How can companies make 100 per cent renewables a reality?

Gone are the days when pledges from companies to power their business with clean electricity were driven first and foremost by a desire to slash emissions and win green plaudits from customers.

Today, the motivation is as much about cutting costs and boosting resilience. And it is a trend that has been turbocharged by the latest fossil fuel crisis triggered by the Iran War, which has led to a spike in oil, gas, and electricity prices, as well as growing fears that fuel shortages could soon spread across economies all around the world. 

That much was the key message from leading experts who took part in BusinessGreen's latest Spotlight webinar this week, hosted in association with energy technology provider Wattstor, which explored how and why growing numbers of businesses are making the shift to 100 per cent renewables a reality.

It is a trend Sam Kimmins, director of energy at the Climate Group, is better placed than many to testify to. Alongside CDP, the non-profit co-founded the RE:100 campaign more than a decade ago, which has seen hundreds of companies publicly commit to transitioning 100 per cent renewable electricity by 2050 at the latest, but often far sooner. RE100 members - including corporate giants such as IKEA, Unilever, and Google - together now represent over 570TWh of clean power demand globally, which if it were a country, would rank as the world's 10th largest in terms of electricity demand.

As Kimmins explained, the success of the initiative boils down to the cold, hard realities of operating a business during the era of polycrises that have come to characterise the 21st century.

"Back in 2014, the initial members were saying ‘look, this is the right thing to do'," Kimmins said. "They're now saying - and for the last eight years they've been saying - 'this is the right thing to do for our businesses'. The costs of renewables have dropped dramatically: 90 per cent for the price of solar over the past decade, for example. This is now all about cost, energy security and business resilience."

Aiming for 100 per cent renewables

Achieving 100 per cent renewables remains a challenge, especially for smaller companies, given the raft of technologies, services, and regulations they need to navigate. But the case for doing so has become ever more compelling.

"[100 per cent is] a bit more inspiring," he said. "People get behind it, but it also means your entire business is behind it taking action and thinking about it in a systemic way, rather than just one person in the sustainability department driving it incrementally. And that's how we've seen such big shifts around the world - not only in corporate policy, but in the policy of governments that have seen the billions of dollars that can flow into these renewables markets from corporates and the billions of dollars in energy savings that it brings. So really, aiming for 100 per cent is about taking it seriously and thinking of it as a system change rather than a tweak."

Over the past decade and a half, those growing political and economic signals have served to transform the global energy market. The declining costs and increasing availability of clean energy and associated technologies have massively improved the financial case for either deploying renewables or sourcing renewable power from suppliers, opening up the market for many more companies.

On top of that, having barely recovered from the economic fallout of the Covid-19 pandemic, two major global crises inside four years have brought into stark focus the huge economic dangers of relying too heavily on international markets tied to the supply of finite fossil fuels from geopolitically unstable regions. First, Russia's full-scale invasion of Ukraine sent European nations scrambling to source alternative supplies of fossil gas, sending energy prices and inflation soaring as a result. Now, while still reeling from that energy crisis, yet another price shock has reared its ugly head in the wake of the US and Israel's war with Iran, which almost overnight knocked out around a fifth of the world's oil and gas supply.

The result? Yet more hardship for consumers and businesses. In the UK, the energy price cap is expected to rise in July, pushing up the typical dual-fuel household energy bill by more than £300 a year. For UK businesses, which are not protected by the price cap, the costs are even more eye-watering, with wholesale electricity prices roughly 75 per cent higher than they were five years ago, leaving energy-intensive firms such as industrial manufacturers particularly exposed.

Wake-up call

For many, the latest crisis appears to have been a long-overdue wake-up call: UK demand for solar panels, heat pumps and electric vehicles (EVs) has shot up over the past month, as consumers and businesses have sought to curb their exposure to volatile energy and fuel costs. Some commentators have jokingly suggested President Trump - a climate science denier and one of the world's fiercest critics of clean energy - might actually be a secret renewables industry plant.

As Jess Ralston, head of energy at the Energy and Climate Intelligence Units (ECIU), argued during the webinar, the case for companies to ditch fossil fuels and take greater control over their energy through renewables and electrification has never been stronger.

"I think it's becoming increasingly obvious to the public, businesses and the government that net zero technology offers not just that energy security, but actually a way to stabilise prices," she said. "Yes, there's been little speed bumps when global inflation has been through the roof, but we'll see those technologies get even cheaper. So, it makes sense from that business perspective, but it also helps from that UK-wide energy resilience perspective, because the more businesses that install these technologies, the less gas we have to buy from countries that we probably don't want to buy from. All that just means that, overall, the UK is a lot more energy secure."

For Jack Peck, head of UK renewables at Wattstor, the inherent instability of fossil fuel markets only further bolsters the case for renewables. "I think it's important to say that Iran is the current geopolitical crisis, but it shouldn't be viewed in isolation," he said. "We've had lockdown from Covid, and also Russia and Ukraine, which have had dramatic implications for costs on the standard grid and fossil fuel-based energy supplies. These were previously seen as reliable and cheap sources of energy - they're now proving to be anything but."

Navigating a complex market

Growing numbers of firms are convinced of the merits of switching to renewables, but how can they best make a transition that is defined by significant complexity and presents businesses with a wide range of different options?

"It takes time to learn the market, and build your experience and expertise as a company, but thankfully there is now a huge ecosystem that is designed to make it easier for companies to make the switch," said Kimmins.

