How the energy transition can affect the electricity grid

EiD is regularly providing posts on the impact of the energy transition on the grid. Letha Tawney and Manish Bapna from the World Resources Institute write on the Forbes website about the demand by the corporate sector for renewable energy, which is fine, but the problem is providing enough supply.

 

Corporate Demand for Renewable Energy Could Rock the Grid

Renewable energy is good for customers, the environment and the bottom line of corporations that run their operations with it. In the United States, though, renewables (including solar, wind, hydropower and biomass) account for only about 10 percent of all energy used and 13 percent of total electricity generated – even as corporate contracts for renewable energy nearly tripled from 2014 to 2015. If there are challenges now, when capacity and use are low, what will happen to business models, technology and financing when renewable power penetration reaches 30, 40 or even 50 percent of the U.S. market?

Since there’s plenty of corporate demand, the problem is supply, which in turn depends on adequate infrastructure to deliver it. Historically, U.S. utilities have decided what fuels to use to generate electricity, with scant incentive to increase the percentage of renewables in the energy mix or to explore technology to encourage that kind of shift.

We know there’s an appetite for many more gigawatts of renewable capacity, but it’s excessively difficult for large companies in the United States to buy as much renewable energy as they want. While retail customers in many states can arrange to buy solar or wind power from local utilities, companies need a large, sophisticated team to get access to renewable energy options at the scale they need – if those options are available at all.

To change this picture, it’s time to look to the demand side, where multinational corporations are joining together to make their preference for more renewable power felt.

Facebook and Microsoft are among 60 companies and over 50 leading project developers and service providers participating in a new network, the Renewable Energy Buyers Alliance, known as REBA, that aims to break down barriers to lower-carbon energy. The alliance aims to see 60 gigawatts – the same amount of total generating capacity of Turkey — of renewable energy deployed in the U.S. by 2025. That’s a huge jump from the 3 gigawatts of renewable power purchases companies signed in 2015, which was about triple the amount from the previous year.

Turning Supply and Demand on Its Head

Renewable energy is the rare case where the law of supply and demand can be turned on its head, due to the essentially limitless supply of raw material (sun and wind) and the potential to capture economies of scale through innovative technologies. It’s also a case where change can happen on the state and local level. With sluggish legislative progress on renewable energy at the national level, a national price on carbon emissions is unlikely in the near future. But a coalition of powerful companies with large and growing demand for power – and corporate goals for environmental sustainability – is a market force to be reckoned with.

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