In the first part of his monthly review of sustainability news, Oliver Balch reports on how power purchase agreements by US companies are driving a boom in wind and solar projects, how falling costs of hydrogen could help speed the energy transition, and the health benefits from renewables
When Invis Energy’s 23.2 megawatt (MW) wind farm in Cork, Ireland, comes on stream in late 2020, its owners will have no need to go in search of customers. Online retail giant Amazon has already committed to buy all the facility’s output of clean energy. The same is true for a recently announced 45MW wind farm in Pittsylvania County, Virginia. The two projects mark the 65th and 66th power purchase agreements signed by Amazon in recent years. The renewable energy from the two sites will be used to power the company’s energy-hungry data centres. The Seattle-based tech giant puts the combined generating capacity of all its clean-energy projects (which include 51 solar rooftops) at 1,342MW and predicted these will deliver more than 3.9m megawatt-hours (MWh). The moves form part of the company’s stated aim of achieving 100% renewable energy usage for all its global infrastructure.
US apparel retailer Gap also announced that it was upping its purchase of clean power. The high-street brand has signed a contract with Enel Green Power North America to buy energy produced by almost one third (90MW) of its proposed 299MW wind farm in North Dakota. The agreement should see Gap gain access to around 374 gigawatt hours (GWh) of clean power per year, enough to meet the electricity needs of more than 1,500 of its stores (equivalent to around half of its overall retail network). Back in January, the retailer signed a separate agreement to purchase the partial output of a 100MW solar project in North Carolina. The deal, struck with renewable energy developer BayWa r.e., will be used to offset the energy footprint of all the stores and operations of Athleta, Gap’s womenswear brand. A first of its kind, the January deal included four corporate co-signatories; Bloomberg, Cox Enterprises, Salesforce and Workday (dubbed Corporate Renewable Energy Aggregation Group).
Both developments are in line with the latest corporate energy market outlook from analyst firm BloombergNEF. Looking back over the first half of the year, the report identifies new corporatecontracts for 8.6 gigawatts’ (GW) worth of clean energy, up 2.4GW on the same period last year. The trend is being led by US corporations, which are responsible for over two-thirds (69%) of all such deals. The majority (82%) of corporate purchasing activity comes in the form of power purchase agreements. Another interesting aspect of the report is the expectation of Asia’s private sector emerging as a major renewables’ buyer. This is primarily due to expected uptake by companies in China, where a new renewable portfolio standard is on the cards.
Giving momentum to the increase in corporate energy purchases is the RE100. A global business initiative, RE100 comprises 191 corporations, all of which have publicly committed to source 100% of their energy needs from renewable sources by 2030. Despite strong initial progress, however, RE100 signatories will need to acquire an extra 189 terrawatt hours (TWh) in zero-emission energy if they are to hit their 2030 targets, the BloombergNEFreport predicts. Were they to do so from wind or solar sources, this would require the deployment of an additional 94GW in generating capacity, representing an investment of around $97bn.
BloombergNEF’s conclusions echo those of energy research and consultancy firm Wood Mackenzie and the American Wind Energy Association, which co-published a new reporton corporate wind demand. The report estimates that 85GW of renewable energy demand exists within the largest US companies until 2030.
Two companies, Facebook and Google, lead the pack, comprising 14.1% and 13.7%, respectively, of total existing demand. Amazon is next in line, at 7.3%, from 14 power purchase agreements (though the figures are for 2018, so omit the e-retailer’s more recent deals).
Yet despite a “considerable uptick” in renewables over the last five years, clean sources of energy still only represent around 5% of the power mix for Fortune 1000 firms. The report’s authors predict that growing demand for solar could see it supersede wind by 2021, which had led the clean energy mix to date. According to its primary scenario, companies are anticipated to be contracting over 12.5GW of solar energy by 2027, compared to 1.3GW of wind. However, persistent tariffs on solar modules and the expiration of the Investment Tax Credit could hamper solar’s advance in the US, the report concludes.
Snapping on the heels of both wind and solar is hydrogen. The BloombergNEF report predicts that renewable hydrogen costs could fall to as low as $1.40 per kilogram by 2030, down from $2.50-$6.80 today). The ideal is for hydrogen to be produced by electrolysers, which extract the clean gas from water, powered by solar and wind. In a “fully optimised” system the cost of such an approach could come in at a competitive $24 per MWh by 2030. By 2050, meanwhile, total annual demand is predicted to reach as much as 275m metric tons of renewable hydrogen.
Renewable hydrogen costs could fall to as low as $1.40 per kilogram by 2030. (Credit: Ronda Roth/Shutterstock)
According to a 203-page report published by the International Energy Agency (IEA) back in June, about 3GW of electrolysis projects are currently in train. The IEA estimates that there are currently around 11,200 hydrogen-powered cars on the road worldwide, far short of the 2030 figure of 2.5m vehicles envisioned by existing UK government targets.
One barrier to hydrogen expanding from industrial uses to play a more prominent role in the energy transition is that it is primarily supplied from natural gas and coal. This reliance on fossil fuels in hydrogen production leads to around 830m tonnes of carbon emissions every year (the same as the carbon footprint of the UK and Indonesia combined).
The IEA report points out that if such barriers are overcome, hydrogen will play a transformational role in storing energy produced by solar and wind. “Hydrogen and hydrogen-based fuels can transport energy from renewables over long distances – from regions with abundant solar and wind resources, such as Australia or Latin America, to energy-hungry cities thousands of kilometres away.”
Boosting the case for renewables are their health benefits. According to a new academic research paper, the reduction in exposure to fine particulate matter coming from non-renewable power plants will lead to an improvement in respiratory and cardiovascular health. The study focuses on 10 states in the Midwest and Great Lakes region of the US, which, if current renewable energy standards are met, could see $4.7 billion in health benefits in 2030. This saving equates to 34% of the $3.5bn cost of implementing the clean energy infrastructure that meeting current standards would require. Were the states to double their renewable usage (from current levels of 13% to 26%), the health benefits could leap to $20bn (versus $9bn in implementation costs).
This article is part of the September CSR Cheat Sheet round-up. See also:
CSR Cheat Sheet part 2: Cooperation in protecting freshwater basins 'urgently needed'renewable energy wind power solar power Amazon GAP Invis Energy RE100 International Energy Agency