How US Cities and Corporations Can Collaborate on Clean Energy
U.S. cities and corporations recognize that renewable energy is the future. More than 200 U.S. local governments have committed to power their communities with 100% renewable energy, and more than 300 leading U.S. corporations have become members of the Renewable Energy Buyers Alliance, committing to run their operations on 100% renewable electricity. However, achieving these goals is easier said than done.
Municipal and corporate renewable energy buyers face numerous challenges when trying to purchase renewable electricity for their operations and ensure their communities have equitable, expansive access to clean energy.
One primary challenge is that customer access to renewables varies from state to state and is often limited by state policy, or a lack thereof. Even in states with a favorable policy and market environment, renewable energy buyers face challenges. Navigating available renewable energy procurement pathways can be confusing and executing renewables contracts and deals is a technically complicated process.
Collaboration between cities and corporations can break down barriers to procurement and accelerate progress toward individual and collective climate and energy goals. But the benefits of municipal-corporate partnership go beyond increasing renewables on the grid and driving down greenhouse gas (GHG) emissions.
Collaboration can also increase the visibility, impact and scale of renewable energy projects and help bring the benefits of renewables to other large energy users, like universities, as well as marginalized community members who have been left out of the clean energy transition.
New WRI research identifies four collaborative pathways for cities and corporations to advance a clean energy transition together.
How Can U.S. Cities and Corporations Advance a Clean Energy Transition?
1. Educate Residents and Businesses on the Benefits of Renewable Energy
A common starting point for collaboration is to provide community energy users — such as residents, local businesses and universities — with the necessary tools and skills to make their own shift to renewables. Collaboration can include creating forums for ongoing public-private engagement on renewables, motivating residents and businesses to commit to renewable energy challenges, and providing education and technical assistance to other energy buyers.
For example, the Boston Green Ribbon Commission is a group of business, institutional and civic leaders who are working to develop shared strategies for advancing the city’s climate action plan. Co-chaired by the mayor, the Commission has supported multiple renewable energy initiatives, including the creation of a clean energy procurement network that runs workshops for members and a Renewable Energy Learning Prize that catalyzed multiple deals.
One such deal was a power purchase agreement (PPA) signed by Boston Medical Center, Friends of Post Office Square and Massachusetts Institute of Technology. The largest in the United States at the time, the renewables contract enabled the construction of a 650-acre 60 megawatt (MW) solar farm in North Carolina, while allowing the buyers to receive the Renewable Energy Certificates (RECs) from the project at a fixed price.
2. Work Together to Purchase Renewable Energy
Cities and corporations have different drivers for procuring renewable energy. Cities typically prefer to site projects within or near their communities to achieve co-benefits like community education and job creation. Corporations may be less focused on location and tend to opt for procurement vehicles like virtual power purchase agreements (VPPAs), which provide a high level of flexibility and potentially further revenue.
However, working together on renewable energy procurement can yield shared benefits, such as better pricing and economies of scale, reduced risk and a bigger impact on the grid. These can be especially helpful for cities, which tend to have smaller energy loads than corporations and can’t take advantage of tax incentives directly.
In 2020, Amazon and Arlington County, Virginia worked together on a large-scale, off-site renewables deal, which is anticipated to be cost neutral for both parties. The new 120 MW solar farm, built and operated by Dominion Energy, will help the county achieve 80% renewable electricity use for its operations. Amazon will use the remaining 68% of the electricity to power its new headquarters and other Virginia-based Amazon-owned operations, including Whole Foods and fulfillment centers.
3. Remove Market Barriers Through Collaboration and Knowledge-sharing
Currently, renewable energy buyers encounter many roadblocks when trying to procure renewables, including state policies that sometimes limits access to renewables. Making progress toward clean energy goals will require changing the rules that govern how electricity is generated, distributed and consumed.
Cities and corporations that want to remove market barriers can consider collaborating at different levels of the energy system; for example, working with electric utilities, engaging with the state regulatory body, advocating for state-level renewables-enabling policy, and/or commenting on wholesale electricity market decisions and rules.
Influencing energy system stakeholders and participating in regulatory proceedings and market discussions is outside of most city and corporate staff’s day-to-day. Cross-sector knowledge-sharing can leverage limited resources and amplify the voice of cities and corporations in policy and regulatory decision-making.
Target and the City of Minneapolis are one such partnership, having collaborated on utility and regulatory engagement several times. In 2019, they filed joint comments at the Minnesota Public Utilities Commission (PUC) asking for Xcel Energy to update one of its credit calculation methodologies to better reflect the value of solar to the grid. The PUC accepted some of the joint recommendations, helping ensure customers that install solar are appropriately compensated.
4. Ensure Equitable Development of Renewables in Communities
Increasingly, energy buyers are looking to expand the benefits of renewables to the communities they serve, especially to Black, Indigenous and People of Color (BIPOC) that have been historically left out of the clean energy transition. Two renewables projects with the same capacity can have very different community and environmental impacts based on both the project site and contract requirements. A successful and inclusive clean energy transition relies on cities and corporations sharing the benefits of renewables more broadly.
To further equity goals, cities and corporations can consider a variety of emerging strategies, including incorporating community benefits into initial request for proposals (RFPs); partnering to bring renewables projects into low-income and BIPOC communities; creating and supporting innovative financing mechanisms like green banks and Community Development Financial Institutions (CDFIs) that provide low-income communities with access to solar; and developing inclusive and affordable community solar programs.
In San Antonio, a unique partnership between the city’s municipal utility, a credit union, research institutions, a solar developer and a development corporation resulted in a community solar program that creatively leveraged multiple revenue streams to reduce financial barriers and provide multiple affordable pathways for San Antonians to access solar. As a result, up to 40 income-qualified families will receive substantial subsidies and customized loans that guarantee an energy savings of $215 a year.
It’s Time for More Collaboration on Renewable Energy
While collaboration between municipal and corporate renewable energy buyers can help overcome challenges and expand access to others, most action to date has been on what buyers have the most control over — their own electricity use. Given the potential benefits of collaboration and the scale of the clean energy transition needed to avoid the worst expected effects of climate change, there is a need to amplify, enhance and scale successful collaboration models and explore new models.
The first and most important step is to start the conversation.
Potential partners should work to understand where each is coming from, share goals and intentions up front, and then identify areas of alignment and potential challenges. Successful collaboration requires upfront planning, coordination and decision making, but the returns are worth the investment.
Cities and corporations that are interested in these types of collaborations can view many more case studies and lessons learned in a new WRI publication, The Power of Collaboration: How U.S. Cities and Corporations Can Work Together to Advance Renewable Energy.