As part of your organisation's climate journey, you'll measure your emissions footprint, set reduction targets, and develop a list of interventions to reach those targets. Renewable electricity (RE) will surely be a part of this roadmap.
But, you may want to get started on RE sooner, in parallel to or even ahead of this process. Why is that? RE isn't just a sustainability strategy – it's a good business opportunity. Investing in renewable electricity today can put your organisation in a stronger position to confront tomorrow's challenges, climate-related and beyond. This post explores five reasons not to wait on RE.
It's always harder to find budget for something new. But (we presume) buying electricity isn't new to your organisation. Wherever your organisation operates, you're (likely) buying megawatt-hours (MWh) from the local utility. In fact, you may even have an energy team whose primary purpose is to manage and optimise your energy procurement. Rather than procure that electricity from fossil fuel sources, why not procure renewable electricity instead and reduce your scope 2 emissions?
Reducing emissions in scopes 1 and 3 requires careful emissions footprinting. However, this is not the case for scope 2. To develop an RE roadmap, you need to know how much electricity (measured in MWh) you consume and in which markets. In our experience, most organisations already have this data available simply because it's smart from a business perspective to know how much electricity you're buying and where you're buying it. In other words, there's no extra work required on your part to get started with renewable electricity.
Our suggestion to procure renewable electricity might have you asking: At what incremental cost? True, RE will support your organisation's climate reporting, but how are you going to make a case internally to start, or accelerate, the procurement of renewable electricity if that renewable electricity costs more than grid electricity? The good news is, the opposite is probably true. Renewable electricity, in many cases, costs less than fossil fuel electricity. You can have your cake and eat it too, and thank the remarkable decrease in cost of renewable technologies, particularly solar, over the past decade (see graph below).
Source: U.S. National Renewable Energy Laboratory (NREL)
Does your organisation use a lot of electricity? And are you worried about rising electricity prices? Some types of RE can provide a hedge against electricity price volatility, allowing you to lock in a particular rate over the long term or take an offsetting position that makes you indifferent to rising (or falling) electricity prices. As a result of the ongoing Russian invasion of Ukraine, electricity markets are enduring a period of particular volatility (see graph below, specific to European markets but relevant globally) that shows little sign of abating. Your business might benefit from the long-term certainty that RE can provide.
Source: ENTSO-E
Addressing climate change is vital for the long-term health of our planet. It requires investing in climate solutions that decarbonise our homes, businesses, and communities. But financing these investments is not cheap. That's what makes RE such an attractive place to start. RE can deliver economic returns to its investors. Those returns – be they the positive cash flows from a power purchase agreement or the avoided electricity costs from installing on-site solar – can in part finance the more expensive investments needed to fully decarbonise. If your organisation is developing a decarbonisation roadmap, don't leave out the potential economic benefits of renewable electricity. A roadmap that illustrates the case for climate action from both a sustainability and business case perspective may be more persuasive to your organisation's key stakeholders than one that only considers the costs.
For all these reasons, RE is likely the best place to start your climate journey. You're already buying electricity from your supplier and, in all likelihood, have ready access to data showing how much you buy. There's nothing stopping you from taking the next step. And that next step can be quite a profitable one: RE is in many cases cheaper than conventional electricity – and subject to less price volatility than conventional sources, making it a climate solution that has the ability to achieve broad appeal to different stakeholders across your organisation. Finally, if you're eyeing more costly interventions to decarbonise other aspects of your business, you might feel more confident making that case to senior management if you've already addressed the lowest-hanging fruit in your emissions footprint.
Get in touch with us and we can explore the options available to you.
