TODAY’S STUDY: Why Big Buyers Buy New Energy
State of Corporate Renewable Energy Procurement
September 2017 (Apex Clean Energy and GreenBiz)
Apex Clean Energy and GreenBiz are pleased to provide an in-depth study of the state of direct renewable energy purchasing, with insights on why and how corporates buy renewables, and strategies to increase renewable energy project development. The intent of this report is to help corporate sustainability, energy and finance executives from Fortune 500 companies – and beyond – to plan and access renewable energy at an increased pace and scale.
Renewable energy resources such as wind and solar power are no longer just ways to meet sustainability goals. Corporate buyers increasingly seek renewables as cost-competitive sources of new power generation that offer a hedge against price volatility from traditional energy sources. More opportunities to buy and finance clean energy exist than ever before, allowing buyers to purchase on their terms and harness internal expertise they already possess.
Apex Clean Energy partnered with GreenBiz to conduct an analysis of current and future corporate renewable energy activities, determine the outlook on the market, and identify procurement strategies and resources that corporates can use to help scale new projects and reach beyond onsite generation and purchasing of Renewable Energy Credits (RECs).
We conducted a web-based survey of 153 large corporate buyers (public and private) each with an annual revenue of greater than $250 million. Of those surveyed, 128 (or 84 percent) are actively pursuing or considering purchasing renewable energy over the next five to ten years. For more detailed insights, we then performed 12 phone-based interviews with a cross-section of leaders in corporate energy purchasing.
Five Key Findings
1. Undaunted: 84 Percent of All Respondents Plan to Actively Pursue or Consider Directly Buying Clean Energy • Most large corporates plan to be active in the renewable energy (RE) market over the next five to 10 years (84 percent) and 43 percent plan to be more aggressive in the next 24 months – led by retail (70 percent), technology (60 percent) and healthcare (54 percent).
2. Corporate Renewable Energy Goals Matter • Most corporates have RE targets (57 percent), and the primary drivers focus on addressing energy and emissions goals (70 percent) and demonstrating corporate leadership (65 percent).
3. Economics Are Converting Sustainability Goals Into Purchases • At 65 percent, price was the clear leading criteria among the drivers of corporate buying decisions, with value coming in a distant second (34 percent).
4. As Market Matures, So Do Strategic Approaches to Achieving RE Goals • It’s no longer a mostly REC world. As the economics of clean energy become more compelling, corporates are leveraging new transaction methods including project aggregation and utility green tariffs.
5. Accelerated Market Education Can Help NonActive Corporates Overcome Market Barriers • Most barriers cited by corporates not yet actively purchasing renewables were focused on internal coordination, indicating a need for greater market awareness.
The Path Forward
The renewable energy market is always evolving and likely will continue to do so. As corporates develop more knowledge and capacity for project development, there is a trend towards addressing renewable energy as a portfolio of dynamic energy assets. Corporates increasingly see renewable energy as an opportunity to generate additional revenue, mitigate risks, manage energy costs and differentiate themselves from other companies.
However, while each business is different, corporations considering or actively pursuing renewable energy projects can consider these important takeaways:
• For companies early in the process, engage a diverse set of internal stakeholders including energy management, energy strategy, sustainability, finance and legal – leverage existing frameworks established for goal setting and project evaluation from experience with energy efficiency, onsite PV, purchasing RECs and operational sustainability projects.
• For those further along in the process, consider taking a portfolio approach to projects based on renewable energy resource (such as wind and solar), transaction types and geographic location. Companies can look to partners and can consider financing mechanisms that mitigate risk by leveraging transactions including project aggregation, utility green tariffs and other project development tools.
• Partner with natural conveners including NGO-driven initiatives such as REBA and RE100 that can facilitate best-practice sharing, workshops and valuable tools for scaling projects.