renewables & your energy management strategy...when considering a renewables strategy, consider...
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Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 1
Renewables & Your Energy Management Strategy eBook
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 2
Table of Contents
The New Frontier of Energy Procurement ________________________________________________________________________________________________________ 3
Forces of Change in Energy Management _________________________________________________________________________________________________________ 5
Why Now is the Time for Action ___________________________________________________________________________________________________________________ 8
Barriers to Entry with Renewable Energy ________________________________________________________________________________________________________11
Evaluating Renewables As Part of An Integrated Strategy ______________________________________________________________________________________14
The Future of Renewables Procurement __________________________________________________________________________________________________________17
APPENDIX
Integrated Energy Management: What, Who and Why __________________________________________________________________________________________20
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 3
Across parts of the globe, it’s a time of political uncertainty when it comes to sustainability and climate
action. Where European countries are making great strides toward deep sustainability goals, the United
States has not pursued sweeping commitments. But regardless of where governments stand on the issues,
another leader is emerging: big business. Large corporations are the new vanguards of the environment and
are rapidly expanding their spheres of influence in the movement towards decarbonizing entire economies.
The next frontier in a decarbonized future is a push towards renewable energy deployment, spearheaded by the large and influential companies that make up the RE100 list having committed to increase the demand and delivery of 100 percent renewable energy. Over the next decade, more than 87 gigawatts of renewable energy will be deployed worldwide by these companies alone. In the U.S., renewable energy procurement by corporations is growing rapidly due to favorable federal and state policies, improved
financial stability of developers, and finally, a drastic decline in overall costs. These factors give corporations the confidence to not only
purchase enough renewable energy to meet their needs but also lock in long-term fixed price contracts.
Meanwhile, other new adopters are entering the renewable energy picture: small and mid-sized corporations. For these corporations,
current financial structures to procure renewable energy are still a challenge. Traditional purchase power agreements (PPAs) are designed
to be longer term, large-megawatt commitments, so the space is ripe for financial innovation focused on smaller, more flexible contracts.
PPA aggregation, such as influenced by a consortium of smaller buyers, or larger companies reselling a larger contract into smaller
tranches, have gained popularity but still present the challenge for developers and financiers who need enough buyers above the
threshold creditworthiness and appropriate demand to finance the projects.
Finally, one of the most important roles of large corporate adopters working with utility providers is their ability to advocate and
influence for stronger energy policies across the country. We already are seeing tangible results. For example, a large online retailer
worked with Dominion Energy to design a green tariff program for Virginia, which has allowed the company to purchase renewable
energy in a regulated market, encouraging further renewable energy growth in the region. Several other large corporations have also
been successful in advocating for third-party leasing and supporting renewable portfolio standards (RPS).
The New Frontier of Energy Procurement
Shy MuralidharanDirector, Product Management14-year energy expert
What follows in this eBook is the result of ENGIE Impact’s many years of working with our clients on
energy procurement and energy cost optimization in both deregulated and regulated markets and the
lessons learned as we guide clients through the barriers and complexities of the new frontier of energy
procurement: renewable energy. Whether the motivation is financial, driven by regulation, or in response
to stakeholder expectations, renewables are emerging as a viable alternative to fossil fuel-based energy for
organizations. Companies should be seizing the opportunities in front of them, now.
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 4
What Informs Our Expertise
1.4 Millionenergy accounts for which we provide
energy supply contracts, energy sourcing
or rates analysis
10+average years of experience of our
procurement managers, transaction and
rate analysts
120+energy price indices we continuously
monitor, plus critical economic trends and
weather impacts
2.5 Billionpoints of current and historical energy data
is analyzed, processed and stored on the
ENGIE Impact Platform
1,100monthly evaluations of energy supply
offers, providing insight into market prices,
supporting negotiations
500clients who we support in every
deregulated market in North America
and Europe
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 5
Energy management has seen its fair share of evolution, with the continued growth of renewable energy being a leading force of change. With impacts across demand and supply-side management, and key interdependencies between both, we wanted to take the opportunity to discuss how we’ve seen renewables affect both sides of the energy management equation – and highlight other leading forces we’ve observed and counseled clients through.
