From technology and manufacturing companies to real estate and big-box retailers, companies are committing to decarbonization; there are a variety of approaches these companies are taking to meet commitments, while also weighing the balance of economics.
Fieldnotes from Corporations’ Different Paths to Decarbonization
Mathew Sachs, Senior Vice President | CPower
Clean energy commitments by companies -- and the pressure others face to keep up -- are becoming watershed moments for the energy transition. 23% of Fortune 500 companies have made a public commitment that they are, or will be by 2030, carbon neutral, using 100% renewable power or meeting a science-based emission reduction target. From technology and manufacturing companies to real estate and big-box retailers, companies are committing to decarbonization; there are a variety of approaches these companies are taking to meet commitments, while also weighing the balance of economics. The approach these companies take depends not only on how much electricity they use, but also when they use this electricity.
On-site energy reductions
For most commercial businesses, energy represents a significant operational cost. As a result, corporations like national retailers are early adopters of on-site energy optimization, which is typically enabled through retrofits or controls-based technologies. At a baseline level, energy efficiency initiatives like on-site LED lighting retrofits are widespread -- as are controls-based systems for scheduling and monitoring energy consumption. Companies compare practices across their building portfolio to recognize inefficiencies, like when stores have lights burning all night or when energy managers inadvertently override the energy program and forget about it. On-site renewables, such as rooftop solar, also have the net effect of reducing demand from the grid and replacing it with 100% clean energy.
The purchasing power of power purchasing
Many corporations are increasingly meeting their carbon goals by purchasing energy from off-site renewable energy plants. Through these power purchase agreements, these companies fund large solar and wind projects and drive the decarbonization of the grid for the rest of their communities. This type of power purchasing acts as an initial parachute for companies jumping into commitments, as it enables them to quickly buy clean energy to offset the emissions of their operations. However, while commendable and a key driver to increasing renewable deployments, more and more power purchasing acts as a foot-in-the-door phenomenon, and the high visibility of these corporate commitments is also surfacing other opportunities for improvement.
The next wave
One opportunity that is getting more mindshare and some early adopters, like Google and the City of Des Moines, is sometimes referred to as 24/7 clean energy. Under this framework a company looks to not only offset the total amount of electricity it uses, but also offset its carbon emissions for each hour. This is an important step in the journey toward a renewable grid. For example, imagine a scenario where every company procures enough off-site solar to offset all corporate energy demand. Without further adjustments, many of these companies would still need electricity when the sun is not shining, say at night. Shifting demand could help. Some of this shifting could be done through energy management and traditional demand response. Adopting batteries and other energy storage technologies offer great potential to further accelerate this impact.
The next wave of impact corporations are making is in the area of demand response, which is helping local communities rely less on inefficient, fossil-fuel peaker plants during times of peaking customer load. Managing the grid’s peak demand is a critical concern for utilities so they go to lengths to incentivize and usher in support. Utilities dispatch signals to participants in the demand response program when they anticipate a spike in energy use on the system, and these participants are rewarded for reducing their energy usage for that short interval. These types of grid services quickly pay off any retrofits needed to implement the program and become a revenue stream for the companies.
These demand-side solutions can also pave the way for greater large-scale renewable penetration. Renewable energy has become inexpensive, but its generation will vary with the intensity of the sun and speed of the wind. Similar to managing the grid’s peak demands, utilities can signal participants to lower their demand during renewable generation “lulls” without increasing emissions.
The Federal Energy Regulatory Commission (FERC) recently passed new regulation, FERC 2222 and 2222a, that works to ensure demand-side solutions are allowed to compete on equal footing with traditional assets when providing grid services. Grid operators across the country are in the process of talking to stakeholders and forming the rules to govern this. Getting these “market rules” right will help ensure corporations realize the value they bring to the grid, which in turn should support more action from corporations.
Corporations are playing a big role in greening the grid. By purchasing clean energy, lowering their energy demand and coordinating with utilities for grid services, corporations are able to help fill the role now played by gas generators from central systems. Corporations also play a large role as early champions of energy solutions that usher in economic benefits and resiliency. Each sector is on different decarbonization paths; however, all sectors feel the pressure of corporate commitments. These commitments will become more specific and material to companies’ operations; for example, as companies move from net zero to zero carbon goals, companies will increasingly commit to energy usage reduction targets.
Mathew Sachs is the senior vice president of Strategic Planning and Business Development at CPower, a leading, national energy solutions provider guiding customers towards a clean and dependable energy future. CPower works with over 11,000 sites across North America driving superior economics through the highest-rated customer experience in the industry. Mathew is a seasoned green-tech executive with over fifteen years of experience focused on investment, sales and operational strategy.
The content & opinions in this article are the author’s and do not necessarily represent the views of AltEnergyMag
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