy Access to projects that are new or help drive new projects in order to reduce energy emissions beyond business as usual Increased access to third-party financing vehicles as well as standardized and simplified processes, contracts and financing for renewable energy projects Opportunities to work with utilities and regulators to expand our choices for buying renewable energy

Vertical integration

There appears to be a movement in the direction of a one stop shop regarding renewable energy. As quoted in an Environmental Leader article, Chris Robinson, a research associate on the Energy Storage team at Lux Research, said that the industry is moving toward a one-stop-shop business model. "we do see the commercial space moving toward vertical integration and will in many ways involve the same players as the residential space."

Through his work with Tesla and other endeavors Elon Musk has demonstrated that he is an innovative leader of the emerging low carbon economy.  Telsa's residential and commercial scale energy storage solutions are a case in point. He is forging a new business model that will help to provide onsite solar and battery systems in one package. This is due to Tesla’s proposed $2.6 billion merger with SolarCity (the vote by shareholders will take place next month).

If the SolarCity deal goes through the merger would fully integrate residential, commercial and grid-scale solar generation and storage.  This would be the world’s only vertically integrated sustainable energy company. "By joining forces, we can operate more efficiently and fully integrate our products, while providing customers with an aesthetically beautiful and simple one-stop solar + storage experience: one installation, one service contract, one phoneapp," Tesla said on their blog.

"A one-stop shop for customers would give Tesla better access to solar customers and also allow SolarCity to leverage Tesla’s brand and storefront locations," Robinson said.

Alan Russo, senior vice president of sales and marketing at REC Solar said his company is betting on a different paradigm. They believe, "customers are seeking greater choices, not fewer...[customers] also want to work with a proven energy partner with deep roots in the energy business that can reliably reduce energy costs while helping to make their organizations greener and more sustainable."

REC Solar is building a partner network of engineering, procurement and construction (EPC) companies and solar developers and giving them direct access to REC Solar’s commercial power purchase agreement.

Apple

Apple has been at the forefront of renewable energy development and in a move announced in June, they launched a subsidiary to sell renewable energy back to the grid. W  first ever decline in sales was front page news, Apple continues its sustainability leadership with, among other things, a commitment to go 100 percent renewable.

The Apple Campus 2 that is currently under construction in Cupertino, California is expected to have a solar capacity of 14 megawatts and baseload biogas fuel cells rated at 4 megawatts.

As reviewed in a Sustainable Brands article, Apple has created a new wholly-owned subsidiary known as Apple Energy LLC and filed an application to the Federal Energy Regulatory Commission (FERC), which regulates power companies, to be able to sell electricity and other power grid services to non-utility customers. Apple is not looking to be a utility, rather, this may be best understood as, "a sound business decision based on the fact that the company will sometimes generate more power than it is consuming and at other times be using more than it is generating." In their application to the the Federal Energy Regulatory Commission (FERC) to sell "capacity, and certain ancillary services," which could may translate to more competition in the batteries, charging stations for electric vehicles or perhaps even electric vehicles themselves.

Guidance

As explained above, many corporations are interested in renewables and distributed energy resources (DERs) in particular, however, this can be a daunting task for many companies. According to Environmental Leader, in an effort to benefit from cost-efficiencies and reduce environmental impact, a total of 15 percent of companies are currently leveraging DERs at the majority of their sites. To help with the complex process that requires significant project management and capital expenditures, Ecova has launched a new e-book called, Considering Renewables: Five Key Considerations for Integrating Renewables into Your Procurement Strategy. The book is designed to help you explore whether DERs are right for your organization, when to make the investment and how to make a strong business case for DERs.

Considering Renewables analyzes trends from commercial and industrial leaders nationwide, giving you insight into how your peers are addressing stakeholder priorities, managing financial risk and seizing today’s renewable opportunities. Whether you’ve already started integrating renewables or are just beginning to consider them, Considering Renewables can help you lay out your organization’s roadmap for DER success.

Click here to access the Considering Renewables e-book and learn what renewables and other DERs can do for your business.

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