Companies Are Hungry for Clean Energy, and the Table is Set

Blog

Sep 25 2024  |  5 min read

by Jon Yoder

Climate Week NYC is a pivotal event each year, bringing together one of the largest groups of innovators, energy suppliers, energy buyers, governments and NGOs to tackle the most urgent challenge of our time. Everyone arrives in New York City – where MN8 Energy is headquartered – looking for a theme, a breakthrough, a policy victory or a widespread shift in policy. In our view, the table is set for huge progress in decarbonization, because this is the year corporate energy buyers are scaling up their ambitions.

Large-scale energy buyers move the needle on curbing emissions. They have the buying power and willingness to drive development of entire solar, wind, geothermal, hydropower and battery storage facilities – and these solutions help them meet bottom-line goals as well as sustainability targets.

This Climate Week, our message to corporate and enterprise customers is that there has never been a better time to accelerate progress on decarbonization objectives.  Solar, battery and EV charging technology is advanced and mature, the policy environment is strong with significant tax incentives and grants available to make projects viable that previously didn’t pencil, and capital costs are moving lower.  Let’s all use this favorable backdrop to raise our ambitions.

 

More is more, and progress is progress

Clean energy and energy storage supply is continuing to grow faster than anyone could have expected in the last decade. The United States is on track to add 38 GW of utility-scale solar capacity by the end of 2024 – nearly doubling 2023 installations – and more than doubling new installed energy storage capacity with more than 14 GW of utility-scale energy storage projected to come online this year.

The speed and scale of growth is staggering, and clean energy is typically being contracted as fast as projects can be built. U.S. electricity demand is growing significantly for the first time in decades. That’s happening in part because of many businesses moving operations to new parts of the U.S., and particularly from growth in data centers to support cloud computing, streaming and AI adoption.

Put simply, appetite for electricity, and particularly clean energy, is outpacing supply at nearly every turn.

 

 

Corporate commitments continue to grow in terms of both scale and breadth

Corporate power purchase agreement volumes are continuing to scale up with 13% growth in 2023 over 2022 and a record 46 GW of solar and wind power contracted by large-scale users, led by Amazon, which procured 8.8 GW by itself.

One clear sign of corporate appetite for clean energy is how quickly the membership of the RE100 – companies that have committed to source 100% of their electricity needs through renewable resources – has grown to 451 members, who collectively consume 508 terawatt-hours of electricity. If those members were a single country, they would be the 10^th largest energy consumer in the world. To meet their combined goals, RE100 member companies will need to procure 301 TWh of additional clean electricity by 2030.

In addition, over 6,000 science-based targets have been set for carbon reductions to date by more than 3,700 companies– with 449 of those having been set in 2023 alone. That’s massive progress, given that science-based targets have only started being formalized and adopted over the last decade.

 

Global commitments are being driven by powerful public policy levers

Regulations from different parts of the globe are providing potent “carrots” and “sticks” for large-scale decarbonization, incentivizing organizations to understand and reduce the carbon emissions from their operations and supply chains.

U.S. federal policy is providing a range of “carrots” for decarbonization solutions – in particular financing instruments for carbon-free energy production and energy storage like transferable tax credits, and in other cases funding through the Inflation Reduction Act and the Build Back Better Act. In addition, government support is helping newer decarbonization technologies including long-duration energy storage and hydrogen production work their way along pathways to commercialization and cost-efficiency.

 

 

The “sticks” driving decarbonization come from growing requirements for climate-related disclosures:

• federal laws like the Securities & Exchange Commission’s proposed rules on climate-focused disclosures;
• state laws like California’s Senate Bills 253 and 261, Maryland’s Climate Solutions Act and others; and
• local laws like New York City’s Local Law 97 and Boston’s Building Emissions Reduction and Disclosure Act (BERDO).

These laws and others are compelling companies to, at minimum, assess their carbon footprint and look at options to make it smaller.

 

Make commitments now to make meaningful climate progress

All of these factors add up to one unescapable idea:  this Climate Week and beyond, energy customers of every scale should be thinking about how to ramp up their ambitions even further. The clean energy workforce is growing, the regulatory environment is giving organizations incentives to focus on reducing emissions, and technologies like solar, battery storage and EV charging are commonplace and cost-effective.

This Climate Week, ask yourself: how will your organization raise its ambitions?