The 2016 Corporate Clean Energy Procurement Index, released in late December 2016 by Clean Edge on behalf of the Retail Industry Leaders Association (RILA) and Information Technology Industry Council (ITI), is a ranking of all fifty US states on how easy it is for American brands to obtain or procure domestic renewable energy for their operations and practices. The index uses 15 indicators across three categories: Utility Purchasing Options, On-site/Direct Deployment Options, and Third-Party Purchasing Options.
This index is important for making predictions and drawing conclusions about the state of procurement in the US and worldwide, and for a brand to determine where best to procure energy and set up their businesses, make procurement decisions, and choose the best and safest methods and areas of operation. Here are 10 of the most important insights and findings from the index:
- Wind is now the second most popular source of energy in five states, Kansas and Iowa included. Almost half of all states now count wind, solar energy, or geothermal energy as one of their top three electrical generation sources; this number has risen significantly (from zero) in the last decade.
- Iowa is the leader with the highest and most favorable overall index score of 74.73, followed by Illinois and New Jersey. Iowa and Illinois both have strong scores in terms of deployment and policy indicators. Iowa is also the top scorer in the Utility Purchasing category, largely thanks to roughly 548 MW of wind power agreements that MidAmerican Energy has with both Google and Facebook. These agreements represent 3.32% of the total generating capacity in Iowa.
- State taxes or tax hikes across the US on renewable energy generation can act as potential barriers to its widespread adoption and procurement, keeping the ranking of certain states low. Utility rates and overall energy costs, especially for solar energy adoption, can also act as barriers holding back state initiatives and overall progress.
- Though in this report only five states—Nevada, New Mexico, North Carolina, Utah, and Virginia—received points for having green tariffs or riders, this number is likely to grow in the future. Twelve states currently have mandatory green purchasing requirements, and an additional 35 have utilities that voluntarily offer this, which are beneficial options for small companies in regulated markets. However, these options may not satisfactorily meet all companies’ needs, especially not large companies who need to push back against high electricity costs effectively.
- Texas, Illinois, and North Carolina are, to date, the only three states that have had a direct corporate purchase of an offsite renewable generation project. In Illinois, this purchase was IKEA’s 2014 acquisition of Apex Clean Energy’s 98 MW Hoopeston Wind project.
- Texas ranked highest in terms of the Third-Party Purchasing Options category, with 1.9% of its total state capacity coming from off-site, corporate-funded, renewable power purchase agreements (PPAs). All of these PPAs are for wind farms. In terms of percentage, Oklahoma, at 3.22%, is number one in third-party renewable PPAs; Texas is second with 1.91%. Fourteen other states also scored points for deployment through this indicator for the Third-Party Purchasing Options category.
- In 2015—for the first time—corporations in the US procured more wind power through PPAs than utilities did, and corporate PPAs have doubled every year since 2012. Corporate PPAs allow renewable energy developers to better compete with the retail electricity rates that corporate customers pay for, leveling the playing field somewhat. However, the differences in the types of corporate PPAs available require understanding and attention to seize their benefits for corporate clean energy procurement fully. Companies need to decide, based on their own business, industry, and financial needs, whether a physical or financial PPA is the best fit for them.
- The use of solar energy is gaining momentum with corporate customers who are increasingly installing solar panels, grids, and other forms of solar energy technology on rooftops and corporate campuses to help them reach their renewable energy targets. Half of US states received points for on-site solar procurement, and a dozen more have some onsite solar deployment but not enough for a measurable impact in this index.
- The top eight states for corporate on-site solar deployment are California, Hawaii, Nevada, New Jersey, Maryland, Connecticut, Massachusetts, and North Carolina. Though the five states on the East Coast have lower solar resources than those in the West, favorable solar and renewable energy policies have allowed them to flourish.
- There is a growing need and demand for suitable energy storage solutions that the market must meet in order to encourage the growth of renewable and clean energy procurement. Policy initiatives across the US are working to improve the accessibility and availability of energy storage deployment, including new storage mandates in California, Massachusetts, and Oregon.
These findings are essential for determining the potential that the future for renewable energy procurement, procurement outsourcing, and energy procurement services and solutions in the US and makes it easier to predict how renewable energy will fare in other parts of North America and around the world. As renewable energy continues to grow and gain importance in the US, businesses will have to decide how best to procure renewable energy, where to get it, and how best to benefit and profit from its use.
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