What is corporate renewable energy purchasing and how is it changing?

Excerpt from weforum.org

The climate crisis is the defining challenge of our time. Since the 19th century, man-made emissions have heated the planet by about 1.1C, according to the IPCC. From floods to wildfires, the impacts are felt today. But the future could be much worse. A recent UN report which analyzed national targets shows that current commitments lead the world on a pathway to 2.7C end-of-century heating.

It’s not only national governments that need to act. Global corporations are acknowledging their responsibility as well. It is becoming clear that sustainability is good business – and probably even the only way of doing business going forward. Over 900 companies have set science based targets to reduce their emissions in line with the Paris Agreement. To many businesses, one of the most important immediate steps to reduce greenhouse gas emissions, is reducing emissions from power use (scope 2 emissions), by sourcing renewable energy from e.g. solar and wind.

3 ways for corporations to purchase renewable energy

  • Buy green electricity certificates (e.g. GOs in Europe or RECs in the US) to match its consumption. While this is a simple process, it does not contribute to the buildout of renewables (certificates come from existing plants, sometimes even from unspecified sources).
  • Sign a Corporate Power Purchase Agreement (CPPA), which is a long-term supply contract of renewable power and certificates usually under a fixed price structure. A CPPA guarantees that the energy can be traced back to a specific wind or solar farm. CPPAs also reduce risks associated with power price fluctuations. If a corporate had locked in power prices through a CPPA a year ago, it would be protected against the record high power prices in the wholesale market that many countries have seen in recent weeks.
  • Invest in and own renewable energy assets. This can be off-site, for example by having an equity share in a new project, or by co-developing a greenfield project in a different location. It can also be on-site, for example through a private wire from a nearby wind farm or solar panels on a factory rooftop.