Sponsored by LevelTen Energy
It’s no secret that recent clean energy growth has been accelerated by intense corporate demand. Motivated by a range of factors — from customer demand to corporate sustainability pledges to the ability to lock in favorable energy costs for an extended period — the corporate appetite for more wind, solar and energy storage has proven immune to disruption.
In 2020, corporations purchased a record 23.7 gigawatts of clean energy via long-term agreements globally, according to BloombergNEF, despite the economic downturn and uncertainty unleashed by the coronavirus pandemic. More than 300 corporations in industries ranging from financial services to manufacturing to retail have pledged to go 100 percent renewable as part of RE100.
The rapid growth in this sector raises many questions, including the impacts these investments can and should make, how they can scale to include the smaller companies that have largely been left out, and the future role of utilities and policymakers. These and other topics were on the agenda during a recent Canary Media Clubhouse that was supported by LevelTen Energy and focused on the current and future state of corporate clean energy investing.
The discussion was hosted by Emma Foehringer Merchant, a contributing writer at Canary Media, and included perspectives from Bryce Smith, CEO of LevelTen Energy, which provides the transaction infrastructure to connect buyers, sellers and financiers of renewable energy projects; Megan Lorenzen, sustainability manager at Salesforce; Erik Hansen, senior director of environmental sustainability at Workday; and Abby Hopper, president and CEO of the Solar Energy Industries Association.
Though the conversation took a number of twists and turns, it made it clear that corporate clean energy investing is evolving quickly and has already become far more sophisticated than it was just a few years ago, when the chief metric of success was the price of power purchase agreements.
Lorenzen described how Salesforce has evolved its approach to renewable procurements since first making a commitment to go 100 percent renewable in 2013. The provider of customer relationship management software has moved from focusing only on transactional and price details to evaluating how projects can more broadly benefit communities and the environment.
“We’ve seen that two projects with identical transactional details can have enormously different impacts on their community, the environment and local habitats,” said Lorenzen. In response, Salesforce has developed what it calls a procurement matrix that includes between 30 and 40 social and environmental criteria weighted by their importance to analyze as the company considers projects. “We have really been focusing on how we can maximize the positive impacts of renewable energy purchasing,” she added.
While she acknowledged that much more needs to be done around compliance and monitoring, Lorenzen said Salesforce is working to include metrics such as job quality, job training and local-hire provisions in its evaluation of clean energy projects.
Salesforce is not alone in widening the criteria it uses to evaluate clean energy procurements. LevelTen’s Smith shared the results of a survey probing what corporate clients are asking renewable developers to disclose. Over 60 percent of developers are being asked about local hiring, and over half reported being asked about land-use impacts. “Fifty-one percent said they’re asked about the diversity stats of their own company,” Smith said. “About a third were asked about disclosure of human rights protections throughout the supply chain.” Hopper added that SEIA wants to ensure that supply chain issues continue to gain traction with developers and project buyers; the organization has developed and released a traceability protocol to bring more transparency to the market.
Another glaring issue is how to drive significant scale to corporate renewables so that smaller companies can easily participate. To some extent, this is already happening, though Salesforce’s Lorenzen believes that true scale will require more robust participation from utilities and retail electricity providers.
“The challenge is [whether we can] get meaningful products through the utility that really drive net new renewables on the grid,” said Lorenzen. “We have seen a trend from utility providers to offer increasingly creative and innovative products, like green tariffs and a few other options, but the challenge that we are still seeing is it’s still not accessible to many corporates beyond those largest few.”
Aggregation can help, but policy can also play an important role in propelling utilities to drive scale. Workday, for example, is supporting efforts to pass a 100 percent clean energy standard in Oregon, where 40 percent of its global data center load is located. “I would love to see a world where 10 years from now the corporates are not having to go out there and do this procurement model for renewables, and instead the grid is clean because policy has played a role,” said Hansen.
SEIA’s Hopper also underscored the importance of policy to accelerate the move to a clean grid. “We’re not going to have transformational change by having individualized small contracts,” she said. This is why SEIA has been pushing for a national clean electricity standard. “We would guarantee that we are pulling from a clean grid as opposed to having to contract separately for this.”
Corporate buyers of clean energy can make a big difference in advocating for legislation that leads to a clean grid, said Hopper. “When I go into meetings with elected officials and I have Salesforce next to me, or I have Microsoft next to me, or ...Google or Apple — that’s heard differently in the halls of Congress and statehouses.”
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