Corporate America Demands Renewable Power

Corporate America's Growing Demand for Renewable Power 

Major American companies want improved transmission to make the grid more resilient and reliable. Unilever, Cargill, Nestle, General Mills, and Procter and Gamble recently sent a letter to the U.S. Federal Energy Regulatory Commission (FERC) asking for continued acceleration and enhancement of the regional and inter-regional transmission line planning processes. The companies - which are some of the nation’s largest electricity consumers - are also among the 100 U.S. Corporations with renewable energy goals. 

In January 2018, the Wind Energy Foundation released a report  on the need for upgrading and expanding transmission lines to meet large (corporatecustomer demand for using renewables such as wind and solar in their energy mix. The companies are concerned that modernization is lagging behind the demand for smarter, more resilient connection. The report gives details of a coalition representing over 100 corporate energy buyers (the “Renewable Energy Buyers Alliance” or “REBA”), formed in 2016 that aims to purchase 60 gigawatts (GW) of new renewable energy capacity in the U.S. by 2025. (1 GW of electricity can power approximately 725,000 homes.) 

REBA collaborates with RE100, a group of corporate purchasers committed to source 100 percent of their power from electricity including BMW, General Motors (GM), Johnson & Johnson, and Procter & Gamble (P&G). 

Following were the key findings of the report : 

  • Corporate demand for cheap, clean renewable energy is growing.
  • Renewable energy production and potential is concentrated in the central U.S. region, far from most future electricity demand.
  • New transmission is needed to meet this growing demand.
  • Transmission planners are typically not incorporating this rising tide of voluntary corporate renewable energy demand into plans to build new transmission. 

Based on these findings, the report recommended that corporate buyers and other large institutional customers should encourage transmission planners and concerned state agencies to increase access to affordable, renewable energy by approving upgrades and expansion to transmission lines. 

The report  found that existing and planned transmission facilities may not be sufficient to deliver the amount of renewable energy companies have already committed to buy. Using a conservative set of transmission-building assumptions, the report found that planned transmission build-outs would meet only 42 percent of corporate renewable energy demand in a high-procurement scenario, or 78 percent of the demand in a low-procurement scenario.

"This letter demonstrates that major American companies are becoming increasingly interested in the future of the US electricity grid, " said David Gardiner, President of David Gardiner and Associates, a group of strategic advisors to organizations seeking a sustainable future. "These companies recognize expanding and modernizing the grid will deliver more reliable, cheaper and cleaner electricity to all consumers, including companies with strong clean energy goals."

Explaining the Transmission Problem

Nuclear, coal, and natural gas are all highly centralized sources of power - they rely on relatively few high output power plants. Wind and solar, on the other hand, offer a decentralized model, in which smaller generating stations, scattered over a large area, work together to provide power.

Decentralization offers a key advantage - Resilience.  When one weak point (say a mini grid) fails, the larger grid to which it supplies, can disconnect and continue to operate uninterrupted. Similarly, decentralized energy has a greater speed to recovery after a disruption or disaster. All the same, decentralization also presents with the barrier of transmission. Transmission refers to power lines and infrastructure needed to move electricity from where it is generated to where it is consumed. Wind and solar energy generation are site specific - where these are found aplenty. The export of energy from high production region to areas of demand via the central grid requires additional transmission infrastructure. Also, these lines should be robust enough to incorporate intermittency and security issues.  

“Expanding and upgrading our nation’s transmission grid is a critical element of keeping our electricity system resilient,” said John Kostyack, Executive Director, Wind Energy Foundation. “Improving the regional and inter regional transmission planning processes will facilitate those expansions and upgrades, while also enabling large companies to meet their renewable energy commitments.”

These corporates have a variety of reasons for increasing their demand for renewable energy, such as lower costs, price risk reductions, and corporate environmental initiatives. While, transmission operators have largely failed to incorporate the increasing demand for renewable energy by large energy users into their planning processes. This could lead to a shortage of renewable projects, as corporations act to fulfill their commitments to procure an additional 50 gigawatts of renewable power by 2025. In the longer term, this imbalance in the renewable energy market can clearly cost us not only our environmental security, but also economically as prices for products and services would rise with other expensive sources of energy.