He explained that there are four main ways for companies to achieve a 100 per cent renewable supply of electricity. Most obviously, there is self-generation, which is commonly achieved through the installation of rooftop solar panels and on-site batteries. Then there are power purchase agreement (PPAs), which enable companies to secure long-term supplies directly from generators such as wind and solar farms. Green tariffs backed by renewables certificates are another option, which enable the purchaser - and no one else - to credibly lay claim to the renewable electricity each certificate represents. And finally, companies can increasingly reach out to a utility or third-party - such as Wattstor - which provides a bundled product that can combine onsite and offsite renewables suppliers with energy management services to optimise clean energy use and minimise costs.

As a clean energy technology provider that designs, finances, installs and operates smart renewable energy systems for commercial, industrial, and agricultural businesses, Wattstor sits at the epicentre of this growing market - and it is seeing growing interest in its services, according to Peck. The company's offering combines all of the above approaches, tailoring its mix of services for different companies in different sectors, which all have different needs.

Each approach offers different pros and cons. Renewables certificates have a key role to play for many firms, particularly in supporting climate goals. But cost savings can be relatively modest and such green tariffs are unlikely to match renewable supplies to demand in real time. Corporate PPAs can provide much needed certainty and stability in volatile energy market, as well as the reputational benefits of being directly linked to a project. However, contracts are inherently complex and there is a risk of firms missing out on some of the savings on offer from emerging flexible energy markets enabling them to shift their demand to less expensive periods of the day or night.

As such, Peck says he is "a big advocate of deploying technology, if businesses have the capital to do it".

From rooftop solar and heat pumps to battery storage and building energy management systems, there are solutions that can work together to drive down energy costs and optimise on-site clean power generation that is insulated from volatile national and international markets. Such efforts can also curb companies' exposure to non-commodity charges on energy bills, which include levies related to grid and policy costs.

"So long as you've got the right technology deployed in many different ways, then there's ways that you can actually use that to your advantage and ultimately make your energy supply cheaper," Peck said.

However, he also stressed that none of these efforts should be looked at in isolation. Companies electrifying their fleets and heating, while better managing their energy used and installing energy efficiency measures, can reap huge savings from reducing their fossil fuel exposure further, while also enabling them to take advantage of revenues from emerging flexible energy markets in the UK. These innovations can then be complemented by PPAs or the sourcing of renewables certificates. Upfront cost barriers can also be addressed through increasingly common financing packages and services, which can allow onsite technologies to be deployed at minimal or even zero cost.

"It's important that all those systems can work together and work for the benefit of all those technologies on site, provided you've for the right design and setup to make the most of it," Peck explained. "If you do that in the right way, then you can get that unit cost of electricity much lower, and go green with it in the process."

Policy risks and opportunities

Of course, despite welcome recent progress, the clean energy transition will not be solely market-driven. Government policy, which has been intrinsic to the emergence of renewables over the past two decades, will still have a critical role to play in determining the pace and scale of renewables deployment, even if the transition as a whole is now an unstoppable force.

While it is facing growing pressure from some quarters to expand oil and gas drilling in the North Sea as a response to the current fossil fuel energy crisis, the Labour government in the UK has stood firmly behind its target to deliver a clean power grid by 2030. Prime Minister Keir Starmer has repeatedly extolled the virtues of weaning the UK off the "rollercoaster" of international fossil fuel markets by homegrown clean power supplies.

In contrast, the Conservative Party has joined Reform UK in calling for more oil and gas drilling, restrictions on renewables, and the scrapping of the nation's legally-binding net zero targets. Reform UK has gone further still, suggesting it could tear up existing government-backed clean power with wind and solar farm developers. Should either of these parties lead the next government, would businesses be forced to temper their clean energy ambitions?

Raltson pointed out that thus far such policy threats have done little to deter renewables developers, nor has it put off companies from seeking cleaner energy supplies. The same goes for the US, where despite hostile policy moves from the Trump administration, solar installations have continued to surge. "There hasn't been a huge drop off in what's been happening in the US as a result of Trump's rhetoric," she said. "And so I would think it would be similar in the UK."

Peck was similarly confident that, while in an ideal world supportive policies can and should serve to further accelerate the shift to a more resilient clean energy system, that trend is unlikely to be stopped in its tracks by a government that is hostile to renewables.

"The market has now matured to such an extent that, particularly for front-of-the-meter generation, it is no longer completely reliant on long-term government backed contracts," he said. They're actually looking at ways of trading that energy, deploying batteries along with solar, and moving towards merchant models. And from our side, our perspective on the business supply behind the meter, it would be a very brave, foolish government that tries to change the fundamentals of the electricity system. They're not going to do that. It comes down fundamentally to economics: if it's cheaper than the alternative, then that's ultimately why businesses move ahead with it."

The global economy may be plagued by uncertainty, volatility, and risk, but renewables, combined with efficiency measures, are increasingly recognised as the only plausible mechanism for businesses to curb soaring energy costs and tackle escalating climate risks. Shifting to 100 per cent renewables is certainly an ambitious undertaking, and delivering on the goal often requires investment and a mix of solutions. But renewables alongside lower emissions and reduced long term costs, renewables increasingly offers businesses something fossil fuels never can: resilience and stability.

BusinessGreen's Spotlight webinar - 'Making 100 per cent renewables a reality' - was hosted in association with Wattstor. It can be watched back in full on demand here.