CORPORATE RENEWABLE

ENERGY PROCUREMENT: A Snapshot of Key Trends, Strategies and Practices in 2016

October 2016

Authors

Corporate Eco Forum

DevonEdwardsAssociateDirector,CorporateEcoForumDanMitlerResearchFellow,CorporateEcoForumAmyO’MearaDirector,CorporateEcoForumWorld Wildlife Fund

BrynBakerManager,RenewableEnergyJoshuaKaplanProgramOfficer,ClimateandRenewableEnergySusanneFratzscherSeniorConsultantonRenewableEnergy(formerrole)MartySpitzerSeniorDirector,ClimateandRenewableEnergy

2

Table of Contents Executive Summary ........................................................................................................... 4

Overview .............................................................................................................................. 5Background.....................................................................................................................................................5Survey Participation........................................................................................................................................5Response by Sector.......................................................................................................................................5Survey Methodology and Caveats...............................................................................................................6List of Acronyms.............................................................................................................................................6

Procurement Trends .......................................................................................................... 7Averages Across Respondent Group..........................................................................................................7Differences by Industry Sector...................................................................................................................15Differences by RE Share of Total Energy Mix...........................................................................................19

Procurement and Implementation Strategies ............................................................... 22Averages Across Respondent Group........................................................................................................22

Policy Priorities ................................................................................................................. 26

ANNEX A: Top Research and Industry Insights ............................................................. 32

ANNEX B: Notable Examples in Corporate RE Procurement ...................................... 39

ANNEX C: Notable Tools and Resources ....................................................................... 40

ANNEX D: Key RE Procurement Initiatives .................................................................... 41

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ABOUTTHECORPORATEECOFORUM:TheCorporateEcoForum(CEF)isaninvitation-onlymembershiporganizationcomprisedofFortuneandGlobal500companiesfrom18industrieswithcombinedrevenuesofover$3trillion.CEF’smissionistohelpacceleratesustainablebusinessinnovationbycreatinganeutral“safespace”forinfluentialbusinessleaderstostrategizeandexchangebest-practiceinsights.Participantsareexclusivelytop-levelexecutives,includingchiefsustainabilityofficers,chieffinancialofficers,andchieftechnologyofficers,andotherVP-levelexecutiveswithresponsibilitiesaffectingthesupplychain.CEFpublishesexperience-basedresearchandindustryreports,andprovidesanumberofnetworkingopportunities—includinganannualmeetingformembersonly.

ABOUTWORLDWILDLIFEFUND:WWFisanorganizationdedicatedtostoppingthedegradationoftheplanet’snaturalenvironmentandbuildingafutureinwhichhumansliveinharmonywithnature.Inourworkwithbusiness,WWFadvancesthismissionthroughinnovativepartnershipsthatcombineuniquecollaborations,high-levelpolicyengagement,andinitiativestomakebusinessandindustrymoresustainable.WWFco-facilitatestheCorporateRenewableEnergyBuyers’Principles,agroupoflargecompaniesseekinggreateraccesstorenewableenergy.Toscalerenewableenergyuse,webringtogethercorporateenergybuyersandutilitiestoadvancesolutionsthataimtodeploymorerenewableenergyinawaythatmeetsthechangingneedsofbothutilitiesandtheircustomers.

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Executive Summary

Thisbriefingoncorporaterenewableenergy(RE)procurementtrendsandstrategies,implementationpractices,andpolicyandstateengagementprioritiesisbasedonanin-depthsurveyof37CorporateEcoForum(CEF)membersandRenewableEnergyBuyers’Principlessignatories,representing9sectors,withcombinedrevenuesexceeding$1trillion.AllsurveyrespondentsareactivecorporateplayersinthecurrentREmarket.However,theseresultsonlyofferasnapshotofcorporatepracticesandprioritiesgivenever-changingREmarketconditions.Highlights:

• MajorityofRenewableEnergy(RE)ProcuredThroughRenewableEnergyCredits(RECs)and

PhysicalPowerPurchaseAgreements(PPAs).Companiessurveyedareleveragingarangeofinstruments—indirectanddirectformsofprocurement—toprocureRE,butunbundledrenewableenergycredits(RECs)andphysicalpowerpurchaseagreements(PPAs)accountforthemajorityoftheiroverallprocurement.

• GreenhouseGas(GHG)TargetsaKeyDriver.Greenhousegas(GHG)emissionsreductiontargetsareakeydriverofREprocurementatcompaniesthatdonothaveanREtarget.

• RETargetsIncreasinglyAmbitious.MorethanhalfofcompaniessurveyedhavesetanREtarget.OfthosewithanREtarget,approximatelyhalfaretargeting100percentRE.

• RETargetsAimtoMitigateClimateImpactandReduceCosts.ThetopthreemotivationsdrivingcompaniestosetanREtargetinclude:(1)mitigateclimateimpact,(2)reduceenergyprocurementcosts,and(3)demonstratecorporateleadership.

• Time-BoundRETargetsOntheRise.Morecompaniesaresettingtime-boundREsharetargetsthaneverbefore,meaningtheyhavepledgedtomeettheirREtargetbyaspecificyear.Forty-threepercentofcompaniessurveyedhaveatime-boundREtarget.Ofthesetargets,morethan80percentofareovertheshort-term(between2016-2025).

• WindisTopRESource.CompaniessurveyedareprocuringmorewindenergythananyotherREsource,accountingformorethanhalfofoverallprocurement.Solarphotovoltaic(PV)isthesecondmostwidelyusedREsource,accountingfornearlyaquarterofoverallprocurement.

• WindEnergyDeliversShortestPaybackPeriod.Companiessurveyedarerecoveringtheirinvestmentsinwindenergyinfewerthansixyears.Inaddition,thepaybackperiodforSolarphotovoltaic(PV)hassharplydeclinedandisnowoneofthemostfinanciallyattractiveREsources.

• IncreasingAccesstoOffsitePPAsaTopPolicyPriority.RespondentsconsistentlyrankedaccesstooffsitePPAsasthetoppolicypriorityoverall,followedbyexpandingutilitygreentariffs.

• MajorityofREProcurementisOffsite.Almostthree-quartersofrespondentsareprocuringREoffsiteandnearlyallrespondentsareusingitforinternalconsumptionpurposesvs.sellingexcessREbacktothegrid.

• TopExecsDrivingREProcurement.RespondentsreportthatC-suiteexecutives,GroupPresidents,andVicePresidentsaresettingthestrategicdirectionwhenitcomestotargetsetting,policies,andprojects.

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Overview Background

• In2015,theCorporateEcoForum(CEF)conductedamembers-onlysurveyofREprocurementandsharedtheanonymizedresultsacrossitsmembership.Attherequestofitsmembers,CEFisupdatingthe2015findingsincollaborationwiththeWorldWildlifeFund(WWF)toexpandonlastyear’sresultswiththeadditionofdatafromsignatoriesoftheBuyers’Principlesinitiative.

• The2016surveyusedthesamequestionsfrom2015onrenewableenergy(RE)procurementstrategyandapproaches,andexpandeditsscopetoincludeenergypolicy-relatedquestionsgiventheimportantrolefederal-andstate-levelpolicyplaysinacceleratingcorporateREprocurement.

Survey Participation

• FindingsinthisbriefingarebasedonasurveyofCorporateEcoForum(CEF)membercompaniesandparticipantsintheWorldWildlifeFund-andWorldResourcesInstitute-ledCorporateRenewableEnergyBuyers’PrinciplesInitiative.Thesurveywasconductedoverathree-monthperiod(April–June2016).

• Thirty-sevencompaniesrepresentingninesectorsparticipatedinthesurvey,withcombinedrevenuesexceeding$1trillion.

Response by Sector

• SectorsanalyzedinthisbriefingincludeConsumerProducts,Healthcare,IT,Manufacturing(MFG),Retail,andOtherServices.Thisbriefingbuildsonthesectoralanalysisinthe2015briefingbyaddingHealthcareandRetail.

• Sectorswithfewerthanthreerespondentsweregroupedinto“OtherServices”—amixtureofcompaniesinfinancialservices,logistics,construction,andentertainment.

ConsumerProducts16%

HealthCare14%

IT27%

Manufacturing16%

Retail8%

OtherServices19%

ResponsebySector

(NumberofCompanies=37)

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Survey Methodology and Caveats

• Notallrespondentsansweredallquestions,andinasmallhandfulofcases,therewerequestionsaboutdataqualityorconsistency.Wherepossible,reviewersfromtheCEF/WWFteamattemptedtoverifycertainresponsesdirectlywithrespondentsorbycheckingpubliclyavailableinformationorrecords.

• Sincerespondentstothissurveyself-selected,representarelativelysmallsamplesize,andare

fromagroupthatmaybemorelikelytobesourcingrenewableenergythanothercompanies,theresultsfromthissurveyshouldnotbeconsideredrepresentativeofthebroadercorporatepopulation.

• Insomeinstancesthroughoutthisbriefing,comparisonsaredrawnbetweenthefindingsfromthisyearandfromthe2015survey.Partlyasaresultofthepointinthepreviousbullet,comparisonsarenotnecessarilystatisticallysignificant,butratherareintendedtorepresentinterestinganecdotesthatmayhighlightbroadertrends(butfurtherinvestigationwouldneedtoconfirm).

• Inadditiontothesurveyitself,theCEFteamconductedanextensivereviewofpubliclyavailableliteraturerelatedtorenewableenergyintheprivatesector,particularlyindustryreports,analyses,surveys,andpolicyreviewspublishedwithinthepasttwoyears.Thesurveyresultswerecomparedwithfindingsfromtheliteraturetoidentifysimilarities,discrepancies,andpotentiallynewinsights.

• Aftercompletingthisanalysisandliteraturereview,thebriefingwassharedwithselectinternalandexternalreviewers,includingsurveyparticipants,forfeedback.Wewouldliketothanktheseanonymousreviewersfortheirtimeandvaluablecomments.

List of Acronyms BRCBusinessRenewablesCenter

BSRBusinessforSocialResponsibility

CDPCarbonDisclosureProject

CEFCorporateEcoForum

CHPCombinedHeatandPower

GHGGreenhouseGas

IT InformationTechnology

MFG Manufacturing

PPA PowerPurchaseAgreement

PV Photovoltaic

RE RenewableEnergy

REC RenewableEnergyCredit

RMIRockyMountainInstitute

WRIWorldResourcesInstitute

WWF WorldWildlifeFund

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Procurement Trends Averages Across Respondent Group

1.1 Number of Companies with Time-Bound RE Targets SurveyQuestion:Whatisyourenterprise-leveltargetforrenewableenergyshareoftotalenergymix,andbywhatyearareyouplanningtomeetit?

Keyfindings:1

• Therespondentsweresplit,withmorethanhalfhavinganREtarget,andtheotherhavingnoREtargetatall.

• AmongrespondentswithREtargets,13haveshort-term(definedasthrough2025)targets,and3havelong-term(definedastheperiod2026-2050)targets.

• Theaverageshort-termREsharetargetamongrespondentsis49percent.

• Morethanaquarterofrespondents(27percentoverall)haveatargetof100percent(overanytimehorizon).

• Slightlylessthanaquarter(24percentoverall)haveatargetbetween0-99percent(overanytimehorizon).

1Methodologicalnote:duetovarianceamongresponses,onlytargetswithanaccompanyingtargetdatewereincludedinthefirstchart.Targetswithoutdates(e.g.,100%targetwithnotargetyear)wereincludedinthesecondchart.Responseswereonlyconsideredwhengivenasarelativevalue(e.g.,apercentage),sinceabsolutevalues(e.g.,500MW)providenoframeofreference.ResponsesthatwerebasedonRECpurchaseswerenotincluded.Asmallhandfulofresponsesincludedtwotargetsandyears—ashort-termandalong-termtarget;inthesecases,thesewerecountedastwodistincttargets,whichledtoacoupleoffirmsbeingdoublecounted,althoughnotargetsweredoublecounted.

13

3

0

2

4

6

8

10

12

14

NUMBEROFSHORT-TERMTARGETS(2016-2025) NUMBEROFLONG-TERMTARGETS(2026-2050)

SumofResponses

CompanieswithTime-BoundREtargets

49%

24%

27%

CompanyRETargets

(acrossall[meframes)

Notarget <100% 100%

8

1.2 Type of Target Driving RE Procurement in lieu of RE Target TheCEF/WWFsurveyaskedhowmanycompanieshaveanREtargetinthepreviousquestion:51percentofcompaniessurveyedhaveanREtarget.SinceREtargetsarelikelydrivingREprocurementdecisionsatmorethanhalfofcompaniessurveyedinsomecapacity,CEF/WWFwantedtodeterminewhatroleGHGemissionsand/orcarbonneutralitytargetshaveindrivingREprocurementatcompaniesthatdonothaveanREtarget.ThechartbelowisbasedonresponsesfromcompaniesthatdonothaveanREtarget.SurveyQuestion:TowhatextentareyoureffortstoprocureREdrivenbythefollowing:

Keyfindings:

• GHGemissionsreductiontargetsareplayingakeyroleindrivingREprocurementdecisionsatcompaniesthatdonothaveanREtarget.

• TargetsrelatedtocarbonneutralityareplayingamuchsmallerroleindrivingREprocurementatcompaniesthatdonothaveanREtarget.

• Thedefinitionofcarbonneutralityisstillupfordebate.Itcouldbedefinedaseitherachievingnet-zeroemissions(coversallGHGemissionsincludingcarbondioxide),ormoreliterally,asreducingcarbonfootprint(onlycoverscarbondioxideemissions)tozero.Whereas,GHGemissionsreductiontargetsgenerallyaimtoreduceapercentage(lessthan100percent)oftotalGHGemissions.

10

4

2

1

7

10

0 2 4 6 8 10 12

NOTDRIVEN

SOMEWHATDRIVEN

DIRECTLYDRIVEN

SumofResponses

TypeofTargetDrivingREProcurement

inlieuofRETarget

TargetsrelatedtoreducingGHGemissions Targetsrelatedtobecomingcarbonneutral

9

1.3 Drivers of Corporate RE Targets SurveyQuestion:Howimportantiseachofthefollowingmotivationsinsettingyourenterprise-leveltargetsforrenewableenergy?

Keyfindings:

• Onaverage,respondentsreportthatmitigatingtheircorporateimpactonclimatechangewasthemostimportantmotivationbehindsettingenterprise-leveltargetsforrenewableenergy.

o Althoughthe2016surveydidnotexplorethisdriverinmoredepth,onecanspeculatethatcompaniesmightwanttomitigatetheirclimateimpactforanynumberofreasons,rangingfromreducingregulatory,reputational,operational,orothercompetitiveriskstotakingadvantageofemergingopportunities,suchasnew,lower-costenergysources.

• Reducingthecostsforenergyprocurementisthesecond-mostimportantdriver,tiedwithdemonstratingcorporateleadership.ThisreflectsthetrendofmorecorporatesmovingtowarddirectformsofrenewableenergyprocurementandawayfromstrictlyunbundledREC-onlypurchasesatacostpremium,whichisidentifiedinouranalysisofREProcurementInstruments.

• Thesedriversremainedstableyear-over-year,withthesamerankorderingreportedinthe2015survey.

4.08

3.78 3.78

3.14 3.11 3.05

2.35

0.0

1.0

2.0

3.0

4.0

5.0

MITIGATECORPORATEIMPACTON

CLIMATECHANGE

REDUCECOSTSOFENERGY

PROCUREMENT

DEMONSTRATECORPORATELEADERSHIP,

INNOVATIONANDCOMPETITIVEFIRST-MOVERADVANTAGE

LOCK-INLONG-TERMENERGYPRICESTABILITY

TOHEDGEAGAINSTENERGY

MARKETVOLATILITY

MEETDEMANDFROMINVESTORSANDCUSTOMERSTOINCREASE

RENEWABLESINTHEENERGYMIX

DIVERSIFYENERGYSUPPLY

BUILDRESILIENTENERGYSYSTEMS

THATCANSUSTAIN

OPERATIONSDURING

BLACKOUTS

DriversofCorporateRETargets

(5=highestimportance)

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1.4 RE Procurement Instruments SurveyQuestion:In2016,ofyourtotalprocurementofrenewableenergy,roughlywhatpercentageislikelytobefrom:

Keyfindings:

• Unbundledrenewableenergycredits(RECs)andphysicalpowerpurchaseagreements(PPAs)arethetopinstrumentsusedacrosstherespondentgroup,followedbyself-ownedgeneration.

• AlthoughunbundledRECsaccountformorethanaquarterofoverallprocurement,surveyedcompaniesappeartobemovingtowardmoredirectformsofprocurement—suchasphysicalandvirtualpowerpurchaseagreements(PPAs),self-ownedgenerationandutilitygreentariffs—comparedtothe2015survey.

• Utilitygreentariffsinregulatedutilitystatesareanemergingprocurementapproachcomparedtothe2015survey(2%vs.0.4%),butstillverylowbecausenotmanycompanieshavesigneddealswithregulatedutilities.

• TheshareofunbundledRECpurchasesremainedroughlyequivalentfrom2015to2016(25%vs.27%).

27%

16%

24%

12%

10%

8%

REProcurementInstruments

Unbundled/standaloneRECspurchasedtocoverormatchnon-renewableenergy

Self-ownedrenewableenergygenerapon(onsiteoroffsite)

PhysicalPPA(3rd-party-owned,electronsbundledwithRECs)

VirtualPPA(3rd-party-owned,contractfordifferenceswithRECs)

Regulateduplitygreentariffs

Compeppveenergysuppliergreenpricingproducts(electronsbundledwithRECs)

Communityorsharedrenewables(electronsbundledwithRECs)

Otherwaysofpurchasingorproducingrenewableenergy

11

1.5 Share of RE by Source SurveyQuestion:In2016,ofyourtotalprocurementofrenewableenergy,roughlywhatpercentageislikelytobefrom:

Keyfindings:

• Windenergyclearlyleadstheway,accountingformorethanhalfofREprocurementacrosstherespondentgroup.