Forces of Change in Energy Management
Ben TaylorSenior Manager, Energy & Water Advising10-year energy expert
Demand-Side Management Over the last 10 years, we’ve seen demand-side energy management evolve from a ’nice to
have‘ for reducing operating costs to a ’must have‘ for market competitiveness and business
resilience. Historically, organizations typically tasked a person (or very small team) with
dealing with energy costs. A kickoff call that began with the phrase, “Help me, I drew the
short straw!” was not uncommon. Today, organizations are realizing the value of energy
management, and are leveraging a combination of dedicated internal resources and a network
of partners to generate significant results. Although the pressures behind this evolution are
complex, we see several reoccurring themes enabling this transition to low carbon operations.
When considering a renewables strategy, consider energy efficiency as the foundation for a
holistic energy management program. Even when working through traditional brown power procurement, a short payback project such
as a lighting retrofit can reduce the purchase volumes and further decrease costs. Buildings also have a natural tendency to become
more efficient as older, inefficient equipment reaches the end of its useful life and is replaced by newer, higher efficiency equipment.
If energy efficiency and future energy consumption are not considered before a procurement contract is signed, a facility might not
meet its expected purchasing volume and incur a penalty from the supplier. This consideration becomes more important as a portfolio
makes the transition from brown to green power purchasing. Although the market is evolving quickly, many renewables purchasing
agreements still include a premium as compared to alternative brown power options, so the benefit of applying energy efficiency as
the first layer to reduce total energy needs is amplified.
Finally, when considering on-site renewables for load-shaving and load-shifting strategies, it is often best to implement energy
efficiency projects first. In addition to typically having a shorter payback period than an on-site renewable project, reducing the
overall facility load through energy efficiency will help ensure proper sizing of the renewable system and avoid unnecessary cost of a
system designed to shave/shift a larger load.
In addition to establishing and aligning internal strategy, the following market advancements can be leveraged
to accelerate implementation.
Disparate data analytics approaches are merging to provide holistic benchmarking and performance monitoring across
large, geographically dispersed portfolios. Synthesizing monthly bill data, granular energy data, BMS data and operational
characteristics of each facility, organizations are quickly analyzing thousands of locations, prioritizing those with savings opportunity
and maximizing returns.
Today we see the typical LED retail price more than 80 percent lower than 2011 prices
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 6
Improvements in technology are reducing price and enabling adoption at a rapid pace. Today we see the typical LED retail price more
than 80 percent lower than 2011 prices. Real-time energy monitoring solutions are now available at a fraction of the price and can be
economically favorable even for small locations. These types of advancements are dramatically increasing access to energy efficiency and
continuous commissioning services that were previously limited to major players or large facilities with large capital pools.
This combination of data-enabled program design and accessibility to technology is also creating a new generation of outcome-focused
’as-a-service’ business models. These approaches help spread financial risk and asset management responsibility, further enabling
transformative programs that did not previously meet financial requirements. Infrastructure-as-a-service often involves a commitment
to achieving a reduction target, such as ENGIE’s commitment to improve Ohio State University’s energy efficiency by 25 percent in the
first 10 years of a long-term engagement. Redaptive’s innovative utilities-as-a-service program enables capital projects to be cash flow
positive, treating the investment as an operating expense while transferring risk away from the owner.
We live in an exciting time where data is readily available, advanced technology is readily accessible, and innovative business models are simplifying the implementation process.
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 7
Supply-Side Management Over the last several years, renewables have carved out increased market share, due in
large part to declining costs but also to more environmentally-conscious federal, state, and
corporate policies. In fact, electric generation from all renewable sources nearly doubled
from 382 million MWh in 2008 to a new record of 742 million MWh in 2018, around 17.6
percent of U.S. generation. Furthermore, as technological advancements reduce production
and operational costs, the price of renewable generation is reaching parity with traditional
sources in many regions, leading to even more investment in renewable capacity growth.
With the
U.S. electric generation landscape continuing to shift toward cleaner sources, policies at the
state, utility, and end-user level have followed suit.
