What do Google, Microsoft, Amazon, AT&T, Johnson & Johnson, PepsiCo, Visa, Toyota, and The Nature Conservancy all have in common?
All are striving to achieve a 90% carbon-free electricity system in the US by 2030 as members of the Clean Energy Buyer’s Alliance (CEBA). Collectively, energy customer companies have advanced over 52GW of clean energy since 2014, with 93% of this attributable to CEBA members. In mid-May, CEBA’s nearly 300 energy customers and partners, including nearly 100 Fortune 500 companies, convened in Detroit to move the needle on clean energy procurement.
The CEBA community discussed the state of the clean energy procurement market, we note four key themes:
1. Market dynamics and demographics are changing rapidly
Clean energy is in high demand. 2021 brought 11.06GW of voluntary clean energy procurement, of which 50% is attributed to new energy customers. Demand is persistent and growing in 2022, with 6.45GW already announced between January 1 – April 22 alone. The voluntary clean energy procurement market is expanding in breadth and depth. Small and medium enterprises (SMEs) are increasingly involved, especially as large conglomerates seek to “green” their supply chains. Credit quality remains a barrier to SME growth since many are unrated or below investment-grade.
Further, aggregated buying power is being leveraged and is unlocking purchasing power, even for smaller buyers. Four recently announced sizeable aggregation deals, each with average procurement of 25MW, included some buyers offtaking as little as 3MW.
2. Policy and regulatory markets engagement and collaboration continues to strengthen
Organized wholesale markets continue to provide promising opportunities for renewable energy. ERCOT, PJM, and MISO are the most significant wholesale markets. Despite a recent dip in project volumes, these markets represented 75% of volume in Q1 2022. Encouragingly, bilateral utility deals are on the rise in the voluntary community, including in the West and Southeastern US, notwithstanding the lack organized wholesale markets.
3. Energy customers have a deeper focus on scaling for impact
The voice of the consumer is increasingly audible and influential. Energy customers are engaging much more deeply with policymakers and regulators. Nearly three dozen companies, none for whom energy is a primary focus, have asked the Biden Administration to prioritize clean energy. 35 CEBA members have signed CEBA’s Federal Clean Energy Policy Priorities, and 24 companies filed federal regulatory dockets or submitted via the agency stakeholder processes.
4. Impact goes beyond clean energy procurement
There is a broadened and more comprehensive approach to gauging impact. Interest around quantifying and minimizing direct (scope II) and indirect (scope III) emissions continues to gain momentum, especially as net zero commitments proliferate.
We heard more dialogue around managing and mitigating the carbon footprint of renewable energy equipment production. We expect this trend to persist, especially as footprint quantification resources become more sophisticated, reliable, and accessible.
Thank you to the full CEBA team for developing such an active community committed to decarbonization and clean energy procurement.
We are already looking forward to the next CEBA Connect forum at VERGE 22 in San Jose in October.
Have questions on how Energetic Insurance can reduce barriers to cost-effective procurement and help support the greening of supply chains? Reach out!
This article does not constitute and is not intended by Energetic Insurance to constitute financial advice or a solicitation for any insurance business.