Europe’s 1st automotive renewables PPA bolsters corporate drive to fight climate change
World August 10, 2018
Even as climate change deniers hold some of the world’s top political offices and corporate posts, responsible business is taking tangible steps to fight climate change.
Mercedes Benz recently announced Europe’s first automotive Power Purchase Agreement (PPA) with a 45 MW Polish wind farm to power its manufacturing facility in the nearby town of Jawor, with the longer-term goal to source all of its power needs from renewables.
Corporate PPA deals like this are expanding rapidly in Europe. There was a 130% increase in the volume of wind energy contracted through such PPAs in 2017 alone, according to a press release from WindEurope, a Brussels-based association promoting wind power in Europe.
“This is a double first. The first corporate renewable PPA deal in the automotive sector and the first major PPA in Poland. PPAs all started in the ICT sector. Now we’re seeing them in manufacturing sectors such as aluminium, chemicals, steel, pharmaceuticals – and automotive,” said WindEurope CEO Giles Dickson.
First Polish Power Purchase Agreement is also Europe’s first automotive renewables deal: https://t.co/nBFbqIeV0e
— WindEurope (@WindEurope) August 1, 2018
Corporations on sustainability path
The world market for corporate sourcing of renewable electricity in 2017 reached about 465 TWh, placing it close to France’s overall electricity demand, according to the International Renewable Energy Agency’s (IRENA) Corporate Sourcing of Renewables: Market and Industry Trends report, which analyzed over 2,400 companies worldwide. Production for self-consumption is the most common sourcing model, followed by the purchase of unbundled energy attribute certificates (EACs) and power purchase agreements (PPAs).
Companies sourcing renewable electricity come from a diverse set of sectors and geographic areas. By volume, the majority of renewable electricity was consumed in the Materials sector (165 TWh), which includes mining, pulp and paper, and chemicals. The highest shares of renewable electricity consumption are found in the Financial (24%) and Information Technology (12%) sectors.
Countries in Europe and North America continue to account for the bulk of corporate sourcing. Accordingly, the top five companies by renewable electricity consumption, excluding the materials sector, include three from the US, all three from the IT sector – Microsoft Corporation, Intel Corporation, and Alphabet Inc., which owns Google, and two from Germany – automotive company Volkswagen AG and railway company Deutsche Bahn.
In the materials sector, the top five are UK miner Rio Tinto, Russian aluminum company United Co Rusal, Australian miner South32, Norway’s aluminum and renewable energy company Norsk Hydro, and Brazil’s metals and mining company Vale.
The first five places on IRENA’s list of companies producing renewable electricity for self-consumption are occupied by Volkswagen, Deutsche Bahn, the US-based technology giant Apple Inc., East Japan Railway Company, and Sweden’s furniture producer and retailer IKEA.
Report proposes way forward
The IRENA analysis projects that to achieve a global energy transformation that can deliver on the climate objectives set in the Paris Agreement, the overall share of renewables in total electricity use would need to reach at least 85% by 2050, which translates into 19,000 TWh for the Commercial & Industrial (C&I) sector.
In the current trajectory, corporate global demand for renewable electricity will grow to at least 2,150 TWh by 2030 and 3,800 TWh by 2050. This would correspond to only 20% of the required renewable electricity demand in the C&I sector in 2050, still not of the growth rate required.
To enable the full energy transformation, corporate renewable energy sourcing will need to go beyond the electricity sector and focus on all end-uses as well as energy efficiency measures, according to the report.
Of the companies analyzed in the report, only 17% have a renewable electricity target in place. Three-quarters of those targets will expire before 2020, 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, IRENA said.
Corporate sourcing options available in SEE and wider region
IRENA’s report also provides options for corporate sourcing of renewable electricity by country, with the situation in South-East Europe (SEE) and the wider region shown in the table: