The Story of Renewable Energy Technology: A Positive Evolution
In the last few blogs of this series, my colleagues have shared the economic proof points for renewable energy technology and how to best garner internal buy-in among key stakeholders. These are vitally important for any Sustainability Leader or Energy Executive eager to meet their goals. Today, my hope is to impart to you the broader narrative of renewable energy technology, so you have the important context of this evolving industry. The incredible growth and proliferation of renewable energy are equally as inspiring as they are motivating. I believe understanding, and of course sharing, this story of the rapid evolution of renewables, will inspire and motivate your internal team, as well. Having spent my entire career in energy, the last decade being in renewable energy, I have witnessed this evolution first hand. As you know, there is much more to the story than the headlines we read in the news today.
To offer an analogy that links all these blog segments together, you might think about the economic proof points shared by our CEO, Jam, as an “appetizer” that prompts your team to lean in. Knowing how to approach your key stakeholders about renewable energy, as our VP of Power Marketing, Rebecca, shared, could be likened to the ambiance or experience of the whole meal. And, what I share today, is what has been going on in the kitchen that makes the whole town want to show up at the same restaurant.
3 Waves of Diversification
General Motors procured onsite solar in 2008, installing the biggest rooftop solar station at the time. Since then, there has been a market evolution within renewable energy across three realms: the customer base, the value proposition, and the renewable energy technology itself.
Long before deregulation in the early ‘90s and for the longest time after, utilities across the nation were monopsony buyers of renewable energy. Then, larger Fortune 100 companies with the pioneering vision for a better world, and of course, the financial wherewithal, joined in. Today, the customer base has expanded and diversified to include: community choice aggregators (CCAs), energy services providers (ESPs), universities, and of course, the fast-growing corporate and industrial (C&I) cohort of buyers.
Community Choice Aggregators
CCAs are very strong in several states and they provide the opportunity for communities to unite to offer customers a choice of their electric provider and the source (renewable component) of their electricity. CCAs do not replace investor-owned utilities (IOUs), who are still responsible for transmission/distribution lines and customer service. They can be thought of as a hybrid between IOUs and municipal utilities, adding renewable energy to the grid for their residents to opt in or opt out. This specific model shows the power of innovative partnerships to best meet state, corporate and end-user goals.
Corporate & Industrial (C&I)
C&I signed more renewable energy deals than utilities for the first time in 2015—2016. In 2017, 10 GW of renewable energy were purchased, which can be largely attributed to this growing C&I buyer base. C&I customers are rapidly procuring wind & solar to hedge against rising energy prices, to achieve their renewable energy commitments, and to reduce their carbon footprint. Taking advantage of virtual PPAs and RECs most often, C&I buyers no longer have to choose between what makes sense economically and what makes sense for the environment.
C&I has successfully led the way for others to follow, most notably, university buyers. Universities are procuring more and more renewable energy in a variety of forms due to the assortment of off-take structures available. As an example, George Washington, American University, and the George Washington University Hospital partnered to purchase 52 MW of solar PV from a Duke Energy project. We have seen aggregated offtake among corporations as well, most notably with large anchor tenants like Microsoft.
Everyone is showing up to procure renewable energy for a reason: it is undeniably the better answer and the future. Do not let your organization be left behind.
Ten years ago, sustainability executives had to sell renewable energy as the right thing to do for the environment. At best, procuring renewables was viewed as an expensive PR opportunity. Today, customers want three things: competitive pricing, a predictable hedge against rising energy prices, and to capture any tax benefits that are phasing out. Buyers are asking for it all because it is all, in fact, possible. The International Renewable Energy Agency (IRENA) recently reported that the cost of wind turbines dropped 37—56% and solar PV by nearly 80%, both now priced below traditional energy sources. This implies there is a literal opportunity cost to not procuring renewable energy today. I hope you were able to catch this video that describes, in detail, the economic argument for renewable energy.
In addition to the actual cost of renewable energy plummeting, there is also innovation surrounding the available off-take structures. With the diversification of the customer base, there comes, in tandem, a diversified set of needs. This evolving set of customers are each able to procure the renewable energy solution that makes the most sense for their needs with options like Virtual PPAs (VPPAs), green tariffs, flexible tenures & terms, REC swaps, solar and wind puts and hedges, and anchor tenants – to name a few. 2018 could be yet another record-breaking year for renewable energy procurement, with 3.3 gigawatts of wind and solar already purchased. This is partially attributed to the availability of off-take structures, making renewable energy accessible to not just the Facebooks of the world, but businesses with a smaller load, as well.
New Renewable Energy Technology
I am encouraged by the immense change we have experienced in renewable energy technology during my tenure in energy. The evolution of renewable energy technology has been one of the main drivers propelling the industry forward. In this video, I discuss some of the recent advancement in panel types and efficiencies and storage.
Bifacial panels capture the full cycle of the sun and provide many benefits over normal PV. Generation is increased because 1) both sides produce energy (up to 30% more under certain conditions), 2) there are smaller balance of system costs because more energy is generated from a smaller footprint, and 3) they are more durable as both sides are UV resistant. When frameless, the potential-induced degradation (PID) is also decreased. Although there are still some challenges to work out, as is the case with any new technology, expect to see bifacial panels continue to be a frontrunner solution in the coming years. This technology will be especially impactful for buyers in heavy manufacturing or data center services. It allows purchasing from a smaller plant, equaling a lower investment. Less capital is a much more attractive deal, and an easier sell internally!
We are also seeing many integrated offerings like solar+storage and solar+wind, come to the forefront. These offerings prove powerful. Storage solves solar’s most limiting feature: the sun does set. Solar+storage allows users to harness the sun’s energy during peak hours and store energy to be used in the morning and evening, when consumer demand is highest. California & Maryland have been leading the charge by incentivizing end users to install storage in their homes & businesses. Solar+wind is another complementary duo, offering a similar relationship of compensating for the others’ individual limitations. Just a couple of years ago the cost to install storage was in the $2000’s. Today it’s about $200 per KW and Bloomberg projects the cost to decrease as far as $73 by 2030.
Innovative technology takes time to become economically accessible to mainstream corporate buyers. These technologies typically need a corporate champion who is willing to be the first mover to help the technology iterate and cost curves to fall. Microsoft and GM were powerful champions for renewable energy technology, being the first corporations to purchase utility-scale renewable solutions at very high rates. Soon, many followed their lead. It is my belief that corporations will continue to step up and advocate for the new and innovative technologies that are being introduced to our industry.
Renewable energy has a powerful history, and I anticipate an even more powerful future as costs continue to fall and the number of innovative technology solutions currently available rises. I hope this helps you feel equipped to articulate the broader story of renewable energy technology to inspire and motivate your internal teams. Next month, our Latin American leadership team, Regional Manager Mario Pani, and Vice President of Project Development Gerardo Ferrando, will discuss procuring renewable energy in emerging markets, with a specific focus on Mexico. Check back to learn how to unlock the basics of a new market, decide how to procure energy in an emerging market and the importance of selecting the right partners.