What's your international strategy for renewables?
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Get ready to fund some international travel for your renewable energy procurement team, as the focus for potential projects shifts to Europe and Asia during 2019.
During the first nine months of 2018, businesses procured more than 5 gigawatts of renewable energy — predominantly power generated (or that will be generated) by solar and wind projects in the United States. That’s more than for all of 2017, and the fourth quarter already has been pretty busy with deals from the likes of Microsoft, Cargill, Walmart and Iron Mountain, as I’ll report in January as part of our next quarterly deal tracker.
While there’s really no sign of a slowdown domestically, there are signals that some pretty big multinationals — companies such as Danone, Google, Heineken, IKEA, Microsoft and Novartis — are looking for more opportunities outside U.S. borders.
These names are all a part of the more than 100 businesses that have blessed the RE-Source declaration, which is calling for policy changes across the European Union to help enable more corporate power purchase agreements. There are four main thrusts to what they’re seeking:
- Get rid of regulatory and administrative barriers
- Establish better "guarantees of origin" (critical for energy teams to make their business case)
- Make cross-border transactions simpler
- Support the development of more procurement and financing models
For context, commercial and industrial accounts currently consume about half of the electricity generated in Europe. The EU Renewable Energy Directive requires that the union meet at least 20 percent of electricity demand with renewables by 2020 — and at least 27 percent by 2030.
The group of companies behind the declaration is managing to get deals done despite the lack of clear structure today: More than 6 GW of renewable energy capacity in Europe has been enabled through corporate PPAs so far, according to data cited by RE-Source. That includes 2 GW, up to this point, in 2018.
Against that backdrop, we can expect more corporate energy types to prioritize their European strategies in the year to come. One example of a company that’s already in the game is Google, working on powering a new data center it’s planning in Denmark entirely with renewable electricity. It announced a deal for three wind farms in Finland back in September.
But that isn’t the only region worth studying.
That’s because developing economies are focusing far more attention on policies designed to encourage clean energy development — and it’s working, based on the latest annual Climatescope from Bloomberg New Energy Finance (BNEF). Here’s the big number to consider: in 2017, developing nations added 114 GW of "zero-carbon" capacity (including 94 GW of solar and wind), an all-time record.
"It’s been quite a turnaround. Just a few years ago, some argued that less developed nations could not, or even should not, expand power generation with zero-carbon sources because these were too expensive," said Dario Traum, BNEF senior associate and Climatescope project manager, in a statement about the new data. "Today, these countries are leading the charge when it comes to deployment, investment, policy innovation and cost reductions."
In other words, they’re learning from mistakes and success in North America, especially in regions where grid investments have been minimal to date.
Where are the hot spots? Latin American countries, particularly Chile, which had the highest rating from BNEF when it comes to clean energy development. Four other countries that might be worth a visit: India; Jordan; Brazil; and Rwanda, according to the research.
On the not-so-positive side, a lot of coal-generated capacity — 193 GWs, to be specific — is still under development in developing nations, particularly in China, India, Indonesia and South Africa. For perspective, a total of 260 GWs of coal-fired electricity is online in the United States today.