In economics, most “normal” and mature markets find a balance between supply and demand over time. Within the energy sector, companies, NGOs and many stakeholders have focused on a supply-side driven transition from fossil-based to renewable energy. Discussions have been about technology availability, dropping cost curves, public support schemes and investments in generation and infrastructure.
2015 was a breakthrough year for the demand-side, with private and corporate buyers making clearer demands for clean energy.
RE100, an initiative between the Climate Group and CDP, has played a key role in driving this demand-side push. The project brings together companies committed to 100% renewable electricity. Today more than 50 multinationals are signed up, and this is making waves.
It is one thing to commit to ambitious goals, however; another is to deliver on these goals. To deliver, it is critical to document action in a transparent way, and according to accepted standards.
In Europe and North America there have been systems in place for more than 15 years to monitor, track and document renewable energy purchasing. In Europe, this system is Guarantees of Origin (GO), while in North America it is Renewable Energy Certificates (REC).
In 2015 we saw for the first time a system put in place in geographies outside North America and Europe to enable corporate purchasers to document their renewable energy purchases. The system is called International REC (I-REC) and is built on “best practice” from the GO and REC systems. The development of the I-REC was initially pushed forward by a few forward-thinking companies, and then developed into an independent and transparent standard.
Companies in RE100 share the same 100% renewable ambition, but have different strategies in how they reach this.
For corporate buyers there are various ways of engaging in the renewable sector. Some decide to procure renewable power from existing power plants, while others decide to invest their own money, either in onsite generation or by taking ownership positions in specific renewable power plants.
These companies all need to find a way forward that fits their strategy and financial strengths. What they share is a need to document their actions. The systems and standards – GOs, RECs and I-REC – work along the same principles, just in different geographies. They can, and should be used, as a basis for documenting all renewable actions.
The understanding of the importance of tracking and documenting renewable power purchases has clearly sunk in. New and current statistics from the European market of GOs clearly confirm this – showing annual growth figures every year since 2002. And in 2015, consumers and corporate buyers have purchased close to 440 TWh of “green power” documented with GOs, which is equivalent to 80% of Germany’s total annual power consumption.
The world’s renewable energy outlook is bright. And with the Paris Agreement, corporate interest in engaging in the renewable sector will only strengthen. These customers want and demand the access to a green and sustainable energy. Alone and together, they are showing strength, and they smell success. The market will never be the same.