Federal policies can change from administration to administration, so decisions over
renewable and sustainability efforts have increasingly trickled down to the state and local
level. Many states currently have renewable portfolio standards and goals that direct how
much electric generation must come from renewable sources.
But the latest trend to sweep across the nation is with states adopting a higher renewable portfolio percentage, with some reaching as high as 100 percent.
As the states set their targets, utilities operating within their borders must also realign to
be compliant. Many utilities, though, have been proactive and taken over the mantle to not
only produce cleaner electricity, but also provide opportunities for their customers to take
part. Several utilities across the country are experimenting with combining renewable
technologies to provide improved dispatchability, such as installing solar and wind
resources with battery storage. Additionally, many utilities in regulated and deregulated
markets are creating green tariffs to provide opportunities for customers to source their
electricity directly from renewables.
New trends have also emerged in the corporate space, with sustainability efforts starting
to move beyond just building retrofits to how and where the energy consumed. Energy
procurement strategies are evolving into brown power purchases supplementing needs
in overall green power contracts. The list of solutions continues to grow, but as of now
there are products like Physical PPAs, Virtual PPAs, on-site renewables, green retail
contracts, and Renewable Energy Credits. There are certainly some risks associated with
each solution that must be fully vetted before moving forward to provide the best value.
Ultimately, corporations and their energy and sustainability policies will guide the growth
of renewables implementation. If utilities and energy suppliers see an increased market
demand for such products, they will work to provide cost-effective solutions.
Jonathan LeeManager, Analytics Intelligence10-year energy expert
Electric generation from all renewable sources nearly doubled from 382 million MWh in 2008 to a new record of 742 million MWh in 2018, around 17.6 percent of U.S. generation
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 8
Adoption and consumption of renewable energy has grown tremendously over the last decade. According to industry reports, by nearly 60 percent in fact. Several factors are driving this increase, including customer and shareholder pressure on companies greening their portfolio, declining costs, increasing options, favorable regulatory conditions and so many more.
We’d like to explore these drivers, in particular, the key factors making the case for renewable
energy adoption today. For multi-site businesses with hundreds, if not thousands, of sites
across varying markets, crafting a renewables sourcing strategy portfolio-wide comes with
massive challenges. But with data-based goals, a systematic and consistent approach to
evaluation, market and solution intelligence, and a well-defined roadmap, those challenges
can be overcome.
Why Should Renewables Be in Your Sourcing & Procurement Strategy?As mentioned above, there are several drivers of renewable energy adoption. While many
are consistent organization-to-organization, there are others that are unique. For multi-site
businesses, there is a consistent series that ENGIE Impact hears and advises customers around.
We’re Currently Experiencing the Most Competitive Pricing in History
Record-level investment is driving the development and diversification of options and
increasing supply. In fact, global investment in clean energy reached $332B in 2018, the
highest annual amount on record. Even more encouraging, annual global investment in clean
energy has reached at least $300B every year since 2014. This suggests a longer term, global
expansion of markets regardless of current price supports around the world. We’re also seeing
continued and spiking participation of venture capital and private equity, signaling robust
continued development of clean energy capacity for the near term.
Renewable Portfolio Standards
The establishment and continued expansion of Renewable Portfolio Standards in select markets
set the regulatory framework to signal to capital markets that there would be a continued,
financially stable group of purchasers. For example, California, Connecticut, Massachusetts
and New Jersey increased RPS goals from the initial goals they set. And though the portion
of additional renewable energy generation forecasted to be operational in the near term is
declining, the establishment and increases in RPS goals set in motion a pivot by financial
institutions to assess the opportunities and generate products that expand well beyond the
demand required to meet current RPS goals.
Why Now is the Time for Action
Brian DooleySenior Director, Renewables Consulting19-year energy expert
Did you know:
of Fortune 500 companies have
sustainability targets
of Fortune 500 companies have
renewable energy targets
of Fortune 500 companies have
committed to 100%
renewable energy
of U.S. large buyers are
pursuing renewable energy
48%
43%
5%
72%
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 9
Stakeholder Pressure Will Only Continue to RiseCorporate stewardship is increasing, which is in some part understood to be driven by consumer purchasing patterns becoming more and
more influenced by environmental concerns and climate actions taken by businesses. Whether onsite, offsite or through green tariffs,
many businesses are looking to renewable energy sources as a strategy to increase climate solutions in their portfolio, lessen their
impact on the environment, and show their customers that they’re listening.