• Solarphotovoltaic(PV)isthesecondmostwidelyusedREsource.

• "Other"REsources—suchasrenewablypoweredCHP(CombinedHeatandPower)andfuelcells—arealsobeingusedacrosstherespondentgroup.

54%

21%

5%

5%

4%

6%

6%

ShareofREbySource

Wind

SolarPV

Fiber-basedbiomass

Biofuels

Biogas

Hydro

Geothermal

ConcentratedSolar

Other

12

1.6 RE Used for Internal Consumption vs. Excess RE Sold to the Grid SurveyQuestion:In2016,ofyourtotalelectricityproducedbyrenewables,roughlywhatpercentageislikelytobe:

Keyfindings:

• AlmostallrespondentsindicatethatREisusedexclusivelyforinternalconsumptionpurposes.

• Asmallpercentageofcompaniesaresellingexcesselectricitygeneratedonsitebacktothegrid,perhapstotakeadvantageofpolicyincentivessuchasnetmeteringandfeed-intariffs.

97%

REUsedforInternalConsump[on

vs.ExcessRESoldtotheGrid

Usedforinternalconsumpponbythecompany(%)

ExcessRESoldtotheGrid(%)

13

1.7 RE Procured Offsite vs. Onsite SurveyQuestion:In2016,ofyourtotalprocurementofrenewableenergy,roughlywhatpercentageislikelytobe:

Keyfindings:

• MostrespondentsareprocuringREoffsite.ThiscorrelateswiththeexpandeduseofPPAs,windbeingtheprimarysourceofRE,andtheneedforgreaterscaletodeliveragainstmoreaggressivetargetsthancanbemetwithonsiteREsources.

• AquarterofcompaniesareprocuringREonsitebehind-the-meter.

• AsmallsliceofcompaniesreportREprojectsthatareonsitebutontheutilitysideofthemeter(“beforethemeter”).

73%

25%

REProcuredOffsitevs.Onsite

Producedoffsite(%)

Producedonsitebehind-the-meter(%)

Producedonsitebefore-the-meter(%)

14

1.8 RE Procured for U.S. vs. International Operations SurveyQuestion:In2016,ofyourtotalprocurementofrenewableenergy,roughlywhatpercentageislikelytobefor:

Keyfindings:

• Morethantwo-thirdsofrespondentsareprocuringREforU.S.operations.

• Globaltargetsmaybethedrivingforcebehindinternationalprocurementactivities,giventhat81%ofrespondentsaremultinationalcompanies.

67%

33%

REProcuredforU.S.vs.

Interna[onalOpera[ons

USoperapons(%)

Internaponaloperapons(%)

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Differences by Industry Sector

2.1 Differences in RE Use by Sector SurveyQuestion:In2016,ofyourtotalprocurementofrenewableenergy,roughlywhatpercentageislikelytobefor:

Keyfindings:

• WelloverhalfofREprocuredisusedforelectricityinallsectorsexamined.

• HeataccountsforasignificantportionofREuseinConsumerProducts,morethanparticipatingmanufacturingcompanies.Healthcarecompaniesalsoreportedmorerenewableenergyforheatthanmanufacturingcompanies.

• REfuelsforheavyvehiclesareprimarilyusedinOtherServices,giventheirapplicationinlogisticsandtransportation.REfuelsforlightvehiclesaccountforasmallpercentage(1percent)ofREuseintheHealthcaresector.

84%

60%

85%

99.9%

88%

99.7%

72%

11%

40%

14%

0.1%

12%

0.3%

4%

5%

24%

1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

AVERAGEACROSSRESPONDENT

GROUP

CONSUMERPRODUCTS

HEALTHCARE IT MANUFACTURING RETAIL OTHERSERVICES

DifferencesinREUsebySector

Electricity Heat Heavyvehicleliquidfuels Lightvehicleliquidfuels

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2.2 RE Procurement Instruments by Sector

Keyfindings:

• PhysicalPPAsaretheprimaryinstrumentsusedbyITandRetail.

• UnbundledRECsareheavilyusedtopurchaseREintheRetailsector,buttheiruseisevidentinallexaminedsectors,particularlyIT,Manufacturing(MFG),andOtherServices.

• Onsiteandoffsiteself-ownedrenewablesaremostprominentinHealthCare,ConsumerProducts,andManufacturing.

• VirtualPPAsareplayinganimportantroleinConsumerProductsandManufacturing.

• UtilityGreenTariffsarebeingusedbyConsumerProductsthemost,followedbyIT,RetailandOtherServicescompanieslocatedinregulatedstates.However,thisprocurementtyperepresentsalowoverallsharesincegreentariffofferingsarestilllimited.Greentariffsareexpectedtogrowoverthenext12months,assomeutilitiesareexpressingmoreinterestinmeetingcustomerdemandforrenewableenergy.2

• CompetitiveenergysuppliergreenpricingproductsaremostprominentintheHealthCaresector,representingmorethanathirdoftheirtotalREpurchases.

• CommunityorsharedrenewablesaretheleastpopularinstrumentusedtopurchaseREacrossallexaminedsectors.Companiesaresomewhatlimitedintheiruseofthisprocurementinstrument,asonly14statesandtheDistrictofColumbiahavesharedrenewablespoliciesinplaceandprocurementvolumeshavebeenrestrictedinmostprograms.3

2WorldResourcesInstitute,“EMERGINGGREENTARIFFSINU.S.REGULATEDELECTRICITYMARKETS,”http://buyersprinciples.org/resource/emerging-green-tariffs-in-u-s-regulated-electricity-markets/3VoteSolar,“USASharedEnergyMap,”http://sharedrenewables.org/community-energy-projects/,(2016).

ConsumerProducts Healthcare IT MFG Retail Other

Services

Unbundled/standaloneRECspurchasedtocoverormatchnon-renewableenergy 16% 8% 31.3% 31% 51% 27%

Self-ownedrenewableenergygenerapon(onsiteoroffsite) 25% 36% 2% 25% 6% 14%

PhysicalPPA(3rd-party-owned,electronsbundledwithRECs) 19% 9% 46.2% 19% 41% 6%

VirtualPPA(3rd-party-owned,contractfordifferenceswithRECs) 25% 13% 8.3% 23% 0% 0.4%

Regulateduplitygreentariffs 6% 0% 2.3% 0% 1.8% 1.4%

Compeppveenergysuppliergreenpricingproducts(electronsbundledwithRECs) 2% 34% 8% 0% 0% 14%

Communityorsharedrenewables(electronsbundledwithRECs) 0% 0% 2.2% 0% 0% 0.4%

Otherwaysofpurchasingorproducingrenewableenergy 7% 0% 0% 2% 0% 37%

0%

20%

40%

60%

80%

100%

%ofREProcurement

REProcurementInstrumentsbySector

17

2.3 RE Sources by Sector

Keyfindings:

• WindaccountsformorethanathirdoftotalREprocurementacrossallexaminedsectors,makingitthemostprevalentREsourceoverall,particularlyinITandManufacturing.Thisisconsistentwiththe2015surveyfindings;althoughwindrepresentedaslightlyloweroverallshareasaresultofincreasedSolarPVuse,comparedtolastyear.

• SolarPVisthesecondmostprevalentREsourceacrossexaminedsectors,accountingforthegreatestshareoftotalprocurementinRetail.

• TheConsumerProductssector—thetopconsumerofsolarinthe2015survey—nowconsumestheleastamountofsolar.Inaddition,theITsector—thesmallestconsumerofsolarinthe2015survey—increaseditssolarconsumptionfrom1percentin2015to20percentin2016.Fluctuationsmaybetheresultofourexpandedandmorediverserespondentgroup,aswellasnewambitioustargetsintheITsectorandtheincreasingcost-competitivenessofsolar.

• ConsumerProductshasthemostdiversifiedREportfolio,andistheonlysectorusingfiber-basedbiomass.

• "Other"REsources—suchasrenewablypoweredCHPandfuelcells—arebeingusedinalmostallexaminedsectors,excludingIT.

• BiofuelsrepresentnearlyaquarterofOtherServicestotalREmix,giventheirroleinlogisticsandtransportation.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

OTHERSERVICES

RETAIL

MFG

IT

HEALTHCARE

CONSUMERPRODUCTS

OtherServices Retail MFG IT Healthcare Consumer

ProductsWind 39% 42% 64% 68% 47% 48%

SolarPV 19.3% 50% 19% 20% 32% 1%

Fiber-basedbiomass 0% 0% 0% 0% 0% 33%

Biofuels 24% 0% 0% 0% 0% 0.1%

Biogas 0% 2% 12% 0% 4% 7%

Hydro 10.2% 0% 3% 12% 0% 4%

Geothermal 0% 0% 0% 0% 1% 0.8%

ConcentratedSolar 0% 0% 0% 0% 0% 0.1%

Other 7% 7% 2% 0% 16% 8%

RESourcesbySector

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2.4 RE Procured in Regulated vs. Deregulated Markets SurveyQuestion:In2016,ofyourtotalprocurementofelectricityforUSoperations,roughlywhatpercentageislikelytobein:

Keyfindings:

• TheConsumerProductssectorisprocuringthemostrenewableenergyinregulatedmarkets,followedbyRetail.

