Case Study: How One Multinational Company is Addressing its Global Energy Load

How does a multinational consumer products company, which has publicly committed to purchasing 100% renewable energy and achieving carbon neutrality by 2020, address its carbon emissions across a variety of geographies?

The answer is innovative strategies and cross-functional stakeholder engagement.

Achieving carbon neutrality is an ambitious goal that requires addressing both the emissions from company-controlled activities (known as direct emissions) and those generated from sources outside of a company’s direct control (known as indirect emissions).  For this buyer—and many others worldwide—the strategy to reach carbon neutrality is four-pronged:

1. Reduce operational energy consumption as much as possible through efficiencies
2. Deploy onsite renewable energy resources
3. Utilize utility-scale renewables via power purchase agreements (PPAs)
4. Purchase global energy attribute certificates (EACs) to address remaining emissions

To achieve these goals, the buyer created an internal partnership between procurement, sustainability, and real estate.  Together, this team developed a comprehensive global energy reduction strategy that would simultaneously reduce energy consumption and carbon emissions, and also help the company realize considerable cost savings.

The team then turned its attention to targets for onsite and offsite renewable utilization.  To set these targets, the company used a structured brainstorming process to encourage entrepreneurial ideas to surface among team members.  From this process, the team determined that executing both an onsite solar PPA and an offsite wind PPA in North America would help address electricity load there and reduce the company’s global footprint by nearly 10%, or more than 125,000 metric tons of carbon dioxide equivalent (CO2e).

While the dramatically falling prices of solar photovoltaics have made onsite PPAs more attractive than ever to corporate buyers, most companies are unable to meet their goals entirely with onsite generation.  Offsite PPAs are attractive because they are of a much larger scale and take advantage of a variety of incentives and tax subsidy programs to further reduce their cost.  In several global energy markets, including the U.S., renewable generation has reached or surpassed grid-parity with so-called “brown” generation.  PPAs also enable the buyers to lock-in a fixed price for power over the 12-20 year term of the contract, an enormous advantage over a typical 1-3 year contract for conventional generation.

In an offsite PPA, the corporate buyer—known as an offtaker—contracts directly with a developer for the fixed price of power on a significant quantity of generation (typically 25 MW or more in the U.S.).  Whenever the market price of power is higher than this fixed price, the offtaker receives a rebate in what is known as a fixed for floating swap.  This scenario allows buyers to more readily meet their carbon reduction goals while, at the same time, saving money on their electricity costs over time and effectively hedging against volatile and uncertain energy markets.

For this organization, the offsite PPA option met three goals: 1) it provided significant impact to carbon neutrality targets, 2) it was a tangible contribution to the company’s renewable energy and carbon reduction commitments, and 3) it did not require a capital investment.

By sustainability, operations, and procurement groups working together, alongside buyer’s advisor Renewable Choice Energy, the company was able to execute an offsite 50+ MW new wind project, making a substantial (and additional) contribution to global renewable energy development while also meeting internal goals and public commitments.

The process of securing an offsite PPA is complex and requires the inclusion of stakeholders across an organization.  This company took more than nine months to select a project and finalize a contract, which is typical for U.S. offsite PPAs of this magnitude (PPAs in other markets, such as Mexico and India, can be smaller and more flexible on contract structures).  The role of the buyer’s advisor is critical during the contracting process.  Renewable Choice worked closely with this company’s internal teams over the nine-month period in order to fully address all risks and opportunities and helped to negotiate the final agreement between the company and its chosen developer.

The corporation is actively considering additional offsite PPA options with Renewable Choice’s help to continue to address its global energy load and renewable energy and carbon reduction commitments.  Thanks to their integrated strategy and offsite wind power PPA, they are on track to meet their goals by 2020 as planned.

Reach out to our strategic renewables team to learn how a comprehensive energy strategy can drive value for your organization.

The post Case Study: How One Multinational Company is Addressing its Global Energy Load appeared first on Renewable Choice Energy.