American firms have to draw between 20% and 50% of their electricity from regional electric grids — heavy on fossil fuels — even when they’ve signed deals to purchase on renewable power, the university’s Center on Global Energy Policy said in a report. This is because the renewables agreements are not sufficient to meet these companies’ total demand. That mismatch undermines the climate credentials of U.S. businesses, the report concluded.
“Commitments to buy 100% renewable electricity may not equate to a company actually reducing its power carbon footprint to zero,” said the study’s authors, Melissa Lott and Bruce Phillips. There is “a mismatch between companies’ contracted variable renewable electricity and their actual use of electricity,” they said.
Alphabet Inc., Walmart Inc., Nike Inc. and other companies have pledged to purchase power only from renewable sources, in a strategy that is focused in long-term power purchase agreements. The target of corporate buyers is reducing emissions and hedging against power price fluctuations. But the study raises an alert that this strategy might not be enough to look good regarding the fight against climate change.
One solution for companies with 100% renewable purchase targets would be to install storage capacity either on-site or at the power plant to provide electricity when renewables aren’t sufficient, according to the paper. Another is to match a company’s demand with low-carbon supplies on an hour-by-hour basis using local resources.
“Companies that advance procurement practices that reflect these recommendations would increase the demand for firm low-carbon generation and long-duration energy storage technologies,” the authors wrote. That would send “stronger price signals to drive investment in zero-carbon technologies that better coincide with the timing of customer electricity demand and accelerate carbon emission reductions.”