In this series, we explain the basics of transitioning to renewable energy, from the emerging opportunities, options and impacts, to the process of implementing onsite or offsite solutions.
Corporations that choose to power their operations with renewable energy are on the bleeding edge of the industry. They’re choosing to endure some difficulty for the opportunity to switch to renewable energy -- they’re choosing the harder path. But why?
To recap, corporations and institutions utilize three approaches when trying to reduce their greenhouse gas emissions. These options are the same regardless if the company is targeting its owned and operated facilities or its manufacturing base.
The three methods for reducing emissions include:
In this installment, we’ll cover onsite renewable energy.
Onsite renewable energy projects generally include four types of technologies: rooftop solar, ground-mounted solar, bio energy, and onshore wind. All four of these options have their own pros and cons.
Rooftop solar is great for buildings with large, exposed roofs, but generally only covers up to 20% of a building’s energy needs. Ground-mounted solar can ultimately cover 100% of a building’s energy, but requires large tracts of land to do so. Bio energy is great for powering boilers by acting as a fuel, but generates large amounts of ash waste. And onshore wind can generate large amounts of electricity but proximity to neighbors can limit this option.
There’s no universal solution. Historically buyers use a combination of all four across their portfolio, depending on the needs and market conditions of each facility.
Similar to the number of technologies available, there are also different transaction types for procuring onsite renewable energy.
Power Purchase Agreements (PPAs) are a contract between a renewable energy generator and an interested buyer. This contract details the terms at which the off-taker, potentially a corporation, agrees to buy power from the power provider, including pricing structure, length of engagement, penalties, payment terms, and more. A PPA is generally used when the provider continues sole ownership of the power generating technologies, and sells the power directly to the buyer.
In addition to PPAs, buyers will sometimes lease renewable energy technologies from providers. For example, a stand-alone storefront may lease the rooftop solar panels that were installed by the previous owner of the building. Technically the panels are still owned by a third party, but so long as the buyer makes payments, they can continue to benefit from the power of the panels.
The final option sometimes utilized by corporations or institutions for onsite renewable energy is direct investment. By purchasing the assets outright, the new owner eliminates the service fees generally paid to third-party operators. However, the purchaser generally ends up having to service the assets themselves, and is left to figure out what to do with the assets should their operations move elsewhere.
Onsite renewables are visible to stakeholders in a way that efficiency measures aren’t. They can help generate company-wide buy-in through positive cost-savings and PR opportunities. They also improve the upgraded facility’s electricity resilience, and can usually be paid out over time when another entity owns the assets.
The downsides are that onsite renewable energy is generally fixed to the location, and only services the one facility. In comparison, offsite energy generation can service whole portfolios.