Survey says 72% of large businesses want renewables; experts differ on impact

Almost three out of four large US-based corporations in a new survey plan to pursue renewables over the next two years, but experts differ regarding the validity of the survey's conclusions and how they might affect wholesale power prices.

PwC, a global accounting and consulting firm, on Tuesday released "Corporate renewable energy procurement survey insights," which shows that 72% of the firms "are actively pursuing additional renewables purchase," and that 63% of respondents said they have become more inclined to purchase renewables over the past six months.

George Favoloro, a PwC managing director who led the survey, said in an email Wednesday that it "was designed to focus on corporations who are engaged in the renewables market (i.e., either are actively in the purchase process, or plan to do so in the future) because it's their needs and intentions that [are] determining what is being bought."

PwC solicited responses from about 200 companies and received responses from 63 of them, Favoloro said. Of that number, 62% have more than $10 billion in annual revenue, and 68% spend more than $100 million a year on energy. The largest industry group was involved in information, communication and technology, at 23%, followed by 14% in retail and 11% in manufacturing.

Eric Smith, Tulane Energy Institute associate director, said, "I think this survey falls in the category of 'confirmation bias,'" as 59% of individuals responding were involved with sustainability efforts, versus 3% in operations.

"It's a bit like asking an auditor if he thinks the company is spending enough on audits," Smith said in an email Wednesday.

But the high percentage of companies reported to be pursuing renewables was "not too surprising" to Gavin Dillingham, a research scientist at the Houston Area Research Center focusing on clean energy policy.

"The numbers may be a bit optimistic, but probably not off too much," Dillingham said in an email Wednesday.

Liz Delaney, director of the Environmental Defense Fund Climate Corps, a program that trains and embeds graduate students in organizations to help them with energy management issues, said, "Based on our interactions with hundreds of companies through EDF Climate Corps, we know that a large percentage of our hosts have hired fellows this summer to work on renewable energy projects."

And Delaney sees "a clear trend" increasing those numbers.

Almost all of PwC survey respondents that are pursuing renewables -- 96% -- said they plan to target solar power first, followed by wind at 69% and fuel cells at 31%. Totals exceed 100% because respondents could name more than one type.

"I would think you would see more of the purchases happening with the solar side," HARC's Dillingham said, as solar and wind prices are "at parity across much of the country."

"The wind is more difficult to play in," Dillingham said. "Small wind is completely not cost effective."

Matthew Cordaro, Long Island Power Authority trustee and advisory board member of the New York Affordable Reliable Electric Alliance, said in an email: "The solar percentage does not surprise me because on the basis of scale it can be approached incrementally minimizing the bottom line compared to other alternatives."

Zoe Tcholak-Antitch, spokeswoman for CDP North America, an organization that helps companies and investors to identify risks associated with climate change, said, "Most companies have roofs or pockets of property they can put to use for creating renewable energy that are currently not making or saving money for them."

"And it can be lucrative -- Apple recently announced it's creating so much renewable energy it's going to start selling it," Tcholak-Antitch said in an email Monday.

About two-thirds of respondents pursuing renewables plan to have on-site PPAs, followed by off-site PPAs at 58%, and both direct installation and virtual PPAs, at 47%.

A virtual PPA is a 10- to 20-year contract to pay a fixed price for electricity from a renewable energy project, and the physical electricity generated possibly may not be used by the customer, according to PwC. Instead, the electricity is sold into the market and may provide the customer with an energy price hedge.

Among the top reasons for the 72% of respondents to pursue renewables and for 28% of respondents of not to pursue renewables was return on investment or payback.

In the pro-renewables group, 76% cite a favorable ROI/payback as the among the most important reasons for pursuing renewables, while among the non-renewables group, 56% cite an unfavorable ROI/payback as among the most important reasons for not pursuing renewables.

EDF's Delaney said, "Companies in states with strong renewable portfolio standards, net metering policies and high energy prices are a lot more likely to implement projects than those in states without enabling policies and with low energy costs."

The trend toward renewables' effect on wholesale power prices depends on market structures and the differences between utility-scale and distributed renewables, Delaney said.

"Overall, however, I tend to believe that competition is a good thing, and that the more options there are for energy, the likelier that costs will decline, resulting in a better situation for the consumer," Delaney said.

HARC's Dillingham said the trend toward renewables will cause wholesale power costs to "go down in the long term."

"The other side of the bill, the [transmission and distribution], will likely go up as utilities try to install the appropriate technology to deal with the intermittency of more renewable resources," Dillingham said. "You see that in the Texas market -- lower power prices, but much higher T&D prices."

However, LIPA's Cordaro said: "Of course it depends on the penetration of renewables for any region and the size of corporate operations but on average I do not see this factor as having a major impact on wholesale prices at least in the short term."

--Mark Watson, Markham.watson@spglobal.com

--Edited by Richard Rubin, richard.rubin@spglobal.com

http://www.platts.com/latest-news/electric-power/houston/survey-says-72-of-large-businesses-want-renewables-21786235