• OtherServicesisprocuringthemostrenewableenergyinderegulatedmarkets,followedbyHealthCare.

• ManufacturingandOtherServicessignificantlyincreasedREprocurementinderegulatedmarkets,comparedtothe2015survey.

47%

69%

32%

48%51%

57%

26%

53%

31%

68%

52%49%

43%

74%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

AVERAGEACROSSRESPONDENT

GROUP

CONSUMERPRODUCTS

HEALTHCARE IT MANUFACTURING RETAIL OTHERSERVICES

REProcuredinRegulatedvs.

DeregulatedMarkets

Regulatedmarkets Deregulatedmarkets

19

Differences by RE Share of Total Energy Mix Inthissection,weanalyzedifferencesinprocurementstrategiesatcompaniessurveyedaccordingtotheirREshare,whichisthepercentageshareofacompany’stotalenergyconsumptionderivedfromrenewableenergy.ThisREmetricplacedcompaniesintotwoseparategroups:“topquartile”and“others.”Companiesinthetopquartilegroup—respondentsthatplacedamongthetop25percentintermsofREshare—areprocuringatleast43percentoftheirenergyfromrenewables,whilecompaniesinthe“others”group—thoseamongtheremaining75percentofrespondents—areprocuringlessthan43percentoftheirenergyfromrenewables.ThepurposeofthissectionistoidentifywhetherprocurementstrategiesattopquartilecompaniesdifferfromthosedeployedbycompanieswithlowerREshares.

3.1 RE Procurement Instruments for Top Quartile vs. Others

KeyFindings:

• UnbundledRECsaccountfornearlyhalfoftopquartilecompanies’totalREprocurement,followedbyPhysicalPPAs.ThisisroughlyequivalenttotheshareofunbundledRECsreportedinthe2015survey.

• CompanieswithlowerREsharesareprocuringtwo-thirdsoftheirtotalREusingamixofphysicalPPAs,self-ownedgeneration,andunbundledRECs.Thisisalsoconsistentwiththe2015survey.

• ThegreatestdisparitybetweenthetwogroupsliesintheiruseofRECsandself-ownedgeneration—withtopquartilecompaniesusingself-ownedgenerationtheleast.

• Sharedrenewables,greentariffs,andself-ownedgenerationareusedverylittlebythetopquartile.

TopQuarple Others

Unbundled/standaloneRECspurchasedtocoverormatchnon-renewableenergy) 44% 20%

Self-ownedrenewableenergygenerapon(onsiteoroffsite) 2% 22%

PhysicalPPA(3rd-party-owned,electronsbundledwithRECs) 21% 26%

VirtualPPA(3rd-party-owned,contractfordifferenceswithRECs) 15% 11%

Regulateduplitygreentariffs 2% 2%

Compeppveenergysuppliergreenpricingproducts(electronsbundledwithRECs) 14% 8%

Communityorsharedrenewables(electronsbundledwithRECs) 2% 0.1%

Otherwaysofpurchasingorproducingrenewableenergy 0% 11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

%ofREProcurement

REProcurementInstrumentsforTopQuar[levs.Others

20

3.2 Share of RE by Source for Top Quartile vs. Others

KeyFindings:

• WindandsolarPVarethedominantREsourcesacrossbothgroups.

• However,companiesinthetopquartileprocuremuchmorewindthanothers.TopquartilecompaniesaremorelikelytosetREtargetsandasaresult,mayneedgreateramountsofcost-effectiveRE,whichisoftenbestmetwithwindinthecurrentmarket.

• Companiesinthetopquartiledependonacombinationofwind,solarPV,hydro,andbiogastomeettheirgoals,whilecompanieswithlowerREsharesrelyonagreaterdiversityofREsources.

Topquarple OthersWind 74% 46%

SolarPV 16% 22%

Fiber-basedbiomass 0% 7%

Biofuels 0% 6%

Biogas 3% 4%

Hydro 8% 6%

Geothermal 0% 0.3%

ConcentratedSolar 0% 0.02%

Other 0% 8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

%ofREProcurement

ShareofREbySourcefor

TopQuar[levs.Others

21

3.3 RE Procurement in Regulated vs. Deregulated Markets

KeyFindings:

• Companiesinthetopquartileareprocuringamajorityoftheirrenewableenergyinderegulatedmarkets—retailchoiceandaccesstowholesalemarketsenablesthesecompaniestoprocurelargeramountsofrenewableenergy.

• CompanieswithlowerREsharesareevenlysplitbetweenbothmarkettypes.

40%

60%

50% 50%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

REGULATEDMARKETS DEREGULATEDMARKETS

REProcuredinRegulatedvs.Deregulated

Markets

Topquarple Others

22

Procurement and Implementation Strategies Averages Across Respondent Group

4.1 Corporate Decision Maker for RE Procurement SurveyQuestion:Currently,whoinyourcompanyisultimatelyresponsiblefordecisionsrelatedtothefollowing?

Keyfindings:

• Acrossallcompaniesandsectorssurveyed,respondentsindicatedthatitislargelyvice-presidents/regionalheadsandgrouppresidents/C-suitemembersthataresettingthestrategicdirectionwhenitcomestorenewableenergytargets,policies,andprojects.

• Thisisconsistentwiththe2015survey,althoughthisyearrespondentsindicatedthatCEOsaremoreinvolved.

• RespondentsreportthattopleadershipismostinvolvedinsettingtargetsforGHGemissions,andleastinvolvedindefiningthemixofrenewablesourcesforprocurement.

3% 3% 3% 3% 3%

19%

31%

17%

11%

11%

14%

53%

53%

23%

26%

46%

53%

25%

14%

46%

43%

37%

28%

11%

17%

6%3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

SETTINGTARGETSFORRENEWABLE

ENERGYPROCUREMENT

SETTINGTARGETSFORGHGEMISSIONSREDUCTIONS

SETTINGTARGETSFORENERGYEFFICIENCY

IMPROVEMENTS

DEFININGTHEMIXOFRENEWABLESOURCESFORREPROCUREMENT

DEFININGPAYBACKANDOTHERCRITERIAFORAPPROVINGREPROCUREMENT

PROJECTS

APPROVINGANYCOMMITMENTTOANREPROJECT,

CAPITALINVESTEDORLONGTERM

CONTRACTSIGNED

CorporateDecisionMakerforREProcurement

BoardofDirectors CEO C-Level/GroupPresidents

VPs/RegionalHeads Plant/LocaponManagers

23

4.2 Average Payback Period for RE Investments SurveyQuestion:Whataretheapproximatepaybackperiods(inyears)thatyouarecurrentlyseeingfrominvestmentsinthefollowingrenewablesources?

Keyfindings:

• Averagedacrosscompaniesandsectors,respondentsreportthatwind-andhydro-basedenergysourcesaredeliveringtheshortestpaybackperiods(5.9and6years,respectively).

• SolarPVisnotfarbehind,withanaveragepaybackperiodof6.3years.

• WindandsolarPVarethemostcommonsourcesinvestedin,withallotherrenewablesourcescombinedjustequalingtheamountofwindprocured.

• Althoughtherewereveryfewrespondentswhoreportedpaybackperiodsforbiofuelsorgeothermal,thesetwosourcesappeartohavethelongestpaybackperiod,withbothbeingatleast10years.

• Comparedwiththe2015survey,solarPVhasmadethemostsignificantchange.Inthe2015survey,solarPVwasreportedashavinganaveragepaybackofaround10years,givingitthelongestpaybackofallsourcetypes.Inthe2016reporteddata,itjumpedtohavingoneoftheshortestpaybackperiods.Althoughthisisanindustrytrend,weurgecautionbeforejumpingtoconclusionsgiventhelimitationsinourdata.

• Inthe2015survey,biomass,biofuels,andbiogaswereaggregatedintoonesourcetype,andrespondentsreporteditashavingtheshortestpaybackperiodbyawidemargin.Inthe2016survey,respondentsindicatethattheindividualbioenergysourceshavepaybackperiodstowardthemiddleorbottomofthepack.

• Geothermalstayedconsistentyear-over-yearashavingaroughly10-yearpaybackperiod.

2

1

2

4

20

2

2

13

10

10

8.8

7.3

6.3

6.3

6

5.9

0 5 10 15 20 25

GEOTHERMAL

BIOFUELS

CONCENTRATEDSOLAR

FIBER-BASEDBIOMASS

SOLARPV

BIOGAS

HYDRO

WIND

AveragePaybackPeriodforREInvestments

Averagepaybackperiod(years) Numberofresponses

24

4.3 RE Business Practice Adoption SurveyQuestion:Towhatextenthasyourcompanyadoptedthefollowingbusinesspracticesrelatedtorenewableenergyprocurement?

Keyfindings:

• PublicdisclosureofREpurchasesisbyfarthemostwidelyimplementedbusinesspractice,followedbybuildinginternalexpertiseandlinkingREprocurementtoscience-basedGHGtargets.Thismaybebecausethesepracticeshavefewerinternalobstacles,requirefewerresources,andaremorewidelyknownandaccepted.Inotherwords,thesepracticesmayrepresentthelow-hangingfruitoftherenewableenergybusinesspracticespectrum.

