Companies in 75 countries actively sourced 465 TWh of renewable energy in 2017, an amount close to the overall electricity demand of France, a new report by the International Renewable Energy Agency (Irena) states.
With the continued decline in the costs of renewables, the report suggests that corporate demand will continue to increase as companies seek to reduce electricity bills, hedge against future price spikes and address sustainability concerns.
Titled ‘Corporate Sourcing of Renewables: Market and Industry Trends’, the first global assessment of trends and policies in corporate sourcing of renewables, shows that renewable energy sourcing by private sector companies is made possible with the right policy framework in place and that it can be a key factor in the world’s pursuit of a sustainable energy transformation in line with the objectives set out in the Paris Agreement.
The Paris Agreement, Paris climate accord or Paris climate agreement, is an agreement within the United Nations Framework Convention on Climate Change dealing with greenhouse-gas emissions mitigation, adaptation and finance, starting in the year 2020.
According to the report, environmental and sustainability concerns, social responsibility and reputation management and economic and financial objectives are the three primary drivers of corporate sourcing of renewable energy.
“Renewable energy sourcing has become a mainstream pillar of business strategy in recent years,” says Irena director-general Adnan Amin.
While environmental concerns initiated this growing trend, Amin added that the strengthening business case and price stability offered by renewables can also deliver a competitive advantage to corporations and support sustainable growth.
The findings of the report, presented at the ninth Clean Energy Ministerial in Copenhagen, on Thursday, show that half of the over 2 400 large companies analysed are voluntarily and actively procuring or investing in self-generation of renewable electricity for their operations.
Of the companies surveyed, more than 200 source at least half of their power from renewables.
“Corporations are responsible for around two-thirds of the world’s total final electricity demand, making them central to, and key actors in, energy transformation,” continued Amin.
“As governments all over the world recognise this vast potential, the development of policies that foster and encourage corporate sourcing in the electricity sector and beyond will inject additional needed investment in renewable energy.”
The report also finds that the corporate sourcing trend is widespread and dynamic, with companies participating in the practice coming from various sectors.
By volume, the majority of renewable electricity was consumed in the materials sector, while the highest shares of renewable electricity consumption are found in the financial and information technology sectors, at 24% each.
Countries in Europe and North America continue to account for the bulk of corporate sourcing, the report stated.
Of the companies analysed in the report, only 17% have a renewable electricity target in place.
Three-quarters of those targets will expire before 2020, thereby representing a significant opportunity for corporates to develop new medium to long-term renewable energy strategies and targets that factor in improvements in renewable energy technology and cost declines.