Do Your Brand a FavorCertainly related to the point above, consumers are making judgements on brands based on their environmental stewardship. Studies
show that from GenZ to Millennials to Baby Boomers, many generations prefer to purchase from companies who are known for being
environmentally friendly.
Renewables are One (BIG) Way to Make Progress Toward Sustainability Goals
As more organizations set sustainability goals, it’s important to have a pointed action plan on how to achieve them. Whether specific
renewable energy targets, greenhouse gas reduction targets or carbon emission targets are included, incorporating renewable energy
into the supply mix is a great way to make a big impact on sustainability goals. And with more options that carry less risk and legal
complication, organizations are finding it easier to move forward than ever before.
Climate Risk Forecasting
With 94 of the world’s major stock exchanges making environment and climate disclosures a requirement for listing, environmental and
climate factors are growing factors in assessing companies’ credit rating and thus access to capital.
More Options with Less Risk
Record-level investment in renewables has many developers and suppliers creating new renewables products based on demand. Retail
solutions like Physical Green Supply (supply contracts for renewable energy with shorter terms than traditional renewable products) allow
businesses to purchase contracted physical volumes of renewable energy – primarily wind or solar – directly with generators or through
intermediaries. Physical volumes are incorporated into traditional retail supply contracts along with RECs. A product like this provides a
lower risk option with short-term, simplified contracts and can provide fast progress toward renewables targets.
Source: Berkeley Lab (October 2018)Notes: Target percentages represent the sum total of all RPS resource tiers, as applicable. In addition to the RPS policies shown on this map, voluntary renewable energy goals exist in a number of U.S. states, and both mandatory RPS policies and voluntary goals exist among U.S. territories (American Samoa, Guam, Puerto Rico, US Virgin Islands).
WI: 10% by 2015
NV: 25% by 2025
TX: 5,880 MW by 2015
PA: 18% by 2021NJ: 54.1% by 2031
CT: 44% by 2030
MA: 41.1% by 2030 +1%/yr
ME: 40% by 2017
NM: 20% by 2020 (IOUs)10% by 2020 (co-ops)
CA: 60% by 2030
MN: 26.5% by 2025Xcel: 31.5% by 2020
IA: 105 MW by 1999
MD: 25% by 2020
RI: 38.5% by 2035
HI: 100% by 2045
AZ: 15% by 2025
NY: 50% by 2030
CO: 30% by 2020 (IOUs)20% by 2020 (co-ops)10% by 2020 (munis)
MT: 15% by 2015
DE: 25% by 2026
DC: 50% by 2032
WA: 15% by 2020NH: 25.2% by 2025
OR: 50% by 2040 (large IOUs)5-25% by 2025 (other utilities)
NC: 12.5% by 2021 (IOUs)10% by 2018 (co-ops and munis)
IL: 25% by 2026
VT: 75% by 2032
MO: 15% by 2021
OH: 12.5% by 2026
MI: 15% by 2021
Increasing and extending RPS targets: More than half of all RPS states have raised their overall RPS target or carved-out at some point since initial RPS adoption; many in recent years.
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 10
Why Renewables Today?There are many reasons to consider renewables, but we believe these truly make the case for adoption of renewable energy now.
Expanding Renewable Requirements Renewable energy portfolio
standards are increasing in
many markets which is a
primary driver of investment in
increased generation.
Growing Installations and Forecasted CapacityWith record investment comes
increased capacity and supply
that will make renewable
solutions more readily available.
This also puts pressure on pricing
to decrease and diversification of
products like shorter term retail
solutions to increase.
Record-Level InvestmentOver $300B has been invested
annually in renewable energy
projects since 2014.
Declining Costs REC pricing has continued to
step down, and coupled with
federal tax credits and tax
equity, markets continue to
be economically attractive.
