Opportunities to Increase Corporate Access to Clean Energy

Posted by Content Coordinator on Friday, August 12th, 2016


Executive Summary

For many companies, the ability to control energy costs and sources is a key factor when deciding where to locate or expand their operations. Advanced energy sources that use little or no fuel, such as wind, solar, hydropower, fuel cells, and energy storage create opportunities for corporations to capture savings and hedge against energy price volatility. The price of advanced energy sources has decreased dramatically during the past decade, and companies are increasingly seeking to purchase power from these resources in order to increase competitiveness and achieve corporate responsibility targets. A growing number of corporations have set formal goals for purchasing renewable energy, which they are integrating into their operations and decision making.

While companies across the country are purchasing advanced energy at an unprecedented rate, policy and regulation in many states constrains certain types of purchases. In some states, legislators, utilities, or utility regulators have enacted policies to expand corporate access to advanced energy. Such policies allow states to support corporate goals and attract or retain a strong corporate presence. At the same time, states that unlock corporate investment in advanced energy also stand to grow their advanced energy industry without expending state resources. Those states that choose to enact policies allowing corporate purchases of advanced energy will benefit most from the investment, tax revenue, jobs, and infrastructure upgrades that come with the resulting projects.

To understand the role that policies to expand corporate access to advanced energy could play across the country, this report first identifies policy options that states are using to enable corporate advanced energy purchases. The report then considers where these policies have the greatest potential to expand corporate access to advanced energy, assessing the regulatory and policy environment, potential market size for corporate purchases, and renewable energy potential of all 50 states. From this analysis, 11 states emerged among the top 5 for one or more of the policies profiled on the basis of its potential to increase corporate access to renewable energy: Alabama, California, Florida, Georgia, Indiana, Kentucky, Michigan, Minnesota, North Carolina, Ohio, and Texas. By the same metrics, an additional seven states emerged among the top 10 for one or more of these policies: Louisiana, Iowa, Missouri, South Carolina, Tennessee, Virginia, and Wisconsin.

The six policies considered in this report have been enacted in one or more states across the country, and were specifically selected as policies that allow companies to go beyond renewable energy certificate (REC) purchases. These policies can be broadly grouped into those that support purchases from offsite power plants (e.g., large-scale wind and solar facilities), and those that enable the installation of advanced energy on corporate property (e.g., rooftop solar, fuel cells, energy storage, and small-scale wind). The six policies are outlined below, along with a brief explanation of the criteria used to identify states in which each policy would particularly increase corporate access to advanced energy.

Policies to enable companies to purchase electricity from large offsite advanced energy projects. In states that allow customers to choose their electricity providers, companies already have several options to pursue offsite purchases. In vertically integrated electricity markets, states are using three policy-enabled purchasing pathways to allow companies to access offsite generation:

  • Utility renewable energy tariffs: Utility renewable energy tariff programs, sometimes referred to as “green tariffs,” allow customers to opt-in to a portfolio of competitively procured renewable energy supplied through their utility. In contrast to REC-based utility programs, which typically add a simple premium to customer tariffs, renewable energy tariffs are priced according to the price of renewable energy procured for program needs, such that participating customers could realize savings over time.
  • Utility-enabled back-to-back power purchase agreements (PPAs): Sometimes grouped together with utility renewable energy tariffs, back-to-back (or “sleeved”) PPAs allow companies in traditionally regulated markets to contract for renewable energy, with the utility agreeing to act as an intermediary between a customer and a specific renewable energy project.
  • Direct access tariffs: Direct access tariffs allow certain customers in traditionally regulated states, most frequently large energy users, to choose to purchase power from an energy supplier rather than the local distribution utility. Direct access tariffs do not necessarily have a renewable energy requirement, but this pathway does create the opportunity for renewable energy purchases.

While these policies enable different purchasing pathways, they all address the same regulatory barriers, and the criteria to identify states with high potential (and therefore the states identified) are the same for all three polices. States were only considered for these three policies if they do not currently allow electricity choice. Top states for expanding corporate access to offsite projects were distinguished by their strong commercial and industrial sector and strong resource potential.

Policies to enable companies to purchase advanced energy from distributed energy resources. Most states around the country currently have policies in place that support distributed advanced energy, but not all of them are structured to enable the participation of larger corporate users. Through discussions with corporate purchasers, three policy designs were highlighted as improving access:

  • Raising system size limits: Restrictive distributed energy system capacity limits prevent large consumers from using these projects to serve a significant portion of their demand.
  • Allowing third-party ownership: In states allowing third-party ownership, corporations can partner with third parties to make project financing and operation of distributed resources much simpler.
  • Allowing virtual or aggregated metering: Virtual or aggregated metering allow companies to apply the output from one or more distributed energy facility to multiple corporate meters (or buildings), serving companies whose needs are not met by a single onsite system at a single building.

States were considered for one of these policies to enable distributed generation if they have an established means to compensate distributed energy resources, and if they currently lacked one or more of the three policy solutions. States highlighted as candidates for expanding corporate access to these projects were identified by their strong commercial and industrial sector load at facilities capable of hosting onsite resources, and by their strong solar potential, since distributed generation is currently dominated by solar PV.

The analysis reviewed the potential to serve large corporate load with renewable energy purchasing mechanisms enabled by these various policies. The top states with policy opportunities for increased corporate renewable energy access—determined by an index that combined corporate energy consumption, in-state renewable energy resources, and the existence of supporting policies—are listed in Table 1.4 The Table also lists the total annual electricity consumption by large corporations and the equivalent renewable energy capacity that would be required to serve that demand.

Table 1 – States ranked among the top 5 states for one or more of the identified policies, based on potential to increase corporate access to advanced energy

Download full version (PDF – registration required): Opportunities to Increase Corporate Access to Clean Energy

About Advanced Energy Economy (AEE)
ADVANCED ENERGY ECONOMY (AEE) is a national association of business leaders who are making the global energy system more secure, clean, and affordable. Advanced energy encompasses a broad range of products and services that constitute the best available technologies for meeting energy needs today and tomorrow. Among these are energy efficiency, demand response, energy storage, natural gas electric generation, solar, wind, hydro, nuclear, electric vehicles, biofuels and smart grid. It’s all the innovations that make the energy we use more secure, clean, and affordable.

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