Corporate procurement of renewable energy continues to ramp up
Corporate demand for sustainable energy continues to grow, according to a panel of experts from the solar and wind energy industries, but the future centers around storage and scalability solutions.
During a recent webinar sponsored by David Gardiner and Associates on the State of Corporate Renewable Energy Procurement in the U.S., experts representing the wind and solar energy sectors and Microsoft discussed the increased demand for renewable energy.
The panelists, Shawn Rumery, director of research for the Solar Energy Industries Association; Hannah Hunt, deputy director for electricity policy and demand for the American Wind Energy Association; and Jenna Goodward, energy technology program manager with Microsoft, said that while corporate use of sustainable energy continues to increase, the need for smaller organizations to finance and procure renewable energy also will be an important issue going forward.
For Goodward, how companies manage risk will be the next big issue in sustainable energy.
“I think the next big thing is going to be addressing shape risk,” she said, referring to the relationship between volume and price and the mismatch that may occur between how much electricity is bought in advance and how much might actually be consumed.
Hunt agreed. “… As people try to manage shape risk you’re going to see a number of hopefully entities with the ability to take that risk emerge more, insurance companies perhaps or others.”
Another major theme to watch for in the renewables space could involve the C&I experience start to get applied to cities as well. “There are a number of cities that just came out of the U.S. Conference of Mayors that said that they were going to be attempting to sign an aggregated power purchase agreement (PPA),” Hunt said, including Boston, Orlando and others. “Seeing how success from this side can translate to the other side of the more public sector will be really interesting.”
For Rumery, a major issue will be providing storage solutions for larger organizations, and providing financing for smaller organizations to adopt solar energy.
“Particularly when we look at distributable resources, it’s really opening up some opportunities for corporates who see storage in and of itself as a value particularly on the resiliency side, but also load shifting and things of that sort,” Rumery said. In 2017, 6 percent of all commercial and industrial (C&I) capacity that was installed in 2017 had storage paired. “GTM Research is estimating by 2023, 25 percent of capacity on the C&I space will have storage paired – that’s over 600 megawatts of solar projects with storage,” he said.
Smaller buyers also have a need to gain access to renewables.
“What we’ve seen in the last two or three years is more boutique financing firms like to keep transaction costs low, getting into the space and offering opportunities for a lot of these clients … we’re seeing some aggregation on the financing side; that’s how people reduce costs. But really it’s innovation on the financing space,” Rumery said. Community solar has been an important opportunity for a lot of C&I customers, he added.
Corporate adaptation of sustainable energy has been on the rise, both in solar and wind energy industries, the panel said.
In solar energy, corporate purchasing has risen since 2015, with corporate procurement accounting for 30 percent of all solar capacity brought online in 2017. Rumery said the increase was due in large part to falling costs and increased demand preceding expiring incentives and rate changes.
Meanwhile, wind energy took a slight dip in 2016 but continues to rise in 2017 and 2018. Commercial, industrial and institutional customers of wind account for 95 percent of all non-utility procurement of wind energy. And while C&I customers purchased over 2,400 MW of wind power in 2017, C&I customers purchased an additional 1,359 MW of wind power in just the first quarter of 2018, Hunt said.
Some of the largest customers across the sustainable energy industry continue to be tech companies, including Google Energy, Apple and Facebook, which have procured wind energy, for example. Major retailers, especially big box stores with large flat rooftops, like Kohl’s, Walmart and Target, continue to be major procurers of solar energy.
Tech companies like Microsoft are increasingly aware of the importance of sustainable energy.
“The cloud is a real place,” Goodward said. “It’s a physical place where we run all these computers and as the world increasingly races to a future based on cloud computing, it’s really incumbent on us, Microsoft as well as other fellow tech companies, to make sure that that place is run with sustainable energy and sustainable practices to run the cloud.”
“We’ve spent a considerable amount of time and teamwork thinking about our role in the energy supply chain,” Goodward added, noting the scale of Microsoft’s cloud infrastructure footprint, including 2 million kilometers of data center fiber running around the globe, 42 Azure cloud services regions, a hundred-plus data centers and a gigawatt of installed computing energy load capacity.
While Microsoft has had a longstanding commitment to being carbon neutral, the company also has incremental sets of targets for reaching direct procurement of renewable energy. “They are 50 percent of our energies from wind, solar, and hydro by 2018, which we have met,” Goodward said. “We have contracted that amount of capacity, and 60 percent by 2020, continuing towards our goal of 100 percent renewable energy.”
And those investments in renewable energy could lead to more companies becoming energy providers, instead of just energy users.
For companies like Google, where energy produced exceeds their demand, providing energy may be a wave of the future, Hunt said. Google technically acts as a wholesale market participant under an order from the Federal Energy Regulatory Commission that grants it the ability to buy and sell energy at market rates.