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 11
Barriers to Entry with Renewable Energy
While all signs point to investment in renewables, that doesn’t mean an organization’s go-forward plan will come without challenges. Even with a methodology to evaluate your options, it’s important to go into the process with potential barriers identified and a strategy to overcome them. This section will cover a variety of barriers that prevent companies from making rapid forward progress to acquiring renewable energy, whether they are early adopters or mature and seasoned veterans of renewable purchasing, as well as best practices to stay on track.
BARRIER: Complete & Accurate Data
The Issue: Many organizations lack complete and accurate resource data across their entire portfolio of sites, including lack of
data in the format that allows for comparative analysis of renewable solutions verses current sourcing strategies.
The Solution: Tracking consumption and other data internally or via a trusted third-party partner will allow organizations to
understand needs across their entire portfolio of sites and better plan an energy management strategy to meet goals.
BARRIER: Understanding of & Ability to Assess Available Options
The Issue: Terms and conditions of different renewable energy solutions will vary across providers and markets. Maintaining a
working knowledge of markets, transaction types and pricing is very difficult, especially for multi-site organizations.
The Solution: Ideally, organizations can leverage one or more partners who regularly evaluate these solutions to make
strategic recommendations on what makes the most sense based on their goals.
BARRIER: Funding Options for Onsite Renewables
The Issue: Incorporating renewable solutions into an operating budget involves identifying a business case and a cost for
some solutions, which may give rise to unforeseen funding issues or at least timing challenges of getting funding included in
forecasted budgets.
The Solution: In capital-constrained environments, organizations can pursue renewable solutions that do not require an
upfront capital expenditure, or they can partner with vendors who offer performance-based contracting through which services
are paid for via shared savings.
BARRIER: Counter-Party Risk
The Issue: When assessing renewable energy options, it can be difficult to assess stability, fitness and experience of different
renewable energy service providers and products (i.e. batteries, fuel cells, solar panels).
The Solution: Organizations can mitigate risk by working through financially stable energy service providers who can source
and bundle solutions and potentially act as a counter party to shield from market risk.
Brian DooleySenior Director, Renewables Consulting19-year energy expert
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 12
BARRIER: Executive Buy-In
The Issue: Executive buy-in is a pervasive theme across organizations looking to transition a portion of their portfolio to
green power. Providing market data on the scope of opportunity, investment, pricing trends, availability of price supports, and
comparative risks is critical to obtaining support.
The Solution: Partnering with a development partner with diverse experience across technologies, suppliers and markets can
help de-risk renewable sourcing strategies in the perspective of executives.
BARRIER: Managing Regulated and Deregulated Locations Across Your Portfolio
The Issue: There can be a tendency to separately approach renewable sourcing strategies and traditional energy sourcing. This
can be further exacerbated by separating those strategies between regulated and deregulated markets.
The Solution: Renewable opportunities will have to be balanced with traditional energy strategies already in place, and the
development of new, diverse products will require more a more frequent assessment of both renewable and traditional energy
supply strategies.
BARRIER: Facility Ownership Versus Lease
The Issue: Both the term of leased facilities and the relationship with landlords can complicate renewable energy strategies.
The Solution: A strong sustainability strategy will start with a materiality assessment—identifying energy usage profile,
location and facility terms & conditions—from the outset. With those characteristics established, organizations can
prioritize sourcing strategies and incorporate solutions for leased portfolios that emphasize term and source flexibility
over other attributes.
BARRIER: Timing of Capital Investment
The Issue: With a finite amount of capital available to pursue an organizations goals, distinguishing the relative value of
deploying capital for renewable solutions can be a difficult sell internally.
The Solution: The priority goals of an organization will drive whether capital deployment for renewable solutions may be
advantageous at any given time across differing market conditions. State and market level programs and incentives can help
create a compelling business case regarding why to prioritize capital allocation to renewable solutions. However, such programs
and incentives often have caps on the amount of participation or windows of time for eligibility which will require that
customers respond in a timely fashion. Ideally, customers will partner with energy service providers with broad and continued
market engagement to help flag those timely opportunities early enough to participate.
