Major US corporations biggest customers of renewable energy

Wal-Mart, GM some of the largest users of renewable energy

A number of major American corporations, including Wal-Mart Inc and General Motors Co have become some of the biggest consumers of renewable energy and are helping drive growth in the industry.

According to a Reuters report, nearly 40 per cent of US wind contracts were signed by corporate power users, university and military customers.

In 2013 those users accounted for 5 per cent of the industry’s business.

Data from GTM Research shows these users also accounted for 10 per cent of the market for large-scale solar projects last year.  In 2014, there were none.

The biggest reason for the switch to renewables is lower energy bills.

Technological advances and increased global production of solar panels and wind turbines have made wind and solar much cheaper.  Tax breaks and other incentives make renewables competitive for large corporations like GM, and in some cases wind and solar energy are cheaper than conventional sources.

GM’s global manager of renewable energy Rob Threlkeld says the company is saving $5 million worldwide, and has committed to powering its facilities with 100 per cent renewable energy sources by 2015.

“It’s been primarily all driven off economics,” Threlkeld told Reuters. “Wind and solar costs are coming down so fast that it made it feasible.”

The Detroit-based automaker has signed deals with two Texas wind farms that will soon provide the company with enough electricity to power 12 GM facilities.  Among the clean-energy powered facilities will be a vehicle assembly plant in Arlington, Texas that produces the Chevrolet Tahoe, Cadillac Escalade and the GMC Yukon.

Growth in renewables in recent years was driven by utility companies mandated by states to reduce carbon emissions, particularly California where early adopters helped kickstart the green energy revolution.

Progressive, leading-edge companies like Alphabet Inc and Amazon.com have deep pockets and major power needs.  Their early support of renewables helped create today’s environment where wind-power costs are down 60 per cent since 2009.  The cost of solar power has dropped by 70 per cent since 2010, according to the Solar Energy Industries Association trade group.

This year, Home Depot, T-Mobile, Goldman Sachs and General Mills announced major purchases of renewable energy.

Over the past four years, corporations have contracted for about 7 gigawatts of renewable energy.  That is enough to power 1 million homes.  The Edison Foundation Institute for Electric Innovation says that by 2025, that is expected to rise to 60 GW.

Many of these agreements are often so-called power purchase agreements, or PPAs.  They are usually long term, 10-20 year contracts where a large wind or solar project sells electricity to large customers, often at lower rates than those charged by utilities.

These deals allow energy users to buy renewables at lower prices with no upfront investment.

The massive wind and solar farms often supply electricity straight to the grid, so if the wind doesn’t blow or the sun doesn’t shine, corporations get the benefits of green energy but with the reliability of the grid.

So, for a company like Wal-Mart, this set up saves them from having to create an independent power system.  Mark Vanderhelm, vice president of energy for Wal-Mart told Reuters the retailer is about half way to its goal of meeting 50 per cent of its power needs with renewable sources by 2025.

Wal-Mart has installed rooftop panels on a number of its stores, but it purchases much of its green energy through two PPAs.

“For us to meet our goals, we wouldn’t be able to get there by doing it all on site. We just fundamentally don’t have enough roof space,” Vanderhelm said.

Vanderhelm said Wal-Mart is seeing roughly single-digit percentage savings through these green-energy contracts.

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IKEA has taken a different tack to boost its renewable energy use.  The Netherlands-based furniture retailer prefers to own its renewable-energy assets that serve its US business, including rooftop solar systems on most of its buildings and two wind farms in Texas and Illinois.

The company prefers to own all its stores, factories and the land on which they’re built.

According to BNB Renewable Energy Holdings LLC, a privately held New York-based renewable energy developer, corporations now make up about half its business.

“There is a convergence right now where price is low and their sustainability commitments are high,” said Jos Nicholas, a managing partner with BNB.

Since 2014, nearly 100 large global companies have made the commitment to transition to 100 per cent renewables through a partnership with The Climate Group.

The Climate Group is a non-profit organization that is working to reduce greenhouse gas emissions.  Amy Davidsen, the organization’s executive director for North America says every month, roughly two corporations join in the effort.

Johnson & Johnson, Procter & Gamble Co and Nike Inc. have committed to make the switch.

Not everyone is on board, though.  A PriceWaterhouseCoopers survey showed a number of large firms lack an overall corporate sustainability mandate, see renewables as having unattractive returns or because the contracts are too long.

For small and medium-sized businesses, the benefits are not there yet.  They don’t use enough energy to be able to negotiate large PPAs like the big corporations.

As well, the 2020 expiration of the federal tax incentives is another concern.  According to Reuters, industry watchers say despite the expected loss in incentives, US companies will continue their ambitious public commitments to boost renewable energy, even if the tax breaks are not extended.

General Mills sees climate change as a major threat to the agricultural supply chain and the company has a goal of reducing its GHG emissions by 28 per cent by 2025.

“If the front end of that business model breaks down — Mother Nature — we’re in a world of hurt,” the company’s chief sustainability officer, Jerry Lynch, said.