Why now is the time for corporates to set long-term targets for renewables
A new report from the International Renewable Energy Agency (IRENA) found that corporates have actively sourced renewable energy equivalent to the overall demand of France, but renewables demand could soar if companies turned voluntary agreements into active goals.
The new IRENA report, published at last week’s Clean Energy Ministerial meeting in Copenhagen, found that more than 2,400 companies across 75 nations sourced 465TWh of renewable energy in 2017.
The report found that more than half of the companies studied are voluntarily procuring and investing in onsite generation or purchasing agreements to power their operations with renewable electricity. Of the companies listed in the study, more than 200 are sourcing 50% or more of their energy from renewables.
According to IRENA, 100% of active corporate sourcing of renewable electricity is “already feasible”, but the report found that just 17% of the companies listed had a renewable electricity target in place and three-quarters of these targets are set to expire before 2020.
There is, therefore, a “significant opportunity” for corporates to develop long-term renewable strategies that “factor in improvements in renewable energy technology and cost declines”, according to the report. This, in turn, would stimulate market demand for the technologies.
"Corporations are responsible for around two-thirds of the world's total final electricity demand, making them central to, and key actors in, the energy transformation," IRENA’s Director-General Adnan Z. Amin said.
"As governments all over the world recognise this vast potential, the development of policies that foster and encourage corporate sourcing in the electricity sector and beyond will inject additional needed investment in renewable energy."
Corporate demand for renewables is expected to grow as technology costs fall and companies seek ways to reduce utility bills. In the wake of diminishing government-backed subsidies and developing markets that are failing to create universal access to clean energy, corporate consumption of renewables is viewed as a “mainstream pillar” to lower global emissions, according to IRENA.
A notable aspect of the report is that more electricity is sourced from onsite generation (165TWh) than unbundled energy attribute certificates (130TWh), corporate power purchase agreements (114TWh) or green procurement programmes (34TWh).
IRENA has previously predicted that renewables will be cost competitive with fossil fuels by 2020, but long-term targets could drive demand further and accelerate cost declines. In fact, BP’s 2018 Energy Outlook report notes that the market could grow five-fold by 2040.
Some companies are already leading the charge. The likes of Apple, BT and Alphabet were all acknowledged in the report for their efforts to source renewables. In fact, Apple powers all its global facilities with 100% renewable electricity.
Apple is one of the few firms that has hit its target, which was set as part of a RE100 membership. 134 RE100 companies have made a commitment to go '100% renewable' and the group behind the movement, the Climate Group, believe that renewable targets can help the corporate world push towards the goals of the Paris Agreement.
“There is a real urgency to step up ambition and accelerate the uptake of renewable energy. We can see from influential, global organizations like Microsoft, Google and Apple committing to 100% renewable electricity that this is possible – but businesses globally need to step up to this challenge,” The Climate Group’s chief executive Helen Clarkson said.
“The Climate Group is driving companies to raise their ambition and accelerate towards using and sourcing 100% renewable electricity. This is absolutely vital to achieve the Paris Agreement’s goal of a world of less than 2 degrees of warming. It is encouraging to see from this latest IRENA report that corporate sourcing of renewable energy continues to be a growing global trend, and we will keep propelling this growth.”