As the cost of renewable energy plummets, large corporate energy buyers are taking advantage of the benefits of renewable power: they can manage energy costs with more certainty, reduce their greenhouse gas (GHG) emissions and tell a compelling story about their brands’ sustainability.
Electric utilities, particularly investor-owned utilities that own their own power stations, are also facing fundamental changes to their longstanding business model, including an uncertain regulatory regime, slow load growth and competition from new players such as solar companies and independent generators. Even as their business landscape shifts, utilities must maintain investor confidence and chart a path toward stable returns.
Utilities facing these challenges have a unique opportunity to work with companies looking to increase renewable energy. Together they can identify and create win-win solutions that reduce GHG emissions and keep electricity systems reliable, stable and affordable.
Bringing Both Sides Together
A growing number of large companies want their utilities to provide access to long-term, fixed price renewable energy at cost-competitive rates that enables them to go beyond the grid mix and on-site generation. Electric utilities that do offer options are able to retain large customers, attract new customers and support economic growth in their communities. This could yield financial benefits for both sides.
To support such mutually beneficial solutions, WRI is convening the Utility Leadership Forums, a series of workshops aimed at fostering substantive discussions between executives and senior-level staff from electric utilities and the large customers they serve. The goal is to develop innovative, flexible arrangements to speed more cost-competitive clean energy options to the grid. The most recent workshop brought together Berkshire Hathaway Energy, its subsidiaries across 11 states and a number of large energy customers, to discuss ways to expand and strengthen the renewable energy options being offered to customers.
Green tariffs are an emerging option for traditional utilities, offering customers transparent and simplified access to fixed-price renewable energy through the local grid. If designed well, green tariffs can be competitively priced for customers and offer value to electric utilities. Companies such as Apple have already taken advantage of this emerging trend in Nevada with its Ft. Churchill solar PV array, which will power its Reno data center with 100 percent renewable energy. And green tariffs are catching on elsewhere around the country.
Utilities and customers are also working together in other ways to bring more cost effective renewable energy to the grid. IO, a data center services provider, recently crafted a new rate structure with its utility provider, Arizona Public Service (APS). A result of years of advocacy, the contract allows IO and its 600-plus customers to access cost-effective renewable energy from local projects. The agreement leverages the benefits that IO brings to the local electricity grid through built-in energy storage and a highly predictable load. This kind of innovative thinking about what each party can offer has resulted in a win-win arrangement for APS, IO and IO’s customers.
A Growing Trend
Utilities and their regulators are showing an increasing interest in collaborating with large customers to design new kinds of arrangements. As renewable energy deployment grows and the greenhouse gas regulatory regime in the United States becomes clearer, more opportunities will emerge for collaboration. If this is done right, the result can be lower costs, a more stable grid and less pollution – benefiting U.S. electricity customers.
- LEARN MORE: WRI is working with 25 multinational corporations on the Corporate Renewable Energy Buyers’ Principles to make these deals happen in the United States.