Major companies more than ever before are driving the transition to renewable energy, but that effort is not without hurdles. Seif and Baker offer lessons learned from overcoming the challenges of making big business go green.
Empowered by aggressive climate and energy targets, companies more than ever before are driving the transition to renewable energy—but that effort is not without hurdles.
WWF’s Power Forward report, for example, showed that 60 percent of Fortune 100 and Global 100 companies have climate goals. To meet these targets, renewables are high on the hit list, but companies are finding buying and investing in renewable energy particularly challenging, even when they’re putting their shoulders into it. Witness Google’s white paper calling for new approaches to expand renewable electricity procurement options.
To address these challenges, WWF and RMI held a Corporate Renewable Energy Buyer’s Day. Companies representing more than $1 trillion in annual revenue discussed and prioritized how to best execute against these challenges. Here’s what we found:
We know companies face a variety of barriers that are slowing progress, including:
1) internal challenges, including knowledge and management support; 2) market challenges that lead to high transaction costs; and 3) limits on what they can do and how they can do it caused by laws, utility regulators, utility practices, and accounting standards.
As companies try to source and execute projects to meet their goals, even the largest companies struggle to learn about the complex deal structures and financial instruments they need to buy renewables. Confusing financial accounting and legal structures put a burden on staff and management and often require expensive outside expertise. Renewable energy developers, suppliers, and buyers need to work together to make information and resources easier to access and understand, so company management understands the benefits of renewables investments.
No matter how much renewable energy expertise is available within a company, current market structures are bound to prove challenging.
Corporate buyers want to buy clean, renewable power but they can’t buy it directly in many U.S. states. It’s like going to buy a new car, but finding all the cars are the same model and only come in black. Corporate buyers generally would rather buy green power from a supplier like a normal procurement decision than meet their goals project by project. Lack of simple procurement options that meet their needs are driving them to go around utilities.
All this would be a lot easier if utilities—those in the business of procuring and delivering energy—were able to sell the renewable energy product their customers are looking for. As the growing number and scale of corporate goals demonstrates, there’s a market here; utilities have a business opportunity ripe for the picking.
There is a day coming soon when the vast majority of U.S. businesses are supplied by renewable energy. Companies have the power to make large investment and procurement decisions that can move and shape energy markets.
Many already have. They see the business value renewable energy offers. However, the common challenges identified at the Buyer’s Day workshop hinder their progress. A clean, prosperous, and secure future comes closer when the choice to go renewable is the easiest path. WWF and RMI will use ideas from the Buyer’s Day to drive several solutions that make that desired future arrive even sooner.