There are several reasons for this explosion in interest in direct purchases of clean energy. Reasons range from pure cost per kwh purchased, to market and regulatory certainty, to the brand value of reducing reliance on fossil fuels, to concerns over the future of specific markets in the face of a changing climate. Consistent in every one of these reasons is an underlying economic case – replacing electricity generated from burning fossil fuels with electricity from wind and solar is a good business strategy.
Over the past few years electricity from wind and solar has become cheap – in many cases it is less expensive to build new generating capacity from wind or solar than from to build a new gas or coal plant. Buying renewable electricity removes fuel price volatility so prices are much more stable. Wal-Mart has been aggressively buying renewable power for years, primarily for the cost saving the company realizes. Ikea constantly touts immediate costs savings as the primary driver for its massive clean energy purchasing. Oil refining giant Valero uses wind power to drive refining operations in Texas because wind power was cheaper and the price was more stable than what was otherwise available in the market.
Renewable electricity is clean, and an increasing number of companies are setting aggressive clean energy and greenhouse gas emission reduction targets. Companies across the business spectrum – from Apple to General Motors, which both publicly announced goals for 100% renewable power for their global operations, are using clean energy investments to gain competitive brand advantage. Companies ranging from Bank of America to Dow have built advertising plans around their clean and sustainable investments. Consumers, both individuals and businesses, place real value in their buying choices based on the energy and climate footprint of brands. Forward thinking companies are committing to buying clean power in an effort to build a competitive advantage with these consumers.
Corporate interest in renewables is also being driven by anticipation of significant climate-policy changes, which could materially disrupt the market and existing cost structure of fossil fuel-based electricity. Several countries have put serious carbon pricing regimes in place as part of their efforts to meet the goals laid out in the Paris Climate Accord, and the two largest global markets, China and the U.S., have both formally joined the pact. In the U.S., EPA’s Clean Power Plan is still being contested, and the effect of specific implementation remain uncertain, but a material impact on power markets and electricity customers remains virtually certain. Around the globe many other countries are working through the implementation of new laws to reduce greenhouse gas emissions, all of which shifts value towards renewable electricity generating sources.
Many large corporations are not only trying to calculate the effects of these regulatory shifts, but are directly supporting these climate change driven policy changes. Amazon, Apple, Google, Microsoft, Mars, Ikea, Blue Cross and Blue Shield, and Adobe all submitted briefs supporting the Clean Power Plan in its appeal before the DC Circuit Court of Appeals. While there was a diverse set of reasons for each of these companies’ support for the Clean Power Plan, from getting regulatory certainty on the future of power markets, to mitigating the negative health effects (and costs), to a belief it will support longer term global economic stability, each was rooted firmly in the conviction that the Clean Power Plan would lead to long-term valuation creation for these companies. As more corporations see the value of aligning their business with mitigating and managing climate change, the pace of clean energy acquisition by corporations will only increase, growing a market worth hundreds of billions of dollars for new solar and wind projects.
Read more at Corporate America’s Huge Appetite for Clean Energy
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