The corporate sector is continuing its push toward renewable energy as its benefits become more widely recognized. Companies are vigorously working to meet the expectations of stakeholders as the demand for clean energy increases. There’s also the upside of taking advantage of falling prices!
According to a report from the U.S. Energy Information Administration, renewable energy was the only energy source in the U.S. that saw an increase in consumption between 2019 and 2020. Both nuclear energy and fossil fuel consumption decreased the same year.
Additionally, renewable energy consumption grew for the fifth consecutive year in 2020, reaching a record-breaking high of 11.6 quadrillion British thermal units (Btu) — or 12% of the total U.S. energy consumption.
This level of clean energy use plays a major role in nudging more companies to improve their energy use practices. Especially as institutional investors become increasingly focused on including the environment, social, and governance (ESG) in their proposals.
Adapting Your Business to Renewable Energy Reliance
The renewable energy sector is an important area within the U.S. economy and is also a leader in new technology innovations. Companies play an important role in reducing global greenhouse gas emissions with their decisions to rely on clean energy.
And as the cost of energy technology begins to fall, we’ll begin to see renewable energy replace traditional energy sources such as coal and fossil fuels. Currently, most companies source their renewable energy from wind, solar, and hydropower.
Renewable energy for small and large businesses alike is also a flourishing investment. But there are some factors to consider before choosing which type of clean energy works best for your company to adapt to.
Considerations Before Your Business Transitions to Renewable Energy
Your business needs to consider the community, government restrictions, the surrounding environment, and your company’s specific needs before choosing which renewable energy source to adapt.
Some questions to ask before choosing your renewable energy source are:
- What approvals and certifications does my business need to operate our chosen energy source?
- What local governments do I need to work with?
- Can others benefit from my chosen renewable energy source?
You’ll want to consider aspects of your building and location as well. Is it positioned to receive a fair amount of sun throughout the day? If so, solar energy is your best option. Or if it’s situated in an area where wind farms and hydroelectric stations are present, then wind and hydropower might be your best options.
Then consider your company goals in conjunction with long-term benefits. Relying on renewable energy will reduce your emissions, and thus overall operating costs, while also increasing your return on investment (ROI).
Renewable Energy Options for Your Business
Each renewable energy source has different benefits. The best one for you depends on your surroundings and the sources’ environmental availability.
Solar power is usually the face of the renewable energy movement because it’s quick to install and becoming cheaper to acquire every year. You can easily install solar panels on the roof or walls of your building depending on where you receive the most direct sunlight.
While solar projects come in a range of types and sizes, the largest solar project in the country is in Nevada and referred to as “Gigawatt 1.” The technology infrastructure company Switch partnered with its customers to fund its construction. Due to its size, it provides power for the company as well as the community.
Even with various options to source solar energy, onsite generation is still a popular option for companies. While commercial and community solar volumes shrank in Q3, this is largely because of interconnection and equipment delays due to COVID-19. There is still a rising demand for solar in spite of this.
Overall, solar photovoltaic (PV) energy accounted for 54% of all new electricity-generating power from Q1 to Q3. Solar continues to make up the largest new generating capacity in the country.
Utility-scale solar set a record for their Q3 installations at 3.8 gigawatts (GW). Specifically, Texas and Virginia are responsible for more than half of the utility-scale solar installed in Q3. A total of 6.1 GW of new utility-scale solar power purchase agreements were signed in the third quarter of 2021, bringing the total up to 81 GW.
Many companies find that solar arrays can pay for themselves in a handful of years due to reduced operating costs, tax breaks such as the solar tax credit, and various local rebates and incentives.
Green Tariff Deals and Virtual Power Purchase Agreements (VPPA) Help Companies Transition to Clean Energy
Green tariff deals and VPPA play an important role in helping companies source renewable energy to make their overall operations more sustainable.
What Is a Green Tariff?
A green tariff is a price structure, or a set rate for your electricity, that’s offered by your local utility company. These rates are first approved by the state’s Public Utility Commission, and they allow eligible customers to source up to 100% of their electricity from renewable energy.
Green tariff deals make the transition to using clean energy much easier. It’s much simpler for a company to source a portion or their entire energy needs through a utility’s green tariff rather than sourcing the energy themselves from wind or hydropower. Not every company is located next to a wind farm or a dam, and not all buildings have an ideal orientation when installing solar panels.
Green tariff programs make the process of sourcing green energy much more convenient. And most importantly, they make it a more realistic pursuit for consumers, including both individuals and companies.
What Is a VPPA?
VPPA, also known as a Synthetic PPA or Contract for Differences, is a very popular type of renewable energy contracting structure that provides a hedge against any future fluctuations in energy prices.
VPPAs are available even in markets where the utility has a monopoly. A company will sign a long-term contract to purchase fixed-price renewable energy credits (REC) that are generated from a new wind farm or solar farm. This helps the developer finance the project. When the developer sells the electricity generated by the facility into the wholesale market, a portion of the proceeds flow back to the company to help offset its monthly utility bill.
Starbucks, for example, made four new investments in 2021 to reach their sustainability goals by 2030. Two of those investments are VPPAs. One is its first supply chain VPPA to reduce its scope 3 emissions, and the other is connected to a virtual storage agreement (VSA) to provide energy to its stores in California.
We’re starting to see larger sustainability initiatives from corporations that pursue numerous deals with energy projects spanning the country. The Corporate Renewable Energy Buyers’ Principles play a role in these initiatives as well, and corporate buyers sign onto the principles for added prestige and leadership points.
What Are the Corporate Renewable Energy Buyers’ Principles?
The Corporate Renewable Energy Buyers’ Principles is a program led by the World Wildlife Fund (WWF). It consists of large energy buyers working to further the use of clean energy and fulfill their increased demand for it.
The Buyers’ Principles have six criteria that help companies meet their purchasing goals:
- Choice: Having a wider choice in procurement options when selecting energy suppliers or products to meet the goals of your business and the public.
- Cost-Competitiveness: Energy buyers want the ability to purchase renewable energy that has comprehensive costs and benefits to their system.
- Long-Term Pricing: The ability to lock in energy price certainty and avoid volatility through long-term and variable contracts.
- New Projects: Having access to new projects that minimize carbon emission, such as Renewable Energy Credits (RECs), sourcing projects near regional energy grids, and more.
- Financing Tools: Increased access to standardized and simplified processes, financing for projects, contracts, and third-party financing vehicles.
- Cooperation: Opportunities to work with utility companies and regulators to expand renewable energy purchase options.
The Buyers’ Principles program tells suppliers and utility companies what industry-leading and often multinational companies are looking for when buying renewable energy from a grid.
More and more companies are improving the energy independence and sustainability of their operations. Using renewable energy sources is one of the most common ways to reduce carbon emissions and raise sustainability scores.
Sourcing energy from solar, wind, hydro, and geothermal are gradually becoming more commonplace as companies realize their range of advantages. Public health, the environment, community, and the world at large all reap the benefits from companies choosing renewable sources.
Contact Freedom Solar to Become a More Sustainable Business
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