Once again, it’s almost holiday season, and just like any journey you might take, you need a roadmap, a plan to get where you’re intending to go, to make the right connections each step of the way, and of course know where you intend to get to. If you don’t know where you’re going and when, you won’t get there, and you could waste an awful lot of time and money trying. Equally, what is becoming increasingly apparent is the need for businesses to define a renewables strategy in order to achieve both immediate and longer-term ambitions, to know and to realise your business’s renewable energy destination.
To be truly effective and improve investor credentials or stakeholder approval, a renewable energy strategy must include the process of development, execution and the means to monitor and report on progress. It must engage business at the highest levels of decision-making process, due to the commitment, risks, and the truly strategic nature of the requirement. This is not about buying energy.
There are four strands or perhaps stages to consider for your renewable energy journey:
- Green Tariff Energy Supplies
- Energy Attributable Certificates (EACs) to offset supply
- Corporate PPAs
- On-site Renewables
Renewable Supply Energy Contracts
The first stage for many businesses is to source their supplies from energy suppliers offering green (renewable energy) REGO-backed electricity and/or biogas.
Energy Attributable Certificates (EACs)
EACs are a recognised tool to document electricity consumption from renewable energy sources and to report reduced greenhouse gas emissions.
EACs are essentially a method to offset supply, each certification verifying that one megawatt-hour of electricity was generated and fed into the grid from an eligible renewable source of production. Purchasing an Energy Attribute Certificate entitles the purchasing organisation to claim the environmental benefits related to green power generation. It is seen as a flexible and cost-efficient option for your company, not only to meet green energy targets, but to also to improve your Scope-2 carbon footprint and sustainability rating.
Complying with the Greenhouse Gas Protocol Scope 2 Guidance, GHG Protocols stipulate that EACs must be sourced from the same market in which the electricity is consumed, presenting a challenge for global business. You need a partner who can source EACs globally to offer green energy solutions for all your worldwide locations.
As subsidies for renewables have been cut, so has the investment appetite in renewables. Conversely, the appetite of large corporates to acquire RE100 status as part of the drive to meet sustainability objectives to attract investors is increasing. This dilemma needs to be met and is feeding the interest and development of Corporate PPA (CPPA) solutions. At present, your business will require sufficient volume to consider a CPPA and the ability to consider a very long-term contractual arrangement, coupled with specialist legal advice. They will also need to consider their potential electricity demand, regulatory changes and any energy supply agreements that a PPA will run in tandem with, ensuring that both supply agreements are compatible – all these matters need to be considered over a much longer-term period, to ensure a successful agreement and delivery over the period of the agreement. Thankfully, CPPA experts are on hand to guide those businesses committed to a sustainability agenda. They can help you define evaluation criteria and manage a Request for Proposal process. By seeking risk management, PPA structuring, and negotiation support, you can ensure the contract and arrangements agreed are the best fit with your organisation’s strategic, financial, and operational parameters. With greater transparency and flexibility being built into CPPAs, wider engagement and approval is apparent.
It can be said in many instances that the ability for an organisation to consider investment and implementation of on-site renewables is an easier internal sell than Corporate PPAs, although they are site-specific and therefore not necessarily beneficial to an overall portfolio. This is particularly the case with complex multisite (and international) estates.
Planning, executing, and recording your journey
So, to plan your journey, it will be necessary to define a strategy, considering the short, medium, and long-term objectives, requirements and opportunities the markets in which your business operates present. The strategy will need to be defined at an appropriate level, global, international and national, depending on the locations, size, structure, and type of your operations. The strategy should consider the most appropriate mechanism(s) for each country and down to site level, taking an approach that aligns with corporate operational and financial strategies and establishes the cost benefit to the business. It must ensure risks are accounted for with appropriate process, policy and safety measures to mitigate risk.
Once the long-term strategy is agreed at board level and the mandate is handed to you, the strategy can be implemented as laid out, and if the strategy has been sufficiently detailed and achieves the objectives set, sign-off of the individual tactical plans on your route should of course be smooth. It is likely that initial targets will be met through a mixture of green tariff supplies and EACs, with longer-term goals for security of supply, price, and sustainability being met through Corporate PPAs and On-site Renewables, as well as a programme of energy/resource waste identification and elimination.
To ensure the successful implementation and reaching destination green, it will of course be necessary to monitor the performance of the strategy and individual projects to achieve it, each step of the way. A process and systems for efficient data collection and analysis will assist in reporting the performance and achievements back to the board and other stakeholders through various corporate and compliance reporting requirements, both internal and external, to validate your success. Considering and agreeing how this will be done at the outset will be critical to reaching the journey’s end.