Corporates and renewables — taking the bull by the horns

An article by Thomas Hillig — Founder THEnergy


Dr Thomas Hillig

An article by Thomas Hillig – Subscribe now to read more on the subject.

Private companies are the main end-consumers of electricity. According to an International Renewable Energy Agency (IRENA) report, although around two-thirds of the world’s electricity is consumed by the commercial and industrial sector, not even 5% of the total electricity demand in these sectors is actively sourced through renewable energy sources. Large IT and telecom companies are at the forefront of the development. Almost all these tech giants have renewables on their agenda — some of them, such as Google, Microsoft, and Apple, are even currently covering 100% of their power consumption by renewables. However, this change of heart by these companies has not come about voluntarily. Their significantly growing electricity consumption attracted Greenpeace’s attention almost a decade ago. Since 2010, the environmental NGO has been tracking the renewable energy efforts of leading IT and telecom companies and published in a cycle of three years a media-effective report that created immense public attention and put serious pressure on their management. In the end, the campaign ultimately forced these corporates to become renewable energy front-runners.

100% renewables and missing the mark?

Commitment to sustainability has required untiring efforts from corporates. The race does not stop at 100% renewables. For taking up the sustainability reins, an attack is the best form of defence. At the beginning of this process, pragmatism was important. Corporate renewable energy pioneers were mainly focusing on standard corporate power purchase agreements (PPAs) and guarantees of origin (GOs). Now, sustainability leaders mainly focus on three areas: Location, supply chain, and synchronization of consumption and renewable energy supply.

“Corporates also buy solar energy for their night-time consumption and source cheap wind power when there is no wind. Off-take and power generation are not synchronized.”

Where to source renewables from — a place in the sun

Global companies have operations all around the globe. An unwritten rule about sourcing renewables is that there should be certain proximity between the off-taker and associated power plant. The purest form to comply with this rule would be on-site power generation. In reality, there are several feasibility concerns that range from high prices of on-site power to issues regarding space requirements for building solar or wind power plants near manufacturing sites. Constructing the power plants further at more distant locations can be costly when charges for the national grid are added and new private power lines are built. There is also the aspect of cross-border approaches.

A threat of new vulnerability is looming on the horizon as Greenpeace is campaigning with this thematical area. A U.S. data centre nucleus in Northern Virginia increases the electricity demand locally while renewable energy capacity under corporate PPAs is predominantly added in Texas. This mismatch means that the energy gap in Virginia might be covered with dirty electricity from coal with all its consequences for our climate.

Timing is everything — generation in sync with energy consumption

Virtually all PPAs today are purchase contracts about certain amounts of energy at a fixed unit price. When solar and wind energy plays a crucial role in an energy system, they also tend to influence energy prices significantly. In plain language, this means that corporates also buy solar energy for their night-time consumption and source cheap wind power when there is no wind. Off-take and power generation are not synchronized. Google is going the next step and has announced that they will source clean energy for every hour of the day. This makes energy sourcing much more complex and also comes with extra costs.

Photo by American Public Power Association

Cleaning up the supply chain

So-called “scope 3” supply chain emissions are the Achilles heel of many renewable energy front runners. Frequently, only a small fraction of carbon emissions occurs within an organization. Regarding downstream activities, in particular, corporates might leverage their purchase power. AB InBev has set up a program to support suppliers with expertise regarding renewables. Apple claims it has expanded outreach and education for its suppliers on procuring renewables. Apple made 44 of its suppliers, incl. Foxconn, commit to running Apple production on 100% clean energy. These moves are part of a larger trend of pushing affiliated companies to pursue renewables commitments.

An attack is the best form of defence

First movers are in a unique position to gain control over the game regarding sustainability communication. Budweiser’s 2019 Super Bowl commercial focused on renewables. T-Mobile and its energy service provider ENEL Green Power have joined forces in sustainability campaigns. T-Mobile even goes one step further. After having committed to 100% renewable energy for their operations and the inauguration of the first wind power plants for which they have signed PPAs, they are running now a social media campaign that is trying to force their main U.S. competitors, AT&T and Verizon, to also engage in a 100% clean energy future. A welcome side-effect is that T-Mobile positions itself through this campaign as sustainable and progressive.

Race for a clean slate not over yet

However, none of the tech giants seems to commit publicly on objectives for all three dimensions of renewable energy leadership. This still makes them to some extent vulnerable. Greenpeace is expected to keep the pressure up — so will some industry peers. Launching a comprehensive renewable energy offensive is the only way to protect oneself from becoming a pawn in this communication game.

Dr Thomas Hillig, an expert specializing in off-grid renewables and micro-grid solutions founded the renewable energy consultancy firm THEnergy in 2013. THEnergy assists companies in dealing with energy-related challenges. Renewable energy companies are offered strategy, marketing and sales consulting services. For industrial companies, THEnergy develops energy concepts and shows how they can become more sustainable — combining experience from conventional and renewable energy with industry knowledge in consulting. THEnergy also advises investors regarding renewable energy investments in quickly changing market environments.

This piece is also available on our Medium page.