• RespondentsseemtobetheleastinterestedinbecomingaFERC-registeredwholesaler.Therecouldbemanyreasonsforthis,includingthefactthatnearlyallrespondentsareusingtheenergytheygeneratefortheirownoperations(andthereforedonothavesurplusenergytosell);thatdoingsomightentailexpandingintofunctionsandareasthatlieoutsidethecorecompetenciesofthesurveyedfirms;thattheymightoperateinstateswithoutfavorableregulatoryregimes;orsimplythatthesurveyedfirmswereunawareofthisparticularapproach.

32%

76%

17%

6%

6%

11%

34%

17%

6%

5%

5%

14%

11%

37%

29%

17%

51%

16%

58%

44%

23%

6%

20%

37%

43%

11%

3%

11%

50%

60%

83%

9%

17%

34%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

LINKREPROCUREMENTTOSCIENCE-BASEDGHGTARGETS

PUBLICDISCLOSUREOFREPURCHASES

USEVIRTUALPPAS

OFFSITEREINVESTMENTSASTAXEQUITYINVESTOR

USEREACCESSASKEYDECISIONPARAMETER

BECOMEFERC-REGISTEREDWHOLESALER

BUILDINTERNALEXPERTISE

COLLABORATEWITHUTILITIES

CONSIDERUTILITYGREENTARIFFS

REBusinessPrac[ceAdop[on

Implementedwidely Implementedinafewcases Inexploraponstage Notexplored

25

4.4 Corporate Involvement in RE Initiatives • WeidentifiedfourmajorNGO-ledcollaborativeinitiativestoraiseawarenessaboutopportunities,

reducecomplexity,andexpandaccesstoaffordablerenewableoptions.Weaskedsurveyrespondentsabouttheirknowledgeof/participationinthefollowing:

o REBuyer’sPrinciples(WWF/WRI)o BusinessRenewablesCenter(RMI/WWF)o RE100Initiative(ClimateGroup/CDP)o FutureofInternetPowerInitiative(BSR)

SurveyQuestion:PleaseindicatetheextenttowhichyourcompanyisinvolvedwiththefollowingREinitiatives:4

Keyfindings:

• RespondentsreporthighparticipationratesintheWWFandWRIBuyers’Principlesinitiative,RMI’sBusinessRenewablesCenter,andCDP/ClimateGroup’sRE100initiative.

• Thisisasignificantjumpinparticipationacrossthesefourinitiatives,comparedtothe2015survey.

• TherespondentgroupisleastfamiliarwithBSR’sFutureofInternetPowerInitiative,asit’sgearedspecificallytowardsincreasingtheuseofREtopowerdatacenters.

4Note:HighparticipationintheRenewableEnergyBuyers’Principleswasexpected,assignatoriesofthisinitiativeparticipatedinthesurvey.

11%14%

3%

50%

36%

42%

8%

31%

33% 50%

60%

8%

17%

8%

29%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

WWFANDWRI'SRENEWABLEENERGYBUYERS'PRINCIPLES

RMI'SBUSINESSRENEWABLESCENTER

CDPANDTHECLIMATEGROUP'SRE100INITIATIVE

BSR'S"FUTUREOFINTERNETPOWER"INITIATIVE

CorporateInvolvementinREIni[a[ves

AKeyDriver Parpcipant Following Unaware

26

Policy Priorities 5.1 Top Policy Priorities Across Companies SurveyQuestion:WhatareyourtoppolicyprioritiesintheUnitedStates?

Keyfindings:

• CompaniesconsistentlyrankedaccesstooffsitePPAsasthetoppolicypriorityoverall.

• Thenextfivepolicyprioritiesrankedveryclosely,showingthatavarietyofpolicyoptionsarecurrentlybeingutilized.

• Despitethisdiversityofpolicypriorities,rankorderingoftheseprioritiesforeachrespondentdependsheavilyonwhichstate-levelmarketsrespondentsareconductingbusinessin.Agivenstates’policyandregulatoryenvironmentplaysalargeroleinwhichpoliciesarebothfeasibleandcost-effective.

12%

12%

13%

16%

18%

29%

0% 5% 10% 15% 20% 25% 30% 35%

COMMUNITYSOLARORSHAREDRENEWABLES

RENEWABLEPORTFOLIOSTANDARDS

ON-SITE3RDPARTYFINANCING

NETMETERING

UTILITYGREENTARIFFS

OFFSITEPPA

TopPolicyPriori[es

27

5.2 Policy Priorities by State SurveyQuestion:Whatareyourprioritystatesforpolicyengagement?Whatareyourtoppolicyareasofinterestcorrespondingtoyourprioritystates?

Keyfindings:

• ThegreatestnumberofrespondentsrankedCaliforniaasimportantfollowedbyNorthCarolina,NewJersey,Texas,andVirginia,toroundoutthetopfive.

• Withinthesestates,offsitePPAsarestillaconsistenttoppriority.

• AfteroffsitePPAs,thesecondorderprioritieshadrelativelylowresponsecountssothefollowingsummaryisnotaconclusiveexpressionofpriorities.InCalifornia,communitysolarandnetmeteringwerethenexthighestprioritieswhileutilitygreentariffswerethenexthighestpriorityinNorthCarolina.TheRPS,netmeteringrules,andutilitygreentariffswerecitedassecondtierprioritiesforNewJersey,Virginia,andTexas.InTexas,thehighinterestinoffsitePPAaccessmaybeattributabletocompanies’supporttocontinueexpandingtheuseoflarge-scalewindenergyPPAsinTexas’restructuredmarket.

0

10

20

30

40

50

60

CALIFORNIA NORTHCAROLINA NEWJERSEY TEXAS VIRGINIA

SumofResponses

PolicyPriori[esbyState

OffsitePPA UplityGreenTariffs

NetMetering On-site3rdPartyFinancing

RenewablePortolioStandards CommunitySolarorSharedRenewables

28

5.3 Policy Priorities by Sector SurveyQuestion:Whatareyourprioritystatesforpolicyengagement?Whatareyourtoppolicyareasofinterestcorrespondingtoyourprioritystates?(Analyzedbysector)

Keyfindings:

• Highpriorities:OffsitePPA’sremainthetoppriorityacrosssectors,thoughtheymaybelessofapriorityforRetailandOtherServicessectorsbuthighestpriorityfortheothersectors.

• IT/HighTechratesutilitygreentariffsashigherprioritythananyotherindustry,whileon-site3rdpartyfinancingisarunawayleaderinConsumerProducts.NetmeteringismostprevalentinManufacturing,RetailandOtherServices,whichmaybeattributedtotheseindustries’relianceonlargesquarefootagephysicalfacilitiesthatcanhostonsitesolar.However,it’ssurprisingthatConsumerProductsdoesn’talsoplaceahighpriorityonnetmeteringtoaccompanytheirpriorityforonsite3rdpartyfinancing.

• Ingeneral,companiesarelookingforadiversityofpoliciesandthesamplesizemaybetoosmalltodetectsignificantdifferencesinprioritybysector.

ConsumerProducts Healthcare IT MFG Retail Other

ServicesOffsitePPA 37% 36% 33% 27% 22% 15%

UplityGreenTariffs 2% 9% 28% 22% 18% 27%

NetMetering 18% 13% 7% 24% 25% 24%

On-site3rdPartyFinancing 26% 13% 5% 15% 13% 6%

RenewablePortolioStandards 5% 28% 15% 0% 3% 18%

CommunitySolarorSharedRenewables 12% 2% 12% 12% 18% 9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

PolicyPriori[esbySector

29

5.4 Corporate Interest in the Clean Power Plan SurveyQuestion:IfandwhentheCleanPowerPlan(CPP)isimplemented,itwillsignificantlyimpacthowbusinessesmakepublicclaimsonthegridemissionsavoidedduetotheirvoluntaryrenewableenergypurchases,andmoregeneralclaimsabouthowvoluntarypurchasesdriveadditionalrenewableenergydeployment.WithregardstotheCPP,areyouinterestedinthefollowing?

Keyfindings:

• ThemajorityofcompanieswouldlikemoreinformationonwhethertosupporttheCleanPowerPlan,whichsuggestsagenerallackofknowledge/expertiseregardingitsimpacts.

• Unsurprisingly,themajorityofcompanieswouldliketoencouragestate-levelutilitiestodesignprogramsthatmeetcorporateREprocurementneedswhilecomplyingwiththeCleanPowerPlan.WhetherornotcompanieswouldlikefortheseprogramstobeseparatefromCleanPowerPlancomplianceprogramswasnotascertainedbythissurvey,butwouldbeanimportantdistinctionmovingforward.

• Comparatively,onlyathirdofcompaniesfeelpreparedtosaythattheywouldsupporttheCPPmorebroadly.ThismayspeaktotheknowledgedeficitthatexistsaroundtheCPP.

