At the United Nations climate change conference in Paris, COP 21, governments agreed that mobilizing stronger and more ambitious climate action is urgently required to achieve the goals of the Paris Agreement. Action must come from governments, cities, regions, businesses and investors.
The Paris Agreement calls for measures to reduce fossil-fuel emissions at an “estimated cost of $12.1 trillion over the next 25 years”, according to Bloomberg New Energy Finance. “It will require titanic shifts in how societies generate electricity, fuel vehicles and run factories, in large part by shifting to renewable energy.”
As the policy agenda takes shape, there has also been a dramatic response from companies adopting their own goals to reduce GHG emissions. With more Government action to tackle carbon emissions on the way there is a lot to be gained from early action. Initiatives such as the RE100 and Science Based Targets are engaging companies in making commitments to a clean energy and low carbon future.
With multiple initiatives, different reporting frameworks and often inconsistent government policy, it can understandably be difficult for companies to develop the right renewable energy strategy. In our experience, companies should take time to consider what solutions (or portfolio of solutions) make most sense to achieve their stated goals. Amongst other things this should take into account timescale, scope, expected financial returns, appetite for projects, site growth plans and compliance with carbon reporting frameworks.
There are several approaches to increasing your use of renewable energy from “greening” an existing supply through the purchase of renewable energy certificates to fully “additional” projects developed and installed specifically to meet your energy demands.
Whilst green electricity is often the focus, the opportunity to use “green” gas for heat requirements can also be explored.
investments in renewable projects that provide energy price independence and create new “additional” capacity offer many benefits but also require careful assessment and long-term commitment.
Projects can be located either on site (utilising spare rooftops or land) or offsite with electricity delivered via the grid or a private wire. Solutions that connect “behind the meter” can reduce distribution and other non-commodity charges (these currently make up about half of a typical electricity bill and are set to increase).
Any renewable project must be carefully tailored to a site’s specific energy demand profile. Rapid developments in battery storage solutions also present an innovative opportunity to explore load shifting and demand side response to further maximise revenue.
Companies taking their first steps into renewable energy need to understand the different solutions and develop a strategy appropriate to your business needs.
There is not a one-size fits all approach and multiple solutions may be required to achieve corporate GHG reduction and renewable energy goals. Each opportunity and solution will need to be carefully assessed against the company’s priorities (short and long term) and investment framework.