In October last year the Intergovernmental Panel on Climate Change (IPCC) delivered its most clear-cut warning so far on the effect of failing to limit global warming to 1.5°C. As big business is responsible for 60% of global energy consumption it is businesses not governments that will need to push the transition to renewables. Though companies like Google, Apple and IKEA are leading the way their actions will not be enough to make the difference that is required. The world needs the next wave of corporations to begin their renewable journey.
This is all happening at a time when the renewable energy transition in Europe is at a turning point as it moves from being subsidy driven to market driven. Normally this would be the point at which corporations would start to take up more of the market. However, firstly corporates need to be convinced that there are investment benefits.
The BayWa r.e. Energy Report 2019 was released in May 2019 and is the first, systematic, quantitative opinion survey that has been carried out among 1,200 decision-makers in medium-sized and large companies in the UK, Germany, Italy, Spain, France and Poland. The report was issued in partnership with the RE-Source Platform and surveys and analyses the attitude of corporations towards sourcing of renewable energy. There were questions that needed to be answered as to whether corporations recognised their fundamental role in the renewable transition, what progress they had made so far and what might be holding them back. This report provided answers to these questions by analysing the views of corporations across 6 key European countries on how they view renewable energy.
The RE-Source Platform is a European alliance of stakeholders representing clean energy buyers and suppliers for corporate renewable energy sourcing. This platform pools resources and coordinates activities to promote a better framework for corporate renewable energy sourcing at EU and national level. Organisations behind the platform include SolarPower Europe, Wind Europe, RE100 and the WBCSD.
The BayWa r.e. Energy Report 2019 shows huge corporate enthusiasm for clean energy and cites bureaucracy and complex regulations as holding back full potential. 89% of all companies surveyed agreed that corporations should play a leading role in driving the energy transition. However, 76% identified bureaucracy and complex regulations as major barriers to further investment in renewables. The majority of corporations could see the benefits with almost 90% feeling that the use of renewables resulted in a better public image and 80% feeling it gave them a business advantage. When making the decision to invest in renewables 92% did so to reduce energy costs.
Despite this many corporations across all surveyed countries identified long payback periods and high investment costs as barriers. The perception of investment costs as a barrier were ighest in Poland and the UK.
Matthias Taft, member of the Board responsible for the energy business, BayWa AG. commented:
“The BayWa r.e. Energy report 2019 shows that corporations want to play a leading role in the renewable transition, driven by a desire to advance their sustainability goals, improve their public image and reduce energy costs. However, many continue to be held back by complex regulations and barriers relating to investment and payback. To overcome these, the industry must offer corporations a wide range of renewable supply options and work closely with governments to improve regulatory frameworks.”
50% of the corporations surveyed had set targets for the use of renewable energy, energy efficiency and the reduction of greenhouse gas emissions.
Karol Gobczynski, Head of Climate & Energy, Ingka Group, IKEA largest franchisee said:
“Individuals and companies want to take climate action by investing in renewable energy generation and sourcing renewable energy. A simple and inclusive legal framework is essential to accelerate the transition to an affordable and clean energy market. This will enable many more people to live better lives within the limits of the planet.”
Over half of all the surveyed corporations were planning to use renewable energy or install their own renewable energy facilities within the next 5 years.
Sam Kimmins, Head of RE100, the Climate Group said:
“The findings of the Energy Report 2019 show European corporate buyers are increasingly aware of the strengthening business case for renewables. By pioneering innovative approaches and helping to shape regulatory frameworks, RE100 members have been instrumental in making corporate renewable energy use more mainstream. We expect more and more companies to step up their ambition and work with policy makers, regulators and energy suppliers to drastically accelerate clean power deployment.”
Some American firms are now taking climate change so seriously that they are surprising even former critics. The strongest evidence of their commitment alongside energy efficiency measures is the number of new wind and solar projects that they are helping to build around the world. Companies are using power-purchase agreements (PPAs). They sign long-term contracts to buy clean electricity from firms that develop solar and wind farms at agreed prices, instead of buying the bulk of their power from utilities, which can rarely guarantee 100% clean energy to their customers. Big business has by now spurred the worldwide development of a cumulative 20 gigawatts (GW) of wind and solar farms.
Last year firms such as Amazon and Google led the way. They use clean energy to power their vast banks of servers. Enthusiasm is now extending to energy intensive industries too including manufacturers. It is also moving from corporate headquarters to subsidiaries and suppliers, and from developed countries to emerging markets, where the costs of wind and solar energy are falling fastest.
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Some environmentalists are beginning to see businesses as allies rather than enemies in the fight against global warming. Instead they believe that that they could become strong forces behind the worldwide spread of clean energy.
Marty Spitzer, head of climate and renewable energy policy in America for the World Wildlife Fund (WWF), a charity says:
“There used to be rhetoric and little action. Now I see fundamental changes.”
Other global developments include the mammoth Australian supermarket Coles agreeing to procure power from three utility-scale solar projects that Terrain Solar plans to build in the Australian state of New South Wales. Under a 10-year power purchase agreement, Coles will buy more than 70% of the 220 GWh of clean power that will be annually generated by the plants. The deal will cover 10% of the retailer’s national electricity usage.
Steven Cain, Coles Group CEO said:
“Renewable energy is a major part of the supermarket chain’s commitment to becoming the most sustainable groceries group in Australia. With this agreement, Coles can make a significant contribution to the growth of the renewable energy supply in Australia, as well as to the communities we serve”
Coles is the first major Australian retailer to commit to purchasing renewable energy through a PPA and is also working with property partners to increase on-site renewable generation at its stores and distribution centres.
Thinus Keeve, Coles Chief Property and Export Officer has said:
“We plan to install solar panels on another 38 stores this financial year and we will be working with our landlords and property developers to identify further locations suitable for on-site solar power generation.”
Tesco’s 100 per cent renewables target is a great example of where we should be heading. They have stated unequivocally that “the company is committed to sourcing 100 per cent of its electricity from renewable sources by 2030 – to include over 50 per cent from PPAs and on-site generation – and has an interim milestone to source 65 per cent renewable electricity by 2020”.
The speed with which some of the world’s most high-profile companies have signed up to the RE100 initiative and set targets to source 100 per cent of their power from renewable sources has been remarkable. Essentially, this trend has been driven by not just the desire to reap reputational benefits, but also a recognition that falling renewables costs and the ability to lock in stable and competitive energy prices through long-term power purchase agreements means there is a genuine commercial rationale for such investments.