79%82%

36%

15% 15%

55%

6%3%

9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FURTHERINFORMATIONONTHETOPIC

ENCOURAGINGSTATESTODESIGNPROGRAMSTHATMEET

CORPORATENEEDS

SUPPORTINGTHECPPMOREBROADLY

CorporateInterestintheCleanPowerPlan

Yes

Maybe

No

30

5.5 Federal- and State-level Policy Engagements SurveyQuestion:Howoftendoesyourcompanyengagein:

KeyFindings:

• Mostcompaniesonlyengageonstateorfederalpolicyonlyoccasionallyornever.

• Companiesreporttheyareasmuchastwiceaslikelytoengagewithclimatelegislationandregulationatboththefederalandstatelevelsthanwithenergylegislationandregulation.

• Federal-levelenergylegislationandregulationistheleast-likelytypeofpolicyengagementforrespondentstoengagein.

• Federal-levelclimatelegislationandregulationisthemostlikelytypeofpolicyengagementforrespondentstoengagein.However,itisunclearastowhichspecificpiecesoflegislationareclassifiedasclimate-orenergy-focusedatthefederallevel,sorespondentsmayhaveinterpretedthisdifferently.

26%

34%

41%37%

51%

43%

50%

49%

23% 23%

9%14%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

FEDERAL-LEVELCLIMATELEGISLATIONANDREGULATION

STATE-LEVELCLIMATELEGISLATIONANDREGULATION

FEDERAL-LEVELENERGYLEGISLATIONANDREGULATION

STATE-LEVELENERGYLEGISLATIONANDREGULATION

Federal-andState-levelPolicyEngagements

Frequently

Occasionally

Never

31

5.6 Preferred Type of Policy Engagement Whatareyourpreferredmethodsofengagementonenergypolicy?

KeyFindings:

• Themost-preferredtypeofpolicyengagementistoworkthroughanindustryassociationorcoalition.

• Thesecondmost-preferredtypeofpolicyengagementisaone-on-onemeetingwithdecision-

makers.

• Signingontolettersorpressreleasesandissuingpublicstatements,filings,andtestimonyaretheleast-preferredtypesofpolicyengagement.

18

1413

28

0

5

10

15

20

25

30

ONE-ON-ONEMEETINGSWITHDECISION-MAKERS

PUBLICSTATEMENTS,FILINGSANDTESTIMONY

SIGNONLETTERSORPRESSRELEASES

WORKTHROUGHANINDUSTRYASSOCIATIONOR

COALITION

SumofResponses

PreferredTypeofPolicyEngagement

32

ANNEX A: Top Research and Industry Insights Asinterestinanddemandforrenewableenergycontinuestorapidlygrow,sotoodoestheavailabilityofliteraturerelatedtoit.Inordertobothinformthisbriefingandprovidethereaderwithanupdatedoverviewofthelatestresearchonrenewableenergyprocurement,weconductedaliteraturereview.Thereviewfocusedprimarilyonindustry-relatedpublications,inordertoensurethatthefindingshaveahighlypracticalvalue.Whatfollowsinthisannexareoverviewsoftworecentreportsthatarehighlyrelevanttothe2016CEF/WWFsurvey.Forthesereports,onefromPricewaterhouseCoopers(PwC)andanotherfromtheAmericanCouncilonRenewableEnergy(ACORE),wecomparefindingswiththoseinoursurveytoidentifyanyparallels,divergences,orgaps.Itisimportanttonotethattherespondentsforthesereportsarelikelydifferentthantherespondentsforourreport;nonetheless,wethinkitisstillvaluabletoreviewtheseresources,withtheaimofgettingamorecompletepictureofthestateofcorporaterenewableenergyprocurement.CorporateRenewableEnergyProcurementSurveyInsightsByPwC,June2016ComparingPwC’sfindingstothe2016CEF/WWFsurvey:PricewaterhouseCoopers(PwC)surveyedselectlargeU.S.-basedcompanieswithlargeenergyfootprintsandpastpurchasesofrenewables.Whiletheirsurveyandsubsequentreportissimilartoours,theirreportismoreforward-looking,forinstanceexaminingintenttopurchaseinthefutureusingvariousfinancingoptions.Ourreportlooksatcurrentpurchasingtrends.Bothofourreportslookedatdriversofpurchases(oursfocusingondriversofactualpurchasesmade,theirsatfuturepurchases),andbothreportsidentifiedanumberofcommonmotivators,suchasmeetingsustainabilitygoals,reducingGHGemissions,limitingexposuretoenergypricevolatility,andreducingsupplyrisks.Finally,bothreportsconsiderwhoisinvolvedindecision-making.ThePwCreportlookslaterallytoidentifyvariousbusinessfunctionsinvolved,andourreportlooksverticallytoidentifywhatlevelofseniorityisinvolved.AnoverviewofthePwCsurvey:

• Ofthecompaniessurveyed,72%areactivelypursuingREprocurement

o Ofthisgroup,46%ofrespondentshaveestablishedREgoalsand80%haveestablishedGHGreductiongoals

• Whatarethetop-3motivationsdrivingintenttopurchaseRE?

(RespondentsactivelypursuingREprocurement)

o DesiretomeetsustainabilitygoalsandtoreduceGHGemissionso GenerateanattractiveROIo Limitexposuretoenergypricevariability

• HowhaveinclinationstopurchaseREchangedinthelast6months?

o 63%ofrespondentsaremoreinclinedtopurchaseRE§ 85%ofcompaniessurveyedwhohavemadeapurchaseinthepastareinclinedto

makeadditionalpurchasesinthenext18monthso 32%ofrespondentsreportedthattheirinclinationtopurchaseREhadnotchangedo 5%ofrespondentsbecamelessinclinedtopurchaseRE

• Intendedfuturepurchases(%ofrespondents):

o Respondentsreportthatonsitepowerpurchaseagreements(PPAs)andoffsitetraditionalPPAswillaccountformostREpurchasesinthenext18months

o Renewableenergycertificates(RECs)areexpectedtoplayalargerroleinoverallprocurementinthenext18monthsthantheydidinthepast

33

• WhatarethemostimportantREtechnologiesoverthenext12-24months?

o Solarandwindareexpectedtodominatepurchasingdecisionsatcompaniessurveyedinthenext12-24months

• Whichbusinessfunctionsareessentialtothedecisionmakingprocess?

(Inrankorder)

o Facilities/energymanagemento Sustainabilityo Financeo Operationso Procurement

• Howmanyofthesebusinessfunctionsareinvolvedinprocess?

(Inrankorder)

o Atleasttwoo Morethanthreeo Onlyone

• WhatarethetoppainpointsintheREprocurementprocess?

(Inrankorder)

o Buildinginternalsupporto Negotiatingcontracto Definingstrategyo Othero Identifyingproject

34

CorporateRenewableEnergyProcurement:IndustryInsightsByACORE,June2016ComparingACORE’sfindingstothe2016CEF/WWFsurvey:ACORE,ortheAmericanCouncilonRenewableEnergy,recentlyreleasedareportintendedtoprovideguidanceonkeyrenewableenergyprocurementconsiderationsfacedbycorporatedecision-makers.Itprovidesindustryinsightsintocontracting,procurementandfinancing,policyandlegalconsiderations,andtechnologyoptions.Inpreparingthereport,ACORElookedprimarilytoitsCorporateProcurementWorkingGroup,whichisanetworkofrenewablefinanciers,developers,powergenerators,andcorporateconsumers.ConsistentwithbothourandPwC’sreport,ACOREfoundthatpowerpurchaseagreements(PPAs)areanincreasinglypopularprocurementmechanism,particularlyvirtualPPAs.Theirreporttookadifferentapproachandlookedatcontextualfactorstounderscorethedynamicsthatareincreasinglyfavorabletorenewables:fossilfuelpricevolatility,priceparity,policysupport,andvoluntaryenvironmental/sustainabilitycommitments.Similartothefindingsinourreport,theynotedthatalthoughwindpowerisgeneratingsubstantiallymoreelectricitythansolarcurrentlyis,solarenergyisexperiencingsignificantgrowth,inlinewiththedramaticreductioninpaybackperiodfoundinourreport.AnoverviewoftheACOREreport:

• Marketoverview

o UtilitieshavehistoricallyshoulderedtheburdenofRPSrequirements.Tomeetrequirements,utilitydemandforREincreased;asdemandforutility-scaleREpowerplantswentup,thepriceofpowerfromthoseplants(esp.windandsolar)hasgonedownduetolowerconstructioncostsandtechimprovements.

o CorporateprocurementunderPPAsisontherise:theAWEAreported52%ofallwindenergyPPAsexecutedin2015waswithnon-utilitypurchasers,upfrom22%in2013.

§ PowerprocuredunderacorporatePPAcanprovidecostsavingsduetotherelativelowpriceofRE.

§ PPAsalsoreducemarketpricevolatilityriskforanextendedperiod(typically10-25years).

§ VirtualPPAsareapopularalternativeforcompaniessitedinurbanareaswithoutreadyaccesstorenewablepowersources.

o Corporateoffsiterenewableenergyhasmorethandoubledeveryyearsince2012andisprojectedtogrowtomorethan60GWby2030.

o SomecompaniesareconstructingREprojectson-siteoradjacenttothefacilitiestobepowered.

