As the post-2020 Renewable Energy Directive progresses through European institutions with encouraging outcomes at the Parliament, Sam Kimmins, Head of RE100, The Climate Group, blogs on a major business call for supportive EU policy to empower companies looking to source more of their electricity from renewables.
At this week’s One Planet Summit in Paris, the heads of 15 Member States of the EU came together to celebrate those in the private sector that are taking concrete action to accelerate a low carbon future. At next week’s Energy Council, those same countries will be discussing a Directive proposal that - if made more ambitious - could enable more businesses to make large scale investments in renewable power, reduce emissions and gain greater control over electricity costs.
Increasingly, companies are realising that renewable electricity makes long-term business sense. They are making ambitious commitments and are actively switching to renewable sources – rather than waiting for the electricity they buy from the grid to be clean.
The Climate Group's RE100 campaign with CDP brings together 118 of the most influential and ambitious of those businesses, committed to sourcing 100% renewable electricity globally. They include Schneider Electric, which joined RE100 this week. Together, they represent enough renewable electricity demand to power Poland – and provide a major flow of capital and finance that could support the development of European renewable energy infrastructure.
But European countries need to seize the opportunity to unlock far greater corporate investment in renewable electricity, and deliver on their climate commitments, by ensuring that the forthcoming Renewable Energy Directive (REDII) enables engagement in corporate renewable Power Purchase Agreements across Europe.
Our RE100 members are clear: they are not looking for subsidies. Our latest round of reporting, to be published in early 2018, will show that the technology is ready and is cost effective, and what companies need is a clear and stable framework that empowers them to source renewable electricity in an open, market-based, cost-efficient, transparent, and traceable way.
This is why, earlier this year, we set up the RE-Source Platform with our partners WBCSD, Solar Power Europe and WindEurope. This multi-stakeholder platform aims to bring together corporate buyers and sellers of electricity, coordinate activities to promote a better framework for clean energy sourcing in Europe, and unlock the potential of this new and promising financing stream for renewables.
Today, 11 RE100 members, along with utilities and renewable electricity suppliers, have written to Energy Ministers of the European Union, asking them to address some of these barriers ahead of the forthcoming Energy Council meeting, when the post-2020 Renewable Energy Directive (RED II) will be discussed. Getting this Directive right provides a once in a decade opportunity to unlock the potential of corporate sourcing of renewable electricity that, outside of RE100 membership, remains largely untapped in Europe.
RE100 members BT Group, Corbion, Facebook, Google, IKEA Group, M&S, Microsoft, Novo Nordisk, Royal DSM, Royal Philips, Unilever and Vestas are calling on EU Energy Ministers to adopt more ambitious targets on renewable energy and to lift regulatory barriers to corporate renewable Power Purchase Agreements (PPAs).
Specifically, corporate renewable PPAs should be made easier and more widely available across Europe. They enable large energy consumers to source clean power at a competitive price, while providing more certainty to renewable electricity developers.
The latest available data from our membership shows that PPAs are an increasingly popular means of sourcing renewable electricity. This is in line with the global trends identified by Bloomberg New Energy Finance for the last couple of years, with record capacity signed in the US (2015) and in Europe, the Middle East, Africa and Asia Pacific (2016). The 2017 numbers are not finalised yet, but the forecast looks promising.
In 2016, RE100 companies sourced 4.8 TWh of renewable power through PPAs. In the same year, four of our members (AkzoNobel, Royal DSM, Google and Royal Philips) formed a consortium in the Netherlands to jointly negotiate a wind PPA, enabling the construction of two new wind parks accounting for almost 4% of the total wind capacity installed nationwide, and stable long-term costs for the four companies. In November this year, Microsoft signed the largest ever corporate renewable PPA in Europe, with a 180 MW agreement for wind power, also in the Netherlands. Mars, BT and HSBC also have PPAs for wind power in the UK.
But progress in Europe remains constrained to the small number of countries where the policy environment is the most supportive (Ireland, UK, Sweden Norway and the Netherlands). Elsewhere in Europe, unnecessary policy barriers prevent companies from contributing to national renewable energy targets and developing innovative business models.
That is why 11 RE100 members are asking Energy Ministers to ensure that the RED II requires Member States to remove regulatory barriers to the development of corporate renewable PPAs. This includes making sure that green electricity producers can retain Guarantees of Origins, an essential part of corporate PPAs as it enables buyers to trace where their electricity comes from and to publicly make credible claims.
Moreover, those 11 RE100 members back a strong renewable energy target of at least 35% by 2030. This level of ambition reflects the commitments made by European countries under the Paris Agreement to reduce emissions, and would send a strong signal to the market.
President Macron of France and organiser of the One Planet Summit is clear on the sense of urgency: “We are not moving quick enough. We all need to act”. The world’s most influential companies are already leading the way through RE100 – let’s empower many thousands more to do the same.