BARRIER: Uncertainty of Operation
The Issue: Commonly a concern for retail and quick-serve restaurants, businesses that are testing new locations have a level
of uncertainty to the length of time their business might operate in that location. This uncertainty can make it difficult to plan a
renewables procurement strategy that meets the flexibility and contract terms needed.
The Solution: Every business seeks to maintain flexibility to respond to market conditions and thus customers should be
evaluating sourcing renewable solutions in coordination with expected operating schedules for facilities, sales performance and
any other criteria that might lead to cessation of a location’s operations. Increasing demand for renewables solutions year over
year are prompting the development of new products that allow for greater flexibility and more favorable contract terms that
more closely resemble traditional energy supply contracts than long-term PPA type structures.
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 13
No barrier is insurmountable. By understanding what barriers they might come up against, and creating a plan to overcome them, organizations will be more likely to succeed and experience greater movement toward purchase.
BARRIER: Time Constraints
The Issue: Many organizations can feel the pressure to act when they make time-bound commitments to renewable energy
and have quickly approaching deadlines, but little progress. They need a clear roadmap and a strategy to communicate their
short and long-term plan to achieve those goals.
The Solution: Depending on the goals of an organization, diversifying renewable solutions can help generate near-term
success and mix in other longer-term strategies. It is critical to map out the location of usage, ownership structure of consuming
facilities, regulatory restrictions of the markets where usage occurs, current contracted commitments for energy supply, and
contracting flexibility of customers, to move from assessing opportunities to identifying executable options.
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 14
Most multi-site commercial and industrial (C&I) businesses are likely working toward an integrated supply mix across coal-fired generation, offsite renewables and distributed energy resources to support their sustainability goals. Each provide their own value, and depending on regulations, availability and conditions on a site-by-site basis, each portfolio will be unique. Supply strategies are also highly dependent and interconnected with demand-side strategies. The following illustrates the value of both demand and supply-side strategies.
Evaluating Renewables as Part of an Integrated Strategy
Brian DooleySenior Director, Renewables Consulting19-year energy expert
For a more in-depth look at supply and demand-side strategies, including an explanation on what kind of company would benefit and
why an organization should consider them, skip ahead to our appendix at the end of this eBook.
Specific to renewable energy options on the supply side, ENGIE Impact’s approach to identifying the best strategies for our customers
starts with reviewing a set of 12 characteristics of renewable solutions to help prioritize what is important to a given organization and
match those characteristics to the products that best align. Having this clear, concise and repeatable process helps create a smooth
experience and ensure no question is left unanswered. As with any organizational-level strategy, establishing the priorities, a process
to evaluate specific opportunities, executing and measuring against expected outcomes is key to launching a successful initiative and
making incremental gains through continued refinement.
Supply Management Demand Management
Coal-Fired Generation
Offsite RenewablesDistributed Energy
ResourcesEnergy Efficiency Demand Response
Value Value Value Value Value
lower cost clean/decarbonizediversification/
decarbonize
expense management, shave
consumption
expense management, shift
consumption
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 15
Organizations considering renewable products should review the following 12 characteristics. Based on their priorities – locality or
marketability, for example – organizations may determine that a particular project is not right for them.
Additionality Describes transactions that support the
construction of new clean energy facilities –
additional emissions reductions that would not
otherwise exist.
Locality/Proximity The ability to point to a specific source of
renewable power within a certain proximity.
Sustainability Impact How much influence a product will have on
achieving sustainability goals.
Marketability Determines what organizations can publicly
state about their investment in renewables.
If customers are not retaining the renewable
energy credits from a sourcing strategy or
replacing those they sell, there is marketing
guidance from the Federal Trade Commission that
prohibits making statements about these types of
transactions.
Company Credit Rating Can influence which renewable investment is
right for an organization.
Lead Time The amount of time required to deliver renewable
products, which can range anywhere from weeks
to years depending on the structure.
Price Risks Potential of material movement in the
basis curve.
Budget Certainty Predictability in month-to-month costs.
Contract Simplicity Certain products require complex legal
documents with intricate compliance, tax,
and accounting requirements.
