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What energy buyers want from federal policy

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This week, 36 major corporate clean energy buyers released a statement outlining top federal policy priorities they see as essential to accelerate the transition of clean energy and reach deep decarbonization. 

"Energy Buyer Federal Clean Energy Policy," released by the Renewable Energy Buyers Alliance (REBA), is exceptional because of its specificity. It spells out policies the corporate leaders see as a priority to reach their decarbonization goals — a departure from some sign-on letters that are more general in their support for corporate sustainability. 

Miranda Ballentine, chief executive officer of REBA, says the incoming Biden administration opens the potential for new conversations to assert ongoing corporate climate priorities. 

"We don't see this set of statements as new or political. Policy-oriented; yes. Political; no," Ballentine said in a phone conversation. "We see them as good policies that are in the best interest of recovering the economy and decarbonizing the economy."

Among the signatories are Amazon, Facebook, General Motors, Google, Disney, Johnson & Johnson, McDonald's, Microsoft, Pepsi, Salesforce, Target and Walmart. The full slate represents more than $5.8 trillion in revenue and 13.5 million employees, according to a statement from REBA

"The signatories and endorsers, they're not energy companies," Ballentine said. "And every one of the signatories has another major crisis — or crises — that they're managing. One of the things that's most remarkable to me is, given all of the other priorities that these companies have, this is still a high priority for them." 

We don't see this set of statements as new or political. Policy-oriented; yes. Political; no.

REBA has a history of organizing corporate energy buyers to spur forward markets. The group was involved with the creation of the Renewable Energy Buyers’ Principles almost five years ago (before REBA was a standalone nonprofit organization), which catalyzed the procurement movement. 

This new list of policy priorities is a glimpse into what the nation's largest clean energy buyers see as the barriers to continued decarbonization. So what are the policies, and why do they matter to corporate buyers? 

Priority 1: Expand and improve wholesale electricity markets

Competitive wholesale energy markets — markets that buy and sell bulk electricity — are key to keeping the cost of energy low and allowing renewable energy to compete with incumbent energy sources. 

Wholesale markets also enable corporate renewable procurements. According to Ballentine, almost 80 percent of corporate renewable procurement deals in 2020 happened in organized markets (which cover about two-thirds of the U.S. population).

"Yes, it's about ensuring that clean energy projects are affordable, but even more fundamentally, it's ensuring clean energy projects are even possible," Ballentine said. 

Power purchase agreements (PPAs) and virtual power purchase agreements (VPPAs), a primary driver of corporate renewable contracts, are only available in organized wholesale markets. And for companies unable to sign PPAs because of their size or resources, organized wholesale markets are better positioned to clean the grid by allowing renewable energy a level playing field to access the market. 

"Organized markets are critical to getting to decarbonization faster and cheaper by being a baseline platform to integrate the clean energy that we need," said Bryn Baker, director of policy innovation at REBA. "Non-wholesale market regions are just not going to have the same type of level playing field for clean energy technologies."

Organized markets are critical to getting to decarbonization faster and cheaper by being a baseline platform to integrate the clean energy that we need.

Wholesale energy markets are increasingly becoming a focus for clean energy advocates. Earlier this month, the Advanced Energy Buyers Group released a report, "Organized Wholesale Markets and Corporate Advanced Energy Procurement," outlining how competitive markets work and can be improved. In November, REBA also released a set of principles for wholesale market design

The focus on wholesale energy markets is also a nod to the new leadership at the Federal Energy Regulatory Commission (FERC), which regulates wholesale markets. Under President Donald Trump, FERC supported policy that disadvantaged renewables. With a new administration, there are signs FERC may be more supportive of leveling the playing field for clean energy

The corporate buyers' federal policy asks:

  • Empower FERC to improve market design and expand wholesale markets
  • Fund states and utilities pursuing participation in organized wholesale markets
  • Invest in transmission infrastructure and advanced electric system operations 
  • Ensure energy policies leverage and incentivize wholesale market design

Priority 2: Harmonize clean energy standards and expand transmission

Corporations have been key in spurring forward clean energy adoption, spearheading deals that have helped scale renewable technologies. But individual actions from individual companies can take progress only so far. 

"We're not going to get to a fully decarbonized power system one power purchase agreement by a Fortune 500 company at a time," Ballentine said. "There is a critical role for just decarbonizing the grid for everyone."

Rob Threlkeld, global manager of sustainable energy, supply and reliability at General Motors, says that alignment from the federal government can stitch together the current patchwork of clean energy policies across the country. That vantage would allow a better line of sight on how green current practices are — and what gaps still exist. 

"The principles get to the complexities we have to go through to accelerate decarbonization," Threlkeld said. "It's enabling all of these technologies to work together as optimally as possible to drive down the cost to the consumer."

The corporate buyers' federal policy asks:

  • Harmonize data on emissions and resource mixes to enable customers to understand the true carbon impact of their electricity mix 
  • Develop a national strategy for transmission planning to expand and upgrade availability and reliability of renewable energy 
  • Support policies to increase access to efficient renewable energy 
  • Accelerate "next-generation procurement" — including using the federal government's procurements to transition to zero-carbon energy everywhere all the time

Priority 3: Deploy and commercialize new technologies

The third and final policy bucket pushes for broader support for innovations needed to reach deep decarbonization. Current gaps include the availability of energy storage and digitization technologies that empower intermittent sources of energy (such as wind and solar) to supply energy for more hours of the day. 

"It's about enabling other, new technologies to increase the penetration of the renewables we are already currently sourcing," Threlkeld said. "You can't source 100 percent wind, you can't source 100 percent solar. In order to get to the deep decarbonization, we need to find other technology solutions."

Research indicates that more federal support for clean energy technologies would be a good investment. According to separate reports from Columbia University's Center on Global Energy Policy and Industrial Innovation Initiative (I3), a coalition of industry, NGO and public sector players dedicated to decarbonizing industry, investment in R&D for clean breakthroughs will stimulate jobs and economic growth. Meanwhile, Bill Gates’ Breakthrough Energy commissioned a report that crunched the numbers to show that the spillover economic gains from such an investment would be significant — all of which bodes well for political action. 

The corporate buyers' federal policy asks:

  • Support demonstration and commercialization activities, including public-private partnerships, of clean energy innovations by the private sector 
  • Align investments to reach deep decarbonization in the industrial sector, where technological and financing gaps continue to persist 

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