Can You Power a Business on 100% Renewable Energy? Ikea Wants to Try

In 2012, Ikea made headlines with its pledge to completely power its stores with renewable energy by 2020. Last week, HP, the US-based multinational IT company, made the same pledge, promising to switch completely to renewable by 2020. The fact that both Ikea and HP set the same deadline for renewables, despite the fact that their pledges were separated by four years, illustrates a stunning change in renewable power generation. When Ikea made its promise, it was in the process of installing its own power generation facilities. Four years later, HP has numerous other options.

It also has a lot of company on the renewables bandwagon. As part of its pledge, HP signed on for the RE100 campaign, joining fellow corporations Google, Starbucks, Novo Nordisk and Goldman Sachs. RE100 was launched less than two years ago by a coalition of businesses and nonprofits, but participating companies have, on average, already transitioned half of their energy use to renewables, according to a report released last month – and several companies have already hit the target.

For corporations looking to accelerate their adoption of renewable power, this is a pivotal moment. The steady drop in price for renewable energy – solar alone has dipped more than 50% since 2008 – means that renewables are an obvious and common approach to corporate sustainability. Several companies have noted the financial benefits as well: relying on renewable sources means they can worry less about the kind of energy price instability the fossil fuels markets can create, an effect they say will only grow as the renewables sector matures.

“We see this as the clean little secret of a sustainable business,” says Kevin Rabinovitch, global director of sustainability at Mars, Inc. “Preserving the climate can also save you money.”

In many ways, however, lawmakers, regulators and utilities have not caught up with the corporate appetite for sustainable power. Despite improving prices, local rules and supply limitations mean it is not possible to easily buy renewable energy at the same cost as conventional power in all geographies, according to a report from business sustainability nonprofit Ceres. Furthermore, some countries and US states have been inconsistent in their support for renewable energy, making the bottom line less predictable.

The companies participating in RE100 offer insight into the ways that business can help push the renewable energy ecosystem forward while getting themselves to 100% renewables, whether by purchasing renewable energy credits (RECs), buying clean energy directly from producers or generating renewable energy onsite.

RECs allow a company to essentially offset its use of conventional power by ensuring an equivalent amount of renewably sourced energy was also generated. However, this has been a controversial and divisive clean energy option since its inception. Some critics have called RECs a “feel-good scam” that not only fails to represent actual power generation, but does not even cover the difference in cost between renewable and fossil fuel energy. Supporters of RECs on the other hand argue they are the “first and simplest step to achieving a clean energy goal”.

Many businesses are taking extra steps to make sure the RECs they buy adhere to stringent environmental and social principles. Steelcase, a Michigan-based producer of office furniture, only buys RECs generated by projects with no carbon emissions. Software giant SAP aims to push electricity producers to become even more sustainable by developing and implementing procurement guidelines that demand very specific standards.

“We consider renewable electricity from biomass only if it is disconnected from coal or other fossil power plants and if the biomass itself is not related to deforestation,” said SAP’s global environmental manager, Marcus Wagner. “In addition, we require that power plants must be no more than 10 years old, as we aim to foster innovation in the production of renewable energy.”

The next step down the path to renewable energy is for a company to bypass energy producers and utilities by arranging to buy power directly from wind farms and solar arrays, or even partner with producers to build such projects. Mars partnered with Sumitomo on a 200-megawatt, 118-turbine wind farm in Texas that came online in 2015. Today, the installation produces electricity equivalent to 100% of the company’s US power needs, bringing its total share of renewable energy up to 25% of its global usage.

Retail giant Walmart last year partnered with Pattern Energy on another wind facility in Texas, committing to buy half of the energy produced by the 200-megawatt installation. This electricity alone will make up about 18% of the company’s US power needs. Today the company is 32% of the way to its goal of running entirely on renewable energy.

Few companies directly generate significant amounts of their own power. One exception is Google, which is currently using renewables to provide 37% of its energy needs. Google uses a combination of purchasing green power near its data centers and investing in onsite renewable projects, including a 1.9-megawatt solar array at its main campus in California that meets as much as 30% of the site’s peak energy use. Google’s size, wealth and desire to be a leader in sustainability are all motivating factors, not to mention the long term business benefits of signing contracts to purchase clean energy at fixed prices.

The process of shifting to renewables is not always smooth. The sheer breadth of the task – understanding how renewable energy is generated, how it is purchased and how to support the most innovative possible technologies – can pose a challenge. SAP has found itself wrestling to sort out the various renewable options – solar versus wind versus biogas – and what factors define high quality energy in each category. And for many companies, the learning curve has been steep.

In an attempt to mitigate these kinds of difficulties, Walmart and 11 other companies in 2014 signed up to the creation of the Corporate Renewable Energy Buyers’ Principles group, an organization that lays out and promotes ideas that will ease corporations’ adoption of renewable energy. These suggestions include the creation of longer term contracts and increasing access to financing tools such as power purchase agreements.

“In many states there are policy barriers that restrict corporate buyers’ ability to negotiate with regulated utilities for renewable energy at a reasonable price, or procure renewable energy from a non-utility provider,” said Kevin Gardner, senior director of global responsibility communications for Walmart.

Other resources are also springing up to make it easier for companies to go renewable. John DeAngelis, renewable energy manager for Steelcase’s sustainability team, pointed to the Business Renewables Center, part of the nonprofit Rocky Mountain Institute, a Colorado-based organization focused on finding market-based solutions to environmental problems including clean energy, transport efficiency and greener buildings. RMI’s Business Renewables Center focuses on providing guidance to companies pursuing renewable energy use, he said.

Participating corporations are discovering that a commitment to renewable energy has more advantages that just the warm feeling of doing the right thing. SAP has enjoyed brand-boosting external recognition for its effort. The buying power of Novo Nordisk, for example, has convinced a large local energy supplier to convert from coal to biomass, Zarp-Andersson said. In addition, the presence of large corporate players in the market helps create a stable demand.

“Walmart and other companies’ commitment to renewable energy use creates more certainty in the marketplace and encourages others to invest, which helps lower the cost for everyone,” Gardner said.

SOURCE: theguardian.com - http://www.theguardian.com/sustainable-business/2016/apr/08/renewable-energy-ikea-walmart-google-mars-hp-wind-solar-power?CMP=share_btn_tw

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This segment is brought to you through a partnership between the UNDP Climate Change Team at the Ministry of Environment in Lebanon and the NAHARNET team. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any party/institution.