International Renewable Energy Markets: Driven by Corporate Demand

May 5, 2016 Aran Rice

 

Author: Aran Rice has over 10 years of experience in corporate sustainability strategy, renewable energy, and carbon markets, and is directly involved in helping RCE’s clients to achieve complex renewable energy and sustainability goals. 

The last two years have seen an unprecedented increase in commercial, industrial, and institutional (C&I) demand for renewable energy both in the United States and internationally.  Driven by changes in guidance on how companies should address emissions reductions associated with energy usage, as well as a surge in corporate commitments to renewables, pent up demand for solutions has never been higher.

One of the prominent impacts of this demand is the recent development of renewable energy certificate (REC) markets throughout the world, in locations where there was previously no credible method for tracking and trading the ownership of the environmental attributes associated with the production of renewable energy.

The changes to guidance on corporate emissions reporting practices have been driven by the release of the Greenhouse Gas Institute’s Scope 2 guidance in 2015.  Previously, it was standard practice for multinational corporations to purchase renewables, often in the country in which they are based, and apply those purchases to usage throughout the world.  New guidance, which has been accepted by important reporting platforms such as CDP and RE100, directs energy users to focus their purchasing in the regions in which they are actually using energy. Therefore, if you’re a U.S.-based company with operations in India, REC’s acquired from a U.S. renewable project (via direct purchase or power purchase agreement[PPA]) can no longer be applied toward international usage and therefore cannot be claimed toward corporate renewable energy goals.

What has resulted from the combination of very rapid C&I adoption of renewable energy goals and commitments to public disclosure through platforms such as CDP is a push for renewable energy solutions in markets where there have previously been none.   Just this year, we have worked with clients to source RECs and evaluate PPAs in India, China, Australia, Mexico, Europe, Singapore, and Taiwan, among others.  In prior years, many of these international renewable energy markets would have been inaccessible for customers seeking high quality and credible renewable energy products.

Alongside the development of markets in these areas of demand, we are also witnessing the expansion of new certifying standards to credibly track these transactions.  Organizations have stepped forward with new or proposed certifications options internationally such as The I-REC Standard, Green-e(R), the Gold Standard, and Goldpower which lend credibility and competitiveness to transactions in these international renewable energy markets.  One positive result of the emergence of new standards is the welcome possibility of competition between clean energy solutions. In markets without competition, we have, at times, seen a lack of choice for consumers and stagnant development of quality and variety.

While working in these nascent international renewable energy markets, we have also witnessed some of the potential risks of purchasing these new products.  There are many potential issues that can arise with sellers who are unfamiliar with expectations of the sophisticated consumer. Geographic and political constraints, reliability of transmission grids, and verification of product authenticity and attribution are all critical considerations for buyers when looking at international renewable energy products. These risks highlight the importance of choosing a provider that is able to clearly advise clients on the the products they are purchasing and the the associated claims they can make, while assuring that their purchase will credibly and effectively help them to meet their goals.

Although some international renewable energy markets are still  largely underdeveloped, they represent an enormous opportunity to advance renewable energy development and achieve ambitious global corporate sustainability goals. The work of renewable energy developers, providers, and buyers alike all point to a rapid expansion of international clean energy solutions. For companies interested in exploring these markets, it will pay to execute international renewable energy deals with experienced partners who know how to navigate this foreign turf.

As one of the only U.S. providers transacting in international renewable energy markets, Schneider Electric Energy & Sustainability Services has the experience and acumen to help guide your company through the process of successful procurement. Contact us today to learn more about how we can help your company become a global sustainability leader.

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