Renewable energy is now one of the primary ways companies are making progress to meet their business and climate goals and decrease their dependency on fossil fuels. The RE100 program, through which companies commit to procure 100 percent of their energy use from renewable sources, now includes 87 companies.
Not all companies may be ready for a 100 percent renewables commitment, but many firms have begun incorporating renewable energy procurement into their business and sustainability strategies. Here’s how to assess your options for procuring renewable energy and how to collaborate to increase your portfolio more quickly.
Assessing Your Options
The first step in procuring more renewables is understanding the menu of procurement options that will meet your company’s renewable energy needs.
There are several different ways to procure renewable energy, and most companies opt to combine a few methods:
- Onsite installation: Through this approach, your company invests in and builds renewable energy infrastructure on corporate property. This requires both capital and available space for installation. Costs for energy are typically higher than other options.
- Power purchase agreements (PPAs): PPAs are contracts with energy producers that allow your company, the energy consumer, to access an agreed upon portion of the renewable project’s future energy production at a favorable price. While some of these can be developed on corporate property, many of these projects are built off site and require up-front capital or contracts for 12 years or more.
- Renewable energy certificates (RECs) or guarantees of origin (GOs): RECs, used in the United States, and GOs, used in Europe, give companies certificates that represent the environmental attributes of the generation of one unit of renewable energy (typically megawatt-hours). Companies can purchase these certificates and use them to offset electricity emissions when local options are not available. While these are cost-effective and widely available, they do not generate as many strategic benefits for companies as other options.
- Renewable energy (green) tariffs: This approach is a service that allows utilities to supply businesses with renewable energy from their local grid, typically at a fixed rate, which can meet the full energy demand. Renewable energy can be supplied by projects owned by the utility. Though renewable energy tariffs are still an emerging procurement option, the number of options available to companies has increased in recent years. Increased use of this procurement option allows companies to demonstrate a robust market to utility companies and increase the amount of renewable energy available on local grids.
Companies can use any combination of these options and should consider the capital expense involved in the complete portfolio. For example, Microsoft and Google used PPAs and on-site investments for much of their renewable energy procurement, primarily because these options are available in the markets where the companies operate and they meet the companies’ large energy demands. Similarly, Iron Mountain uses onsite solar and a 15-year wind PPA to cover the full energy demand of its data center and portions of its office buildings. Equinix, on the other hand, has a renewables portfolio that includes certified green power, PPAs, RECs, and onsite generation from solar and fuel cells.
To select the appropriate renewable energy portfolio, companies should consider their internal renewable energy target, the availability of procurement options, and the costs involved. When it is not possible to meet the renewable energy demand through these options, companies can use RECs or other carbon offset programs to cover the desired amount of the remaining energy demand.
Collaborating to Create Markets and Reduce Costs
Companies can move further, faster—and create more benefit for themselves—by collaborating with others. Below are four groups that can help companies collectively address barriers to progress and establish a larger corporate market for renewable energy. Each collaboration provides excellent resources and should not be viewed as mutually exclusive.
- BSR’s Future of Internet Power: Our group brings together companies with a large cloud and online footprint to address challenges and collaborate on solutions that will increase renewable energy to power data centers.
- Business Renewables Center (BRC): Run by Rocky Mountain Institute (RMI), the BRC helps its 187 member companies navigate the procurement landscape through tools, primers, guides, and semi-annual conferences.
- Corporate Renewable Energy Buyers’ Principles: The 65 signatories to the principles aim to showcase the demand for corporate renewables to utilities and outline six criteria that can help them meet their aspirations. World Resources Institute (WRI) and the World Wildlife Fund (WWF) manage this commitment.
- Renewable Energy Buyers Alliance (REBA): Run by BSR in partnership with RMI, WRI, and WWF, REBA works with its 80 corporate members to increase corporate demand and utility supply for renewable energy by creating new opportunities and recruiting more participants to purchase renewables. Companies participate by joining BSR’s Future of Internet Power, the BRC, or Buyers’ Principles.
RE100 and/or taking other actions through We Mean Business initiatives, such as setting a science-based target and improving energy productivity through EP100, which complements RE100. Individually or paired, these commitments put companies on track with the global transformation to a low-carbon economy.
Renewable energy should be on the near-term agenda for all companies so the global community can work toward a low-carbon future. Leading companies understand that their efforts can be used to enhance long-term business viability, develop or execute a robust sustainability strategy, and increase business competitiveness. At BSR, we hope to see more companies take a leading role in advancing their business by supporting a thriving, low-carbon economy.