§ Benefits:economic(discussedabove),taxcredits,reducedriskfrompoweroutages.

o REprocurementcanopennewdoorsforpurchasers,suchasaccesstoadditionalsourcesofcapital.

§ In2015,approximately$329billionwasinvestedincleanenergyglobally.o Inmanycasesthereisafuzzylinebetweenfederal/statejurisdictionsonelectricity

markets,whichcancomplicatecorporateprocurementactivities.o REPPAsstillmakesenseforcorporatebuyersevenconsideringthehistoriclowpricesof

naturalgasfor4reasons:§ Pricevolatility(naturalgasandotherfossilfuelpriceshavehistoricallybeen

unstable;REdisplaysnosuchvolatility)§ Priceparity(wind&solarpricesarealreadycompetitivewith,andinsomemarkets

evencheaperthannaturalgas)§ Policysupport(e.g.,ParisAgreement,USCleanPowerPlan)

35

§ Environmentalcommitments(manybuyershavecarbonreductioncommitmentsbestmetthroughREprocurement)

o Renewablesmadeuparecord61%ofnewcapacityinstallationsin2015,nearlydoublenewnaturalgascapacity.

o In2015,morethanhalfofallwindPPAsintheU.S.wereexecutedbycorporate,non-utilityrenewableenergypurchasers.

o Regulatedutilitiesareincreasinglyrespondingtocorporatedemandbyprocuringrenewableenergyonbehalfofcorporatepurchasers,eitherthroughlong-termcontractsorassetownership.

o Aswindpowerpricesdrop(down60%overlast5years),companiesviewREasaviablewaytoreducetheircarbonfootprint.Asaresult,corporatecustomersinvestedin/procuredover3GWofoffsiterenewablesin2015.

• Contractinginsights

o ExperiencedcorporateREbuyersreportthatbuildinginternalsupportisthehardestaspectoftheprocurementprocess.

§ InternalREchampionsthatsuccessfullycreateacross-functionalinternalteamandleadthatteamthroughawell-definedevaluationandbuyingprocesscangreatlyreduceprocurementfrictionandgeneratesuccessfulbuyingoutcomes.

o Across-functionalteamshouldbeformedbytheREchampionandanexecutivesponsor(whoensuresexecutivesupportandhelpssecureanexplicitexecutivemandatetoworkagainst)

o Thefunctionsthatneedtoberepresentedonacross-functionalREprocurementteamaretypically:

§ Operationsand/orfacilities,sustainability,finance,accounting,legal,andprocurement.

o Afour-phaseREprocurementprocesswilllikelyinvolve:§ Creatingasharedmandate(define&establishconsensusonrationale;secure

mandate;settimelineandstepsintheprocess;establishcoordinationandcommunicationmechanisms)

§ Evaluatingtheoptionsanddevelopingarecommendation(useasystematicprocesstoIDoptions;focuson1or2mostattractivealternatives;developRFP;analyzeproposals;developrecommendation)

§ Drivingago/nogodecision(drivea2stageprocess:1-reviewandrefinerecommendationsandbusinesscasewithfunctionalleaders;2-receiveformalapprovalfromseniorexecs)

§ Closingthetransaction(conductduediligence;negotiatewithsupplier;finalizesitingandengineering)

o WhyarebusinessesleadingthewaywithdrivingREdeployment?Severalreasons,including:

§ Desiretohedgefutureenergyprices,brandenhancement,differentiateproductsorservices,respondtostakeholderengagement,orinmanycases,acombinationofallthesereasons.

o WhatarethetopREinstrumentsforbusiness?§ SigningPPAs,developingonsiteRE,workingwithcompetitiveelectricityproviders,

engaginginautilitygreenpowerprogram,participatingincommunitysolarprojects,andpurchasingunbundledrenewableenergycredits(RECs).

o Whiletheseoptionsallhavebenefits,inordertomakeanyclaimaboutusingorsupportingrenewableenergy,companiesmustanswerowntheRECs.

§ UnbundledRECS:companyownstheRECs§ PPAs:dependingontheagreement,companymayormaynotownRECs§ Competitiveelectricitysupplier(whereallowed):companyshouldowntheRECs§ Utilitygreenpowerprogram:companyalwaysownstheRECs

36

§ Communitysolar(whereallowed):dependingontheprogram,companymay/maynotowntheRECs

§ OnsiteRE:companymay/maynotowntheRECs§ LeasedRE:companyusuallydoesnotowntheRECs

o Manybusinessesareleasingtheirfacilities,andsoareoftenunable/unmotivatedtomakeupgradestotheirproperties.Locatingasolarprojectoffsitealsoallowsforthoseuserswithsubstantialenergyusetoenjoythebenefitsofsolarwithoutoccupyingalargeportionoftheirproperty.

37

OpportunitiestoIncreaseCorporateAccesstoAdvancedEnergy:ANationalBrief

ByMeisterConsultantsGroup,August2016Ascompaniesacceleratepurchasesofrenewableenergy,policyandregulationinmanystatesconstraincertaintypesofpurchases.Inotherstates,legislators,utilities,orutilityregulatorshaveenactedpoliciestoexpandcorporateaccesstoadvancedenergy.TheMeisterreportlooksattherolethatpoliciesplayinexpandingcorporateaccesstorenewableenergyandidentifiespolicyoptionsthatstatesareusingtoenablecorporaterenewableenergypurchases.Thereportthenconsiderswherethesepolicieshavethegreatestpotentialtoexpandcorporateaccess.Fromthisanalysis,11statesoverallemergedasprioritystatesforoneormoreofthepoliciesprofiledonthebasisofitspotentialtoincreasecorporateaccesstorenewableenergy:Alabama,California,Florida,Georgia,Indiana,Kentucky,Michigan,Minnesota,NorthCarolina,Ohio,andTexas.Thesixpoliciesassessedeithersupportpurchasesfromoffsitefacilities,including,1)utilitygreentariffs,2)utility-enabledback-to-backpowerpurchaseagreements(PPAs),and3)directaccesstariffs;orenableonsiteinstallation,including,4)raisingsystemsizelimits;5)allowingthird-partyownership;and6)allowingvirtualoraggregatedmetering.TheMeisterreportrankedprioritystatesforadvancingcertainpoliciesbasedonwherethesepoliciescouldhavethegreatestimpact,whereasoursurveyaskedcorporatepurchaserstoranktheirprioritystatesbasedonwheretheyaremostlookingtodeployrenewableenergyandwhichpoliciesaremostimportanttotheminthosestates.California,NorthCarolina,andTexasappearinbothprioritystatelistsbutweaskedaboutaslightlydifferentsetofpolicyoptionsinthosestates,includingoffsitePPAaccess,onsite3rdpartyPPAs,net-metering,communitysolarandRenewablePortfolioStandards(RPS).AnoverviewoftheMeisterreport:

• Thereisnoone-size-fits-alltransactionorcontractstructuretomeetthevaryingneedsofcorporatecustomersoperatingindiverseregulatoryregimes,geographies,costconstraints,andwithvaryingenergyneeds.

• Simple,low-commitmentoptionsincludepurchasingRECs(renewableenergycertificates)orutility“greenpowerpurchasingprograms.”

o CompanieshaveexpressedastrongdesireforpurchasingoptionsthatgobeyondstrictlyREC-basedpurchases,sincetheydonotgeneratesavingsorconferlong-termpriceorfuel-hedgingbenefits,nordotheynecessarilysupportadditional(new)projectdevelopment.

• Categoriesofremainingoptionsincludelargeoffsiteprojectsanddistributedenergyresources.• Largeoffsitepurchases(expandingoffsiteoptions)

o Utility-scaleprojectsareaparticularlyattractiveoptionforcompanieswithhighelectricityuseandinstateswithgoodrenewablepotentialandfavorableeconomicsforlargeprojects.

o “Themainbarriertoaccessinglargeoffsitepurchasesistheelectricitymarketstructureinthestatewhereacompanyorfacilityislocated,andinparticularwhetherutilitiesareverticallyintegratedorrestructured”.

o Nearlyacrosstheboard,thecustomersofverticallyintegratedutilitiescannotchoosetheirelectricitysupplier,whilecustomersinrestructuredmarketscan.

o Companieswithoutelectricchoicecanstillpurchasegenerationfromutility-scaleadvancedenergyprojectsifstateshaveenactedpoliciesthatenablesuchpurchasesthroughtariffsorotherprograms.

§ Utilityrenewableenergytariffs(aka“GreenTariffs”)allowutility-scalepurchasesfromaportfolioofcompetitively-procured,utility-deliveredprojects;

§ Back-to-backutilityPPAtariffsallowutility-scalecontractswithspecificprojects:electricutilitiesagreetoprocurepowerfromaspecifiedadvancedenergyfacilityandadjusttheratechargedtothecustomeraccordingtothecostofthecontractedpricenegotiatedbythecustomerandfacilityowner;

§ Directaccesstariffsallowlimitedelectricchoicetocertaincustomers.

