An interesting headline from Reuters yesterday in an article by Nichola Groom, America’s Hungriest Wind and Solar Power Users: Big Companies echoes themes we’ve been seeing from large companies across the economy, evidencing corporate America’s push towards renewables.
According to the Edison Foundation Institute for Electric Innovation, a utility-backed non-profit based in Washington D.C., companies have been big purchasers of renewable energy contracting for almost 7 gigawatts (GW) of clean power over the past four years – enough for more than 1 million homes. And that number is expected to rise to 60 GW by 2025.
This has had a profound impact on the growth of the solar and wind industries as technology improvements and lower installation costs have made wind and solar competitive with other energy sources, such as natural gas.
And what’s driving our country’s largest energy users to adopt climate-friendly energy practices? “It’s been primarily all driven off economics,” according to Rob Threlkeld, General Motors’ global manager of renewable energy. “Wind and solar costs are coming down so fast that it made it feasible.”
GM is one of a growing number of companies that have committed to obtaining 100 percent of their energy from renewable sources. In GM’s case, that will happen by 2050.
Today’s increasingly complex and dynamic energy market can directly impact a company’s operational performance and its bottom line. But energy risks abound and they often go unnoticed.
Our recent white paper on corporate energy spending found that commercial and industrial energy users are still wasting massive amounts of money on energy spending — up to $80 billion annually on gas and electricity purchases. Why? Because most companies don’t take a holistic view of their entire energy portfolio or data, or the organizational model needed to make more informed energy decisions to support their goals.
The energy market is undergoing profound structural changes — companies are now exposed to an extremely balkanized, dynamic and even volatile energy market for which most are ill-prepared. As a result, companies are falling behind the competition and spending too much for energy. They cannot pivot quickly enough to adapt to market changes, or provide visibility to the investment community about their risk exposure to energy. And that means more changes ahead as companies broaden their focus beyond energy efficiency programs and start treating energy as the strategic asset it really is.
This all circles back to the aspirational statements that have been publicly stated by leaders in the business community on remaining steadfast in their commitment to meeting their GHG and sustainability goals. To get there will require changes in the way our largest energy users procure, use and manage energy across their enterprise.