Perhaps surprisingly, meeting environmental targets is the number one driver for the sourcing of renewables, with financial drivers only placing third – after corporate social responsibility commitments.
This is according to research by the International Renewable Energy Agency (IRENA) whose report into global trends is based on the attitudes and actions of over 2,400 large companies in 75 countries.
IRENA’s researchers do, however, caution that factors such as cost savings, long-term price stability and security of supply are likely to increase in importance as renewables become even more cost-competitive in the energy marketplace.
Good for the bottom line as well as the planet
While it’s good to see that corporate conscience is helping to drive the renewable energy agenda, at CleanEarth we’ve been saying for a while that it must go hand in hand with the financial incentives.
Fortunately, the commercial arguments for investing in renewable energy are becoming more compelling as every year passes.
Self-generation through solar or wind power is achieving rates of return and pay-back periods that demand the attention of finance directors and business owners, while power purchase agreements (PPAs) provide low-cost electricity to those without the capital to invest themselves.
This alignment of the financial and environmental incentives is what’s needed to overcome the inertia shown by many British businesses.
UK lags behind Europe
The IRENA report provides clear evidence of that inertia. While a high number of the businesses polled were headquartered in the UK, we lag behind our European neighbours and other developed economies with only 41% of companies actively sourcing renewable energy – compared with 52% for Europe as a whole.
This may be a consequence of the UK government’s stop/start approach to renewable energy policy, although IRENA do not draw this conclusion directly, observing only that “in many countries, policy-makers still lack systemic knowledge about how to integrate corporate players into renewable energy markets”.
As we have said before, this is an issue that’s too important to be left to the politicians, so business owners and corporate managers need to take their energy strategy seriously, and not leave it to a few high-profile multi-nationals to lead the way.
What needs to change?
IRENA make a number of recommendations for businesses that are looking to procure renewable electricity for the first time or increase their commitment.
These serve to maximise the benefits to the business as well as accelerate the development of our renewable generating capacity.
- Set a renewable energy strategy and commit to targets
- Pursue options that will bring additional renewable capacity to the grid
- Report transparently on your sustainability claims
- Encourage peers, competitors and supply chains to follow suit
Echoing our own sentiments from our 2018 Energy Outlook, the report concludes that change needs to be led by businesses and not left to government:
“Not only governments will need to take the lead in achieving this shift. Corporates can become an important driver in accelerating the energy transformation if they embrace a shared responsibility in decarbonising the economy.”
Download the full report
Corporate Sourcing of Renewables: Market and Industry Trends
International Renewable Energy Agency (IRENA) May 2018.