Corporate Commitments to Renewable Energy as Part of a Portfolio Approach to the Energy Transition

Large multinational corporations, universities, and municipalities are increasingly committing to renewable energy procurement as part of their sustainability programs. These commitments go beyond installing onsite renewable energy systems or buying voluntary renewable energy tracking instruments from existing projects (that are unbundled from the electricity delivered to the grid). These entities, referred to as corporate buyers, are now engaged in innovative transaction models to procure renewable energy from utility-scale offsite renewable energy projects. Guidehouse Insights examined this trend in a recent report, Corporate Utility-Scale Offsite Renewable Energy Procurement Solutions.

Throughout September 2018, at least eight new corporations committed to securing 100% of their energy from renewable sources. The trend in corporate commitments to procure renewable energy has intensified in recent years, with information technology firms, retailers, and food and beverage companies leading the way. September marked a milestone for global renewable energy commitments, with the first-ever Latin American company, Grupo Bimbo, signing the pledge.

The Individualization of Responsibility

Over the last 15 years, many corporations increased transparency about sustainability commitments. The effect of green marketing claims, however, has long been of concern for sustainability experts. While those seeking a transition toward 100% renewable energy embrace the decisions of leading companies such as Google and IKEA, fear exists that consumers will shift purchasing habits toward these companies as a primary means of contributing to a greener future.

Over a decade ago, the notion of the individualization of responsibility sounded the alarm that by merely buying green, consumers might feel that they have sufficiently contributed to sustainability efforts. In the case of renewable energy, some fear that consumers will purchase goods made by corporations that are conscious of their fossil fuel use rather than advocate for policies that bolster the energy transformation or explore means to reduce large-scale consumption of carbon-emitting fuels. In other words, an urban consumer commuting with Lyft, wearing clothing from a PHV Corp. company, or working on an Apple computer can feel satisfied with their level of support for renewable energy without altering other significant characteristics such as home energy procurement and use. The individualization of responsibility then suggests that excessive marketing of renewable energy efforts can be a hindrance in the global shift toward clean, distributed energy resources (DER).

Viewing Corporate Commitments as a Win-Win Situation

Guidehouse Insights continues to track global DER deployments and advocates for a portfolio approach to energy procurement. Just as corporations diversify their renewable energy portfolio by including a mix of solar, wind, hydro, and biofuels alongside other DER, consumers should ensure that brand support is just one of several mechanisms used to support the energy transformation. Corporate commitments alone might not tip the scales toward broad-scale clean energy procurement. Fortunately, utilities are seeking opportunities to bolster engagement with customers to meet their needs for greener energy options.

Corporations should not market their decisions to source renewable energy as the golden ticket for guilt-free, excessive consumption, but they must be proud of their commitments to 100% renewable energy. Renewable energy announcements should aim to educate residential consumers and inspire commercial and industrial competitors to embrace the falling prices of clean energy. Corporate commitments to 100% renewable energy are then a tool in a portfolio of strategies to transition toward clean, multidirectional energy distribution.