Corporates urge EU to make it easier to secure renewable power contracts

A group of over 50 major corporations, including household names such as Mars, IKEA, and Nestlé, have this week called on European policymakers to drive through reforms that would make it easier for businesses to procure renewable energy as part of promised green recovery packages.

The group, which includes major energy consumers, renewables developers, and trade bodies, yesterday published an open letter to EU leaders and member state governments arguing that the growing band of companies committed to sourcing 100 per cent renewable power could play a major role in the EU both meeting its climate goals and driving a sustainable economic recovery from the coronavirus crisis.

Under the banner Re-source, the group notes that "the market for corporate demand for renewable energy is both a large and dynamic driver of positive change in global energy markets".

"In the past year, 2.5GW of additional renewable capacity has been contracted in the EU through corporate Power Purchase Agreements (PPAs) and this has the potential to grow several fold in the coming years," the letter adds. "Annual on-site new installation of renewable energy by the commercial and industrial consumers hit 3.4GW in 2018. 240 of the largest businesses in the world have now committed to go fully 100 per cent renewable for their electricity needs through the RE100 initiative, led by The Climate Group in partnership with CDP. Together, RE100 members now represent a scale of electricity demand that is greater than that of Poland and the Czech Republic combined, and they are moving fast, with most of that demand set to go green before 2030."

However, advocates of PPAs have long argued that the European market lags far behind the US, with a raft of legislative and planning barriers hampering the development of the market. According to analyst firm BloombergNEF, companies used PPAs to purchase six times as much renewable power in the Americas as in Europe last year. Meanwhile, of the 24 national energy and climate plans submitted to date under the EU's Clean Energy for All Europeans package, only two detail how they will deploy corporate renewable energy sourcing.

As such, this week's letter is calling on governments to ensure corporate renewables purchasing features in imminent recovery packages, alongside policy reforms that could help expand the market for PPAs.

"The EU has an opportunity to enable corporate sourcing to play a far larger role in Europe's green economic recovery and transition to climate neutrality by 2050," the letter states. "RE100 members, alone, are set to stimulate global investment in renewables worth €90bn over the next 10 years. With over 40 per cent of RE100 members headquartered in Europe, the EU should see a significant proportion of this investment…  With the right framework in place, corporate renewable sourcing will play its crucial role in stimulating the European economy and make a significant contribution to meeting the 2030 climate target on time."

Specifically, the letter calls for the EU and member states to use the bloc's Clean Energy Package to remove the administrative and legal barriers to PPAs, streamline planning and permitting processes for corporate renewables projects, increase investment in grid upgrades and improve access to grid connections, and use stimulus packages to increase investment in clean energy infrastructure.

It also argues that the EU should bring in non-market based measures such as public credit guarantees or risk sharing for projects that would help address the risks for financiers that can act as one of the main barriers to the signing of long term PPAs.

"COVID-19 has presented unprecedented challenges, but some good can come of it if we seize the opportunity to drive emissions cuts, helping us to live better in the future," said Helen Clarkson, CEO, The Climate Group. "A key area is fast-tracking renewable energy use. With the right policy measures in place, businesses will channel billions of Euros of investment across the continent - slashing emissions and creating the new jobs that we need."

Her comments were echoed by Giles Dickson, CEO at trade body WindEurope, who said the market for PPAs was growing, but could be turbocharged by a more supportive policy environment.

"More and more companies are sourcing their electricity directly from wind farms," he said. "It makes sense for them - wind is cheap and scalable. Wind helps to shift their energy consumption away from fossil fuels to more efficient electricity. Governments need to facilitate all this: e.g. remove barriers to PPAs and stop taxing electricity more than gas. The huge corporate demand for renewables can really drive the energy transition - let's unleash it." 

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• Topics
• Wind
• Solar
• Energy
• Policy
• RE100
• CDP
• Climate Group
• PPA
• Green recovery
• Coronavirus