Five Questions with The Climate Group’s Amy Davidsen on Corporate RE, Efficiency, and EV Commitments

Part of a series of insights from leading smart-grid, clean-energy, and utility experts speaking at gridCONNEXT. Questions asked by Clean Edge managing director, author, and gridCONNEXT co-chair Ron Pernick.

Ron Pernick: Amy, 162 companies have joined your global RE100 campaign (with more than 30 companies joining in the past year alone) – committing to getting 100% of their electrons from renewable sources. What’s driving corporations to make such significant renewable energy (RE) commitments?

Amy Davidsen: When the campaign launched in September 2014 during Climate Week NYC, leading businesses including IKEA Group, Swiss Re, and Mars came together to make a public commitment to achieving 100% renewable power for their global operations.

At this time, most companies joined RE100 to demonstrate their commitment to sustainability and the clean energy transition – which reaped associated reputational benefits – while also standing alongside like-minded companies willing to share their experiences and best practices.

As the campaign has progressed, more companies are realizing that pursuing a 100% renewable strategy also makes business sense – by switching to renewable power, they are experiencing tangible savings on their energy bills. For example, Iron Mountain has seen savings of more than $2 million per year. 

Moreover, in 2018 we released a report with Capgemini Invent, drawing on data from 3,500 companies, which shows that RE100 companies consistently outperform others on key financial indicators.

Pernick: While renewable energy credits (RECs) have served a role historically, there’s been a shift to onsite and utility-scale generation where companies can directly track and point to the “additionality” of their purchases. How important do you think “additionality” should be in making procurement decisions.

Davidsen: We encourage members to develop a sourcing strategy that has the greatest possible impact, while remembering that each company has a different set of internal and external factors that may affect its choices. We also require RE100 members to align with the RE100 Technical Criteria, a rulebook for credibly meeting their 100% goal.

One of the best ways to maximize impact and additionality is to deploy a portfolio or mix of sourcing strategies. This can be self-generation projects, power purchase agreements (PPAs), or carefully orchestrated green tariffs. Another option is to explore collaborative opportunities with other companies – an aggregate project that might not be possible alone.

We are seeing more and more of our members opt for PPAs, which accounted for 20% of the renewable electricity they sourced in the US in 2017. PPAs offer long-term price certainty for corporations and reduced exposure to fluctuating energy prices. By increasing capacity on the grid, they also make renewable electricity more widely available for other businesses, creating a ripple effect. This ‘additionality’ helps to accelerate the clean energy transition.

Pernick: Resiliency (ensuring 24-7 access to electricity) is often cited as one of the major drivers for a clean-energy and energy-storage transition. How do you view resiliency impacting the decisions of major corporates you work with?

Davidsen: A well thought out 100% renewable strategy makes business sense. It reduces risk and improves the resilience of a company’s energy supply. The more we can effectively communicate this message, the more success we’ll have in bringing others along.

A growing area of interest, particularly for companies with on-site power generation, is energy storage. With storage solutions, clean power can be immediately available in the event of energy supply disruptions, such as those caused by extreme weather. We expect more companies to invest in this technology and build battery storage into their renewable strategies as battery prices continue to decline.

An often overlooked, yet critical, component of a resilient energy system is energy efficiency. Saving energy decreases backup generation needs, reducing dependence on outside fuel sources and decreasing life-cycle project costs. The Climate Group’s EP100 initiative encourages companies to make smarter use of energy. Leading companies like Swiss Re and H&M, members of both RE100 and EP100, are showing how a combined approach enables an effective, resilient, and cost-effective business growth strategy.

Pernick: Corporations often need to work directly with utilities and state regulatory boards to meet their RE goals (and are increasingly making site selection decisions based on access to renewable sources). What do you believe most needs to change within the electric utility landscape to ensure that companies have unimpeded access to renewable electricity?

Davidsen: Utilities are a critical part of the solution to transform our energy future at the pace required by science. Utilities and regulators must recognize that companies are allies on this journey and the more they can ease access to renewable power, the faster we will achieve this goal. 

Companies often cite high upfront costs and fees imposed by utilities as key barriers to sourcing renewables in certain states, so they are looking for innovative solutions. Companies are using their influence to collaborate with local utilities to develop programs that allow greater access to renewables. For example, Organic Valley set up a unique community solar partnership in Wisconsin, while Starbucks collaborated with Puget Sound Energy to establish a ‘Green Direct’ tariff in Washington state.

Companies can also facilitate renewables sourcing with utilities by creating green tariffs that bundle energy with the associated Energy Attribute Certificates (EACs), which also provides a direct financial benefit. 

Even if companies are unable to directly engage with utilities in the short term, actively sourcing renewable electricity and making ambitious, public commitments sends a powerful message to both utilities and policymakers. 

Pernick: What are you seeing in terms of commitments focused on the electrification of transportation fleets? Is this going to be the next big wave of corporate activity? 

Davidsen:  Yes. Transportation emissions have been growing, and the best way to reduce vehicle emissions is through electrification, coupled with a clean grid. The business case for EVs also continues to improve rapidly, as battery prices have fallen 85% since 2010. There is no doubt that more companies will switch to electric vehicles for both their environmental benefits and financial opportunities. 

The Climate Group’s EV100 initiative brings together leading companies committed to accelerating this transition, making electric transport ‘the new normal’ by 2030. EV100 now has 31 members, including HP Inc., Bank of America, and the Port Authority of New York & New Jersey. They have committed to switch their fleets and/or install charging infrastructure, sending a clear signal to the market that clean and efficient electric vehicles are the future. 

EV100 just launched its first annual report, for which 23 companies reported their activities. Jointly, these businesses will transition 145,000 vehicles by 2030, 8% of which have already been electrified, while the remaining eight members who joined after the end of the first reporting cycle will transition another estimated 70,000 vehicles. In addition to this, fleet management and auto leasing company LeasePlan made a unique EV100 commitment, not only pledging to transition its own employee fleet to electric by 2021, but also targeting net zero emissions from its entire 1.8 million vehicle customer fleet by 2030. 

Cities, states and regions are spurring greater corporate action by creating zero emission zones to improve air quality, and countries are phasing out internal combustion engine sales. But we still have a long way to go and need to pick up the pace. I encourage every leading company to get on board.

Amy Davidsen is Executive Director – North America at The Climate Group, where she works to accelerate the transition to a clean energy future via business initiatives RE100, EP100, EV100 and the Under2 Coalition of subnational governments. She was a keynote speaker at gridCONNEXT 2018 in Washington, D.C. The conference provides an unprecedented opportunity for utilities, policymakers, regulators, investors, businesses, service providers, end-users, and other stakeholders to explore policies and share best practices on building a modern 21st century grid. For more information, visit www.gridconnext.com.