Lesson 2 of 8
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How Do Corporations Procure Renewable Energy?

Over the past several decades, leading corporations have used specific, proven models to invest in renewable energy. These companies have set precedents for the most effective procurement methods across the globe, which vary in terms of simplicity, cost-savings, and flexibility. These methods may involve Renewable Energy Certificates (RECs) in the form of utility green tariffs, green pricing programs, unbundled RECs. They may also take the form of third-party power purchase agreements or turnkey purchases.

First, See This Overview

Corporations globally have validated four methods of renewable energy procurement over the past few decades: unbundled energy attribute certificates (EACs), power purchase agreements (PPAs), utility or supplier renewable electricity offerings, and self-generation. Availability of these options vary depending on local regulations.

Note that the terms EACs and RECs are used interchangeably.

See: Figure 1.1 from Corporate Sourcing of Renewables: Market and Industry Trends by IRENA.

Next, Consider This Trend

Over time, the use of various types of renewable energy procurement options has changed, with increasing use of PPAs and self-generation, though unbundled RECs and utility offerings still dominate the market.

Note that contract with suppliers refers to utility green tariffs, and self-generation refers to turnkey purchases.

See: Page 11 from Growing Renewable Power: Companies Seizing Leadership Opportunities by RE100, The Climate Group, and CDP.

Now, Read This

Though a range of renewable energy sources exists, some technologies are considered more sustainable than others.

What is renewable?

RE100 defines renewable electricity as “electricity generated from biomass (including biogas), geothermal, solar, water and wind electricity sources”. Depending on the context, there may be a need to consider further criteria regarding large scale hydropower and biomass. For example, the social and environmental impact of large scale hydropower can be a relevant consideration – with entities such as the World Commission on Dams providing guidance on such issues. Similarly, the sustainability ability of fuel for biomass generation can be subject to different perspectives and criteria. Often companies themselves define what they consider to be renewable, e.g. excluding or including hydro or biomass plants

Read Excerpt: Page 24 from Corporate Renewable Power Purchase Agreements: Scaling Up Globally by WBCSD.

Finally, Look More Closely at Each Procurement Method