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o Thefivestatesrankedhighestonthe“policyopportunityindex”foroffsitepurchases(stateswithregulatedelectricitymarkets,nocurrentlyavailableoptionsforthethreetariffsjustdescribed,highin-statecorporateenergyconsumption,andsignificantin-staterenewableenergyresources)include:California,Florida,Indiana,Michigan,andMinnesota.

• Distributedenergyresources(expandingonsiteoptions)

o Procuringpowerfromlocal,distributedresourcesisappealingforcompaniesthathavemanylocationsspreadacrossastateoracrossthecountry,andisparticularlyattractiveinregionswithstrongdistributedenergypotential.

o Distributedgenerationprojectsareagoodoptionforcompaniesthathaveappropriatespaceattheirfacilitiestohostaproject.

o Inordertopresentanattractivepurchasingpathwayforlargecorporatecustomers,theremustbeamechanisminplacetocreditcustomersforgenerationfromdistributedenergyresources.

o Eveninstatesthathavesuchamechanism,theremaystillbebarriers.Policiestoovercomethosebarrierscouldinclude:raisingsystemsizelimitations,allowingthird-partyownership,andallowingvirtualoraggregatedmetering.

§ Thetopfiverankedstatesforpoliciestoraisesystemcapacitylimits,basedonthepotentialtoincreasecorporateaccesstoadvancedenergy:Texas,California,Michigan,Alabama,andKentucky.

§ Thetopfiverankedstatesforpoliciestoallowthird-partyownership,basedonthepotentialtoincreasecorporateaccesstoadvancedenergy:Indiana,Florida,NorthCarolina,Alabama,andMinnesota.

§ Thetopfiverankedstatesforpoliciestoallowvirtualoraggregatedmetering,basedonthepotentialtoincreasecorporateaccesstoadvancedenergy:Texas,Florida,Ohio,Indiana,andGeorgia.

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ANNEXB:NotableExamplesinCorporateREProcurement

TherehavebeenseveralexamplesofcorporateleadershipinREprocurementoverthelast24months.Toprovideaconcisesummary,weusedRockyMountainInstitute’sBRCDealTracker—whichtracksnewcorporateREdealsastheyareannouncedtothepublic—toidentifythelargestREtransactionsoverthelast24months.The2016columninthechartbelowonlyreflectsREdealscompletedthroughSeptember2016andisnotindicativeofyear-over-yeartrends,asmanyREdealsarecompletedattheendofthecalendaryear.

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ANNEXC:NotableToolsandResources

WhilethereareseveralnotabletoolsandresourcesrelatedtoREprocurement,thissectionoffersselecttoolsandresourcesthataimtohelpcompaniesnavigatethecomplexitiesofprocuringRE.

BusinessRenewablesCenter(BRC)

• “BRCMarketplace”(http://bit.ly/2dMc34a)o Onlineplatformthatconnectscorporatebuyersandserviceproviderswithavailable

renewableenergyprojects.• “BRCDealTracker”(http://bit.ly/2dMcHhW)

o Tracksnewcorporaterenewableenergycontractsastheyareannounced.• “PrimersandGuides”(http://bit.ly/2dMda3V)• “CorporateREProcurementCaseStudies”(http://bit.ly/2dMcBa8)

NewEnergyOpportunities(NEO)Network(SchneiderElectric)isanonlineplatformthatconnectslargecompaniesinterestedinpurchasingrenewablestoprojectdevelopers,investors,andotherkeystakeholders.Thecollaborativeplatformwascreatedtohelpcompaniesreducetheamountoftimespentidentifyingandvettingrenewableenergyprojects.IRENAProjectNavigator(InternationalRenewableEnergyAgency)isanonlineplatformthatprovidessustainabilitypractitionerswiththeknowledge,tools,casestudies,andbestpracticesneededtosupportthesuccessfulcompletionoftheirREprojects.FutureofInternetPower

• “BestPracticesforColocationDataCenters:AGuidetoMaximizingRenewableEnergyMix”(http://bit.ly/2dr4z3V)

• “IntelligentLow-CarbonPowerSourcingforDataCenters”(http://bit.ly/2dr5BwQ)• “TheCorporateColocationandCloudBuyers’Principles”(http://bit.ly/2dr4I7x)

RenewableEnergyBuyers’Principles

• “CorporateRenewableEnergyBuyers’Principles”(http://bit.ly/2dMbJm0)o Developedby62corporatesignatoriestospurprogressonresolvingthechallengesthey

facewhenbuyingrenewableenergy,andtoaddtheirperspectivetothefutureoftheU.S.energyandelectricitysystem.

• “EmergingGreenTariffsinU.S.RegulatedElectricityMarkets”(http://bit.ly/2dMbfMy)• “CorporateRenewableEnergyStrategyMap”(http://bit.ly/1PhsbBS)

o Helpscompaniesidentifystatesthatenableaccesstorenewableenergyatthescaletheyneedthroughtheirutility.IthighlightsutilitygreentariffprogramsandotherutilityenergyproductsthatallowcustomerstomeettheircleanenergygoalsandlowerelectricitycostsandcompareseachproducttotheCorporateRenewableEnergyBuyers’Principles.

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ANNEXD:KeyREProcurementInitiatives

SeveralimportantNGO-privatesectorcollaborativeinitiativeshaveformedtoidentifyandtacklekeybarriers.Notably,WorldWildlifeFund(WWF),WorldResourcesInstitute(WRI),BusinessforSocialResponsibility(BSR),RockyMountainInstitute(RMI),ClimateGroup,andCDPareworkingtopromotecollaborationandcomplementarityamongtheirrespectiveefforts.

1.CorporateRenewableEnergyBuyer’sPrinciples(WWF/WRI)TheRenewableEnergyBuyer’sPrinciples,inpartnershipwithparticipatingcompanies,wascreatedtoframethechallengesmostcommonlyencounteredincorporaterenewableenergypurchasing.Theinitiativeoutlines6principlesthattellthemarketwhatcorporatesneedtoincreasetheiraccesstoanduseofrenewableenergy.ToimplementtheBuyers’Principles,WWFandWRIareworkingtocollaborativelyexpandrenewableenergypurchasingoptionswithregulatedutilities,wherecorporateoptionsaremostlimited.Asofpublishing,62majorcompaniesdemandingover45millionmegawatthoursofrenewableenergytomeettheir2020goalshavesignedtheBuyer’Principles.Clickhereforalistofparticipatingcompanies.2.BusinessRenewablesCenter(RMI)TheBusinessRenewablesCenter(BRC)wascreatedtoaccelerateandsimplifytheadoptionofoffsitecorporaterenewableenergypurchasing.TheBRC’sgoalistohelpcorporationsprocure60gigawattsofrenewableenergyby2030byproviding:(1)acommunicationsplatformtoraiseawarenessandchampionsuccessesandopportunities;(2)acommunityofleadingthinkersandindustrypractitioners,whoactivelyparticipateinidentifyinghurdlesandsolutionstomarketgrowth;and(3)aknowledgebaseofknownobstaclesandprovensolutions,andsoftwaretoolstofacilitatetransactions.Clickhereforalistofparticipatingcompanies.3.FutureofInternetPower(BSR)TheFutureofInternetPowerinitiativeiscomprisedoftechnologycompaniesthatareinterestedinadvancinglow-carbon,sustainablepowerfordatacenters.Theinitiativeenablesbusinessestosharebestpractices,collaboratewithselectutilitiesandpolicymakers,anddevelopaplatformthatdrivesgrowthintherenewableenergysector.Clickhereforalistofparticipatingcompanies.

4.RenewableEnergyBuyers’Alliance(BSR,RMI,WRIandWWF)REBAisledbyfournon-profitorganizations(BSR,RMI,WRIandWWF)tointegratethethreeinitiativesdescribedabove.TheseNGOsbringtogethertheirdeepexpertiseintransformingenergymarketstoworkacrosscustomers,suppliers,andpolicymakerstoidentifybarrierstobuyingcleanandrenewableenergyandthendevelopsolutionsthatmeetrapidlygrowingcorporatedemand.CollectivelythefourREBApartnersworkwithmorethan60iconic,multinationalcompaniesthatrepresentenormousdemandforrenewablepower.REBAalsocoordinateswiththeRE100campaign,supportingcompanieswhohavesignedontotheir100%renewableenergycommitment.REBA’sgoalistohelpcorporationspurchase60GWofadditionalrenewableenergyintheUSby2025.

5.RE100Initiative(TheClimateGroupwithCDP)TheRE100initiativewascreatedtoencourageatleast100majorcompaniestocommitto100%renewableenergyby2020.TheinitiativesupportscompaniesbyhelpingtoidentifybestpracticesforREimplementation,financialimplicationsassociatedwithtransitions,andrisksandrewardsofoptions.Clickhereforalistofparticipatingcompanies.6.EPA’sGreenPowerPartnershipInitiative(EPA)TheEPAGreenPowerPartnershipisaplatformthatprovidesexpertadvice,tools,andresourcesfororganizationsseekingtodiversifytheirenergymixwith‘green’powerproductssuchasrenewableenergycredits,greenpricingprograms,andon-sitegeneration.Clickhereforalistofparticipatingcompanies.