Corporate America is at a crossroads: will they stay the course on renewables?
President of Sales and Service in the United States and Canada at Vestas
Published on the 21st of August 2019
We see it almost every day – headlines showing corporate demand for renewables on the rise. Corporate PPAs are up 200% during the past year, and it’s clear that the demand for renewables among corporates is helping drive the industry’s growth. Last year alone 6.6 GW of renewables were installed by the C&I sector. Corporates deserve all the praise they’ve received and more.
I don’t say it all the time, but I’d like to think that corporates buying renewables is about saving the planet from the climate crisis.
Michael Terrell, head of energy market development at Google once said, “Climate change is a fundamental challenge to building a healthy, prosperous future for our society. The world needs to come together on issues like energy and climate, and we want to be part of the solution.”
Google and others certainly have been part of the solution, especially during the past few years. But let’s take a step back and ask ourselves – what’s driving this trend for corporate buyers?
Money, profits – the type of ROI that’s made renewables the best energy source to invest in during the past decade. This makes sense – the economics of wind have spurred renewables’ growth and it’s why our sector is beating fossil fuels.
Of course, policy support in the form of the PTC has played a major role up until this point. So, what happens to corporate demand for renewables when the PTC is out the window?
Some questions are starting to arise. Brian Eckhouse of Bloomberg News pointed this out in his recent article, “Corporate America’s Hunger for Green Power Is Facing a Big Test.”
Let’s be clear: The economics for wind will still be strong in the post-PTC era as I’ve argued during the past few years. But it’d take a fool to say there won’t be some bumps along the way.
The post-PTC era will be a time when the true believers will double down on renewables even when the ROI on paper doesn’t look as good as it did with PTC support. My guess is many corporate buyers will have to ask themselves – why should I double down on new investments that have a slightly diminished ROI compared to just a few years ago?
But the answer many corporates might come up with will show us all why many corporates even looked at renewable PPAs in the first place. Corporate demand for renewables is about providing real climate solutions and building the clean economy.
The leadership corporates have shown in sustainability and the progress they’ve made bringing clean power to the grid is a big part of the solution to avoiding the worst impacts of the climate crisis. As much as multilateral governmental agreements might have fallen short to date on putting us on track to avoid the worst impacts of the climate crisis – the reason we have a fighting chance is because of the mass deployment of renewables and the demand being driven by key players in our economy.
In the years ahead, it is entirely possible that the policy landscape can change. Regardless, the cost of wind will still be good, so I expect C&I growth to continue. But corporate buyers will be forced to really decide why they want more renewables.
Is it all about bottom-lines and ROI on paper? When the money softens a little, will C&I stand by their clean principles and continue to buy wind? What do marginal changes to bottom-lines matter if our children and our children’s children inhabit an increasingly uninhabitable planet?
I think corporates have shown us that they are committed and that even with some price fluctuation, they understand that inaction is the biggest cost to doing business.
I sure hope so. At the end of the day, the future of our planet depends on it.
Source for the PTC table: National Renewable Energy Laboratory