A new report from the International Renewable Energy Agency has revealed that companies across 75 different countries sourced an impressive total of 465 terawatt-hours (TWh) worth of renewable energy in 2017, highlighting the continued interest in and support of corporate renewable energy purchasing.
The new report from the International Renewable Energy Agency (IRENA), Corporate Sourcing of Renewable Energy: Market and Industry Trends, is the world’s first global and comprehensive analysis of corporate sourcing of renewable electricity and highlights one of the leading driving forces of renewable energy developmental support — the long-term Power Purchase Agreement (PPA). The report is based on IRENA’s existing database as well as from over 2,400 large corporations headquartered in over 40 countries and shows that corporate sourcing of renewable energy is taking place in almost a third of the planet’s countries.
“Renewable energy sourcing has become a mainstream pillar of business strategy in recent years,” said IRENA Director-General Adnan Z. Amin. “While environmental concerns initiated this growing trend, the strengthening business case and price stability offered by renewables can deliver a competitive advantage to corporations, and support sustainable growth.”
The report shows that not only is there a lot of corporate sourcing of renewable energy going on but that corporate sourcing of renewable energy is proving itself a key factor in the global transition to a low-carbon economy. The report highlighted three primary drivers of corporate sourcing itself — environmental and sustainability concerns; social responsibility and reputation management; and economic and financial objectives. It’s important to note, however, as I laid out in a piece I wrote towards the end of April looking at corporate sourcing of renewable electricity by big-name companies like Apple and Google, that another of the key drivers is the benefit of stable, long-term electricity prices.
IRENA’s report showed that of the companies involved in its study, more than 200 source at least half of their power from renewables, and that over 50 now source 100% of their power from renewables.
“Corporations are responsible for around two-thirds of the world’s total final electricity demand, making them central to, and key actors in, the energy transformation,” continued Mr Amin. “As governments all over the world recognise this vast potential, the development of policies that foster and encourage corporate sourcing in the electricity sector and beyond will inject additional needed investment in renewable energy.”
Some of the data for the report was provided by The Climate Group’s RE100 initiative with CDP, which seeks to support and promote corporate 100% renewable energy targets. RE100 already has 134 companies from around the world pledged to deliver 100% renewable energy targets through the initiative — having added Vodafone and data storage giant Iron Mountain just this week.
“The Climate Group is driving companies to raise their ambition and accelerate towards using and sourcing 100% renewable electricity,” said Helen Clarkson, CEO, The Climate Group. “This is absolutely vital to achieve the Paris Agreement’s goal of a world of less than 2 degrees of warming. It is encouraging to see that corporate sourcing of renewable energy continues to be a growing global trend, and we will keep propelling this growth.”
One of the important points to look at when considering corporate sourcing of renewable electricity is not only the benefits it provides the companies in questions but the financial and developmental support it gives to renewable energy projects and regional development. A long-term PPA can make or break a renewable energy project, and a signed PPA can open the door for future development.
“The commercial and industrial sector has tremendous potential to drive further investment into renewables and contribute to the achievement of global climate goals,” said Mr Amin, who spoke to me via email. “In fact, given that companies account for about two-thirds of the world’s electricity consumption, their participation in the energy transformation is critical to a decarbonized energy system.”
I also asked Mr Amin what he thought were the economic arguments being made to companies to source their own renewable energy?
“The dramatic cost reductions we have witnessed in renewable power generation over the last few years now make solar and wind the least cost source of new power generation in many parts of the world and also the most stable long-term source of power supply by price. Therefore while it is clear that environmental concerns were the primary driver of corporate sourcing, the business case for renewable power will increasingly become a central motivating factor.
“Predictable long-term renewable electricity offtake agreements can deliver a competitive business advantage to companies, particularly when compared to the type of price volatility traditional power markets can be subject to. We believe costs and stable pricing – together with strong enabling policy frameworks – will encourage more corporations to actively source renewable energy moving forward.“
There’s still a long way to go, however, and IRENA’s report highlighted this by showing that while many companies source some of their power from renewable energy sources, only 17% have a renewable electricity target in place — and of those that do, three-quarters of those targets will expire before 2020. This opens the door for significant opportunity, but the opportunity must be picked up.
“There is a real urgency to step up ambition and accelerate the uptake of renewable energy,” Helen Clarkson added. “We can see from influential, global organizations like Microsoft, Google and Apple committing to 100% renewable electricity that this is possible – but businesses globally need to step up to this challenge. The Climate Group is here to help them achieve that, as well as progress on energy saving and electric transport.”