Corporate commitments about transitioning to renewable energy are growing exponentially as more and more companies understand the opportunities for managing energy costs, reducing carbon emissions and showing climate leadership in reaching broader sustainability goals.
The pace of change can be seen by the number of companies signing on to the Science Based Targets initiative (SBTi), with around 30 companies committing to SBTs per month worldwide across all sectors over the last two years. When it comes to actually meeting these targets, sourcing renewable energy is one of the lowest hanging fruits to achieve emission reductions. And this fact does not go unnoticed: RE100, a coalition of businesses committed to 100% renewable electricity, currently has over 340 members with more than 280 TWh of electricity consumption (greater than the entire electricity consumption of Australia). Combined with consumers and investors increasingly asking companies to be environmentally responsible, the momentum and urgency for sourcing renewable energy is growing more than ever.
Every company's experience of procuring renewables is different, but as demand increases in the coming years, companies need to develop a smart renewable energy sourcing strategy to avoid being left behind. Before you begin exploring this exciting market, here is an overview to keep in mind when developing and executing your energy strategy.
If your company has signed up to RE100, set a SBT, or set a commitment to net-zero/carbon neutrality, you will probably already be looking closely at what's happening in the renewable energy markets and exploring the different opportunities available through power purchase agreements (PPAs).
Energy attribute certificates (EACs) are a quick and easy win in terms of achieving renewable energy coverage as they are widely available globally and can be transacted in a matter of week. But they typically involve additional costs and have limited impact. When you have high energy consumption in geographies that could be better served by other solutions, you should approach your renewable energy target with a nuanced and long term strategy that can achieve cost savings and price risk management alongside sustainability objectives. It's important to consider all options for your portfolio with a long term view and to strike the right balance when developing your renewable energy strategy. This can mean pursuing Power Purchase Agreements (PPAs), on-site generation, or bundled and unbundled energy attribution certificates (EACs), or even newer innovative solutions such as D-RECs.
Once you have developed your renewable energy strategy, you are ready for your next challenge: implementation. Here you will need to partner with sustainability, sourcing, and implementation experts along with financial and business risk analysts to make sure your long term strategy is operationalised effectively.
The depth of analysis required to build the business case for something like a PPA is complex, requiring sophisticated scenario modelling based on forward energy curves and other inputs. This means that very few companies have the internal resources, knowledge, and networks to run these processes themselves. It's therefore important to partner up with the right experts with both renewable energy and climate action expertise as well as deep local knowledge in the source country. These experts can help to contract a well-sourced PPA that is aligned with your climate commitments, internal business objectives, and governance structure.
Working with long term partners and integrating all of your company's departments to work together towards sustainability goals ensures that you apply future forward thinking to your strategy and implementation. Whether you are just starting or already on your way to corporate leadership, embarking on your renewable energy journey enables your company to harness opportunities that will unlock cost-savings potential and allow you to develop a competitive advantage over your peers, all while supporting the global energy transition and your own climate commitments.
South Pole's renewable energy experts & sustainability advisors are well informed of the latest developments to help you on your renewable energy journey.