Smart Energy Decisions, the leading information resource and research platform dedicated exclusively to commercial and industrial (C&I) electric power customers, announced a new report titled Post-Paris: The State of Corporate Renewable Energy Sourcing. It is the first comprehensive study of interest, outlook and behaviors in renewable energy investment among domestic companies and institutions to be issued following the United States’ withdrawal from the Paris Climate Agreement in June.
The Post-Paris report is based upon responses from executives at 94 U.S. companies and institutions, over 40 of which are in the Fortune 500. Respondents were polled on their organizations’ current renewable energy practices and sources, future goals and targets, and the leading factors behind continued efforts to expand their renewable energy portfolios. The report was overseen by Smart Energy Decisions’ Renewable Energy Sourcing Initiative Steering Committee, a group of corporate renewable energy buyers who provided support in developing the survey.
Renewable Energy Interest and Ambitions Remain Strong in Aftermath of Withdrawal from Paris Agreement
Smart Energy Decisions’ survey was conducted between June 5 and June 16, in the direct aftermath of the Trump administration’s decision to withdraw the United States from the Paris Climate Agreement on June 1. Results reflect that U.S. corporations and institutions are maintaining and in many respects strengthening their interest in renewable energy following this development.
Among organizations that already purchased or are interested in purchasing renewable energy, over 95% reported interest in renewable energy stayed the same (36%) or increased (59.3%) in the past year. In that same group, a combined 70.9% currently have either a greenhouse gas (GHG) reduction target or renewable energy usage target – 32.6% have targets in both areas.
Of the organizations with a GHG reduction target, 68.6% said their target was tied to climate science. In addition, 47.4% of organizations with renewable energy targets have a goal to meet 100% of their electricity needs from renewable resources.
"Organizations are realizing the benefits of renewable energy investments as part of their business, irrespective of the current political climate, because these investments make economic sense," said Michael Barry, head of sustainable business operations at Bloomberg LP, and a member of the Renewable Energy Sourcing Initiative Steering Committee. "Smart Energy Decisions’ study confirms this and sheds light on the various renewable energy purchase methods that allow companies to use clean energy in a way that best aligns with their strategies."
Economics Are the Driving Factor Behind Today’s Renewable Energy Purchases
Despite characterizations that recent clean energy commitments are a response to popular pressure, Smart Energy Decisions’ findings reaffirm that economics are the most important factor when organizations decide to make renewable energy purchases. Energy cost reduction was the single most important factor for 29.1% of organizations that already purchased or are interested in purchasing renewable energy, followed by meeting GHG reduction targets (25.6%) and meeting renewable energy targets (16.3%). By contrast, brand image was selected as the most important factor by only 8.1% of respondents, and 5.8% said it was demand from customers.
“Basic math initially drove businesses to get serious about energy efficiency, and the same is happening with renewables today,” said Rob Threlkeld, global manager of renewable energy at General Motors (NYSE:GM) and a member of Smart Energy Decisions’ advisory board. “With the cost of renewables consistently falling now, organizations are finding that boosting their efforts here has a multiplier effect on the efficiency measures already in place.”
Commercial & Industrial Sector Is a Growing Hotbed for Renewable Energy Activity
The Post-Paris report finds that the commercial & industrial sector is an increasingly active area for the growth of the renewable energy industry. All C&I respondents reported some level of experience with renewable energy purchases. The largest share – 40.3% of C&I companies – have already made five or more purchases. Only 19.4% of C&I companies included in the results have not made a renewable energy purchase to-date, and all of them report that they are currently considering their first purchase.
Additional Findings Shed Light on “Leapfrogging” and Diverse Portfolios
Additional findings from the Post-Paris report give insight into how U.S. corporations and institutions are choosing to make renewable energy investments.
Buyers new to renewable energy are “leapfrogging” straight into methods that used to only be prevalent among more mature buyers. For respondents considering a first purchase, the two most-favored methods were onsite power purchase agreements (61.1%) and offsite power purchase agreements (44.4%). This is in contrast to lower figures for methods that used to be more common among first-time buyers, including onsite, self-owned assets (38.9%) and renewable energy certificates (16.7%).
Responses from organizations that have already made at least one renewable energy purchase showed the diversity of renewable energy portfolios: 91.2% of organizations have purchased solar; wind, 67.6%; hydro, 30.9%; biogas, 19.1%; geothermal, 13.2%.
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