What does corporate renewable energy procurement entail?

The climate problem is the most pressing issue of our time. According to the IPCC, man-made pollutants have heated the earth by around 1.1 degrees Celsius since the 19th century. The effects are still being felt today, from floods to wildfires. However, things could get a lot worse in the future. According to a recent UN analysis that looked at country targets, current commitments put the globe on track for 2.7°C warming by the end of the century.

National governments aren’t the only ones who need to act. Corporations around the world are also recognising their responsibilities. It is becoming increasingly evident that sustainability is a great business – and, in many cases, the only way to do business in the future. Over 900 businesses have committed to reducing their emissions in accordance with the Paris Agreement, based on scientific evidence. Cutting pollution from power usage (scope 2 emissions) by procuring renewable energy from sources such as solar and wind is one of the most critical immediate initiatives for many businesses to decrease greenhouse gas emissions.

There are three options for businesses to obtain renewable energy.

To match its use, purchase green electricity certificates (– for example, GOs in Europe or even RECs in the US). While this is a straightforward procedure, it does not add to the renewable energy infrastructure (certificates come from established facilities, sometimes even from the unspecified sources).

Sign a CPPA (Corporate Power Purchase Agreement), long-term renewable energy and certificate supply deal with a defined price structure. A CPPA ensures that the energy produced may be linked to a specific solar or wind farm. CPPAs also mitigate the hazards of power price changes. If a company had locked in power rates via a CPPA one year ago, it would have been insulated against the record-high wholesale power prices observed in several nations in recent weeks.

Invest in renewable energy assets and own them. Off-site options include taking an equity stake in a new venture or co-developing a greenfield venture in a different area. It could also be on-site, such as via a private line from nearby solar panels on the factory roof or wind farm.

The purchase of renewable energy has risen considerably in recent years. In the United States, approximately 100 corporate renewable sourcing agreements totalling over 10 gigawatts of capacity were signed in 2020, up from 1.5 gigawatts in 2015. Traditional customers such as tech corporations contracted record volumes, but new industries including pharmaceuticals and retail hit the market. In Europe, CPPAs alone reached 3.5GW in 2020. In Asia, for example, TSMC and Orsted recently signed a contract for 920MW — the biggest CPPA to date – in Taiwan in the year 2020.

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This report was originally published on this blog