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24-7 Renewable Energy: Easier Said Than Done

I was on the train from New York to Washington, D.C. — wasting time, per usual, on Reddit.com — when I saw a headline that drew my attention —

Google will reach 100% renewable this year“”

What made it particularly relevant was that I had been in New York to attend the “Solar Goes Corporate” forum organized by the Solar Energy Industries Association. I had spent the day listening to companies such as Walmart, Target and Etsy talk about how they are meeting their clean energy goals.

Certainly, Google’s accomplishment is good news — but truly going 100 percent renewable is more complicated than the oversimplified headline on Reddit. Most corporations are matching 100 percent of its energy consumption with renewable energy generation. However, due to the intermittency of renewables, corporations are still using electrons from fossil-fuel generation for some of their operations.

To truly achieve 100 percent renewables at all times, Google, and the many other corporations and cities now announcing these types of goals, will have to couple their solar and wind purchases with adequate amounts of storage and other distributed energy resources to keep the electrons flowing even when the sun isn’t shining and wind isn’t blowing. Achieving the goal of powering operations with 100-percent renewable energy on a 24-7 basis will be a true game-changer.

Granted, Google understands this distinction and articulates it in its 2016 sustainability report, But most of the public doesn’t, which is why the Reddit headline is problematic.

A broader understanding of this complexity is essential as we transition to a clean energy economy. As corporations increasingly become a major driver of renewable energy growth, how they decide to obtain this renewable energy has broad implications for utilities and the electric power sector.

At Solar Goes Corporate, GTM Research stated that as recently as 2015, three quarters of all utility solar projects were driven by policy, predominantly state renewable portfolio standards (RPS). Of projects in development today, only 37 percent originate from RPS mandates. The remaining 63 percent are being propelled by the favorable economics of wind and solar, which have attracted cost-conscious companies. As displayed in the graphic to the right GTM Research sizes the, market for corporate offsite renewables through 2024 at 139 gigawatts.

Corporate demand for renewable energy is expected to increase significantly over the next decade.

The SaleMart story

So how difficult is it for a company to obtain 100-percent renewable energy 24-7? Let’s consider the hypothetical case of SaleMart, a company with an ambitious board determined to be the first corporation to meet such a goal. SaleMart, a local retailer with modest energy demands, is located in a state with a 25-percent renewable portfolio standard (RPS). Thus, without taking any direct action, SaleMart already receives power from its investor-owned utility that has some level of renewable generation.

 

The next step that SaleMart would likely consider is on-site renewable development.However, in its 2017 Global Responsibility Report, Walmart acknowledges its renewable energy aspirations cannot be achieved with onsite generation alone. “Walmart has over 460 renewable energy systems (364 onsite solar installations throughout the U.S.) installed at its stores, clubs and distribution centers worldwide. Combined, these onsite systems make up 11 percent of the retailer’s total renewable energy portfolio and provide a variable range of electricity needs for Walmart’s operations,” said Kathryn Wiseman, Director of Global Public Policy at Walmart.

Space constraints, locational mismatches, and economic disadvantages all hinder the ultimate potential of onsite solar.

Let’s say that SaleMart’s onsite solar array provides 30 percent of the company’s needs. The combination of on-site and the utility’s renewable generation adds up to 55 percent renewable. Consequently, SaleMart needs to find the remaining 45 percent of renewable power from creative grid solutions.

Purchasing and retiring renewable energy credits (RECs) may help other corporations achieve their purchase goals, but it really isn’t an option for SaleMart. There is limited connection between the renewable electricity produced to earn the RECs and the electricity used by the facilities, which are often states apart. In addition, REC purchases are an additional cost above and beyond SaleMart’s electricity bill, thus offering no economic benefit.

In order to meet its 100-percent, 24-7 renewable energy goal, SaleMart needs its utility to procure renewable energy on its behalf and deliver the power to its facilities whenever there is a demand.

Lucky for SaleMart, some utilities are getting creative.

Renewable energy, when and where you want it

Dominion Virginia Power recently filed a proposed new tariff with the Virginia State Corporation Commission to provide commercial customers with renewable energy 24-7. The proposed Continuous Renewable Generation tariff (CRG) would ensure that Dominion would provide a “supply of renewable energy . . . on a continuous hourly basis through a portfolio of resources assembled by the Company on behalf of such customers.”

“Continuous hourly basis” is the key phrase here. It means that Dominion is offering customers renewable electricity even when the sun isn’t shining or the wind blowing. They are offering “renewable resources which have the ability, individually or collectively, to service the customer’s hourly energy load profile 24 hours a day, seven days a week, 365 days a year, as well as the capacity requirements of the customer.” Thus customers enrolled in the CRG tariff would be completely served by electricity from renewable sources at all times.

The portfolio of resources will be identified in a contract, and based on the customer’s actual hourly load. And the electricity supply cost in the CRG tariff will be based on the resources identified. Each customer may very likely have a different contract and different electricity supply cost.

It remains to be seen what the cost will be, as the market and sources of generation will be a key determining factor once Dominion goes to market with their customer. However, a significant premium should surprise no one. Truly transitioning to 100-percent renewable energy 24-7 takes a lot of effort.

Dominion’s CRG tariff likely has a long path ahead of it before any decision is made by the state commission. A similar proposed tariff by Appalachian Power Company has been in debate for over a year. But the proposal is attracting attention from the correct crowd. Wal-Mart, who purchases more than 350,000 megawatt-hours annually from Dominion, has expressed interest in the tariff.

Even if it is approved, the impact of the CRG tariff remains uncertain. What will the electricity supply cost? What customers will sign up? Will other utilities follow suit? If the answers to these questions all support greater growth of 24-7 renewable tariffs, perhaps in a few years Google can make redditors happy with the headline “Google will power all facilities 24-7 with 100-percent renewable this year.”

 

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