We used our blog last week to remind clean energy advocates that despite lingering policy uncertainty as a new administration comes to Washington, individual states continue to demonstrate that they are leading drivers of renewable energy development across the country. Another, perhaps even more significant proponent of clean energy development – especially to a Republican administration led by a businessman – is corporate America.
Besides utilities and the Department of Defense, corporations and industry are the leading buyers of energy in the United States. And as analysts note, major businesses are embracing renewable energy at unprecedented levels.
A market brief last week from the national business group Advanced Energy Economy (AEE) reports that 71 of the Fortune 100 companies have set renewable energy or sustainability targets, up from 60 just two years ago. Among Fortune 500 companies, commitments have held steady at 43 percent, or 215 firms. Of these companies, 22 have committed to powering all of their operations with renewable energy.
While some acknowledge that environmental goals motivate their choices, all recognize that renewable energy is good for the bottom line. Businesses understand that wind and solar are more than just cost competitive with fossil fuels – and will continue to be – but that they also offer price stability and supply certainty.
The vision promoted by the 25x’25 Alliance exists within an “all-of-the-above” energy scenario. The Alliance understands that while the promotion of renewables and the economic benefits they can provide rural America are of critical importance to the nation, fossil fuels, including natural gas and oil, will remain the larger source of U.S. energy for the next several decades.
At the same time, corporate America understands that fossil fuel-based energy is the most volatile commodity in the world. For example, analysts maintain that the spot price of natural gas, which hit a 17-year-low last February, can swing widely due to even the slightest variations in supply and demand, or weather. Natural gas spot prices have fluctuated since the first of the year, but have ultimately – and significantly – increased, now sitting at a level 133 percent more than those February lows.
Rapid, volatile changes in natural gas and oil prices can wreak havoc on corporations and industries, who must respond accordingly, straining their power and transportation budgets, and putting their operations at risk.
So, why are corporations as diverse as Intel, Kohls, Microsoft, Unilever, Cisco Systems, Starbucks, Goldman-Sachs, Mars Inc. and many others meeting – or nearly meeting – all of their power needs with renewables?
Although fossil fuels like natural gas have historically been less expensive than renewables, wind and solar have now become price competitive. In some U.S. markets, renewables are cheaper than fossil fuel alternatives. That is a trend that is expected to continue, given a report released in June by the International Renewable Energy Agency showing the ongoing improvement in renewable energy technologies, and that the resulting economies of scale can drop wind and solar power prices by up to nearly 60 percent globally by 2025.
Entering long-term Power Purchase Agreements (PPA) with renewable electricity generators like wind or solar farms give businesses certainty in their power budgets for up to 20 years, and often longer. And many companies are buying or building their own clean power facilities. Google, the largest corporate purchaser of renewable energy in the world, is doing both to reach 100 percent renewable energy for all global operations – including both data centers and offices – in 2017.
The web giant is among more than 80 major multinational corporations that belong to RE100, a collaborative, global initiative of influential businesses committed to 100 percent renewable electricity, and working to massively increase demand for – and delivery of – renewable energy.
Another factor drawing corporate America to clean energy is the fact it is renewable, meaning infinite in supply. Fossil fuels, while seemingly plentiful in current times, are, in fact, finite and as they become harder to find will go up in price.
Long-term extensions granted by Congress late last year of renewable energy production and investment tax credits are the kind of policy and funding mechanisms that lawmakers would do well to continue next year. We call on policy makers to heed their corporate constituents, who, in the search for energy and economic security, are vigorously pursuing renewable energy. We urge the new Congress to facilitate that growth and construct a comprehensive clean energy policy that creates jobs, boosts rural economies, encourages diversity of sources and provides wide energy security.