Advanced Energy Perspectives

Corporate Procurement of Renewable Energy Gets Creative

Posted by Frank Swigonski

Apr 18, 2017 5:10:42 PM

    

This post is one in a series of feature stories on trends shaping advanced energy markets in the U.S. and around the world, drawn from Advanced Energy Now 2017 Market Report, which was prepared for AEE by Navigant Research.

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Coca-Cola is just one of many companies committing to advanced energy goals. 

As a growing number of companies turn to advanced energy to meet their electricity needs, corporate procurement has emerged as a significant driver of deployment. After a record year in 2015, when corporate purchasers and other non-utility buyers signed contracts for more than 3.7 GW of solar and wind power – surpassing utility purchases – corporate pro-curement maintained a steady clip in 2016, reaching 2.5 GW by the end of the year. These numbers do not count onsite generation, another important market segment led by companies like Walmart, Apple, and Coca-Cola.

The growth of corporate advanced energy procurement can be traced back to several underlying trends, most notably the falling price of wind and solar and the rise in corporate renewable energy and sustainability com-mitments. Once the sole domain of leading companies like Google, Microsoft, Amazon, and Walmart, today a variety of energy-intensive industries such as data center users like Salesforce, and manufacturers like Procter & Gamble, as well as government facilities, are setting renewable energy procurement goals. As of 2016, 71 Fortune 100 companies had set sustainability or renewable energy targets, up from 60 two years earlier.

As companies set targets, they are also using new types of transactions to meet them. These range from Renewable Energy Certificate (REC) purchases, participation in utility green pricing programs or renewable energy tariffs, and an assortment of so-called financial, or “virtual,” power purchase agreement (PPA) structures. Increasingly, companies are reaching innovative deals with their local utilities. For example, in Virginia, Amazon Web Services (AWS) and Dominion Virginia Power signed a renewable energy delivery deal that allows Dominion to manage and integrate the energy produced from various Amazon wind and solar farm projects onto the grid that serves AWS datacenters. In Wyoming, Microsoft agreed to allow the local utility, Black Hills Energy, to reach behind its meter to make use of its new, onsite backup natural gas generators to meet grid needs. At the same time, Microsoft agreed to purchase RECs from a wind project adjacent to its Cheyenne data center.

Some companies have shown they will go to great lengths to get their energy of choice. MGM Resorts and Wynn Resorts announced they will pay exit fees to NV Energy to allow them to purchase wholesale power on their own, cutting themselves off from the state’s largest utility in order to control their energy costs and contract for renewable energy. The companies expect payback in six or seven years, despite paying fees totaling $100 million to offset the impact of their exit on other ratepayers, as well as $80 million in additional fees to be paid over six years.

Looking ahead, leading companies are doubling down on their commitments. When announcing it had met its goal to source 100% of its electricity from renewable energy, Google set a new, more ambitious target: achieving 100% renewable energy on a real-time basis, not just over the course of the year. At the same time, smaller companies are entering the equation, creating demand for ways to make small purchases at scale.

One recently formed company offering a turnkey solution for corporate customers pursuing sustainability targets is Edison Energy, an unregulated arm of Edison International. Edison Energy assembled several acquisitions to offer a combination of renewable energy procurement, energy efficiency services, and distributed renewable generation paired with battery energy storage. In a similar move, Schneider Electric picked up advisory firm Renewable Choice Energy to add renewable procurement to its energy service offerings. We will watch closely as new turnkey offerings and business models emerge from other big players, including GE Current and Duke Energy Renewables.

Learn more about integrating renewable energy resources in our 2017 market report:

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Advanced Energy Perspectives is AEE's blog presenting news, analysis, and commentary on creating an advanced energy economy. Join the conversation!

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