Developer Credit Risk The risk of default or contract termination that
stems from a renewable energy developer’s
credit rating.
Contract Term Flexibility The ability to contract for short terms (3+ years)
or longer terms (10-20+ years), assignability,
shifting deliverables across multiple locations,
termination for convenience and other terms
related to customer performance.
Volume Risks Exposure to real time spot market volatility when
load is short or long relative to renewable supply.
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 16
Current State Assessment
• Current generation portfolio
• Review goals
• Industry and regulatory watch
Integrated Sourcing Strategy
• Business case development
• Procurement planning across traditional
(Brown) and renewable (Green) energy options
Procurement Program Management
• Procurement plan execution
• Proposal evaluation and contracting
Measure & Report on Performance
• Benchmarking of existing assets
• Tracking progress towards goals
• Verification of performance
Performance Optimization
• Performance optimization on both
supply-side and demand-side
Understanding organizational priorities from these 12 criteria is just the start. It takes a thorough process to understand the current state
of sourcing strategies and portfolio characteristics to help develop a business case for renewable solutions. But the process is critical and
can help to surmount obstacles that may arise even as organizations move forward.
Ongoing reporting on performance is key to ensuring long-term satisfaction and trust and to ensure additional investment in future
recommendations. Organizations should also look to performance data to support long-term program optimization and maximize their
approach to renewables.
Strategic Energy Sourcing & Procurement Process
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 17
Throughout this eBook, we discussed the current state of procurement and the forces that have shaped where we are today. We looked at what’s driving urgency and action as well as the barriers that still exist for companies looking to integrate renewables. And we discussed considerations for evaluating renewables as part of an integrated procurement strategy.
So to close, here is what ENGIE Impact believes the future of renewable energy procurement holds for businesses.
Sustainable, Climate-Resilient Assets Will Rise in Value
Large, global companies are sitting on the forefront of sustainability and renewable energy procurement. Nearly 50 percent of Fortune
500 companies have sustainability and renewable energy targets, and in 2018, C&I buyers procured a record 5.3 GW of renewable
energy nationally. This increase in investments in sustainability initiatives—and especially in renewable energy—is gathering momentum
as the link between sustainability and financial performance becomes stronger. Corporations are looking at these investments from a
financial value perspective and beyond the initial, emotionally-driven motivation.
As the world feels the increasing effects of climate change, there is value in sustainable and climate-resilient assets, and leading companies are not only reducing carbon emissions but generating financial returns while creating platforms and incentives as models for others to follow.
Upfront Strategy Development will be a “Have-to-Have”
It is important that corporations pursue their own unique sustainability journey and define their values and principles upfront before
they get into the finer operational details. Their investment strategy must be backed by the right amount of metrics that can track their
progress effectively by analyzing foundational metrics such as energy usage intensity, water usage intensity and GHG intensity
of their operations.
Companies will Continue to Face (and overcome) Hurdles
Despite the overall momentum in this space, renewable energy procurement in the broader C&I sector continues to face hurdles. For
example, traditional PPA structures are complex for small and medium-sized corporations, as they do not have adequate knowledge or
understanding of incentives to get into long-term contracts. But we see corporations overcoming these barriers innovatively, for example,
signing PPA deals with other buyers (i.e., aggregated PPAs) and negotiating for more flexible contracts. Also, financial instruments in the
form of synthetic PPAs are cropping up, which provide some relief from longer term contracts by offering shorter terms at a premium.
Based on the risk profile of corporations, this market is evolving to offer differently structured renewable energy supply contracts for
different types and sizes of buyers. All this is leading to a strong wave of adoption as more and more companies hop on the renewable
energy bandwagon.
The Future of Renewables Procurement
Shy MuralidharanDirector, Product Management14-year energy expert
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 18
Renewable Energy will Become a Competitive Advantage
Another variable driving growth in this space is large companies pioneering business-to-business market incentives (also known as
Renewable Value Chain Initiatives), that encourage upstream companies and midstream suppliers to produce products and services that
are made by renewable energy. If other companies adopt sustainability-influenced supply chains that rank suppliers based on their
renewable energy commitments, the use of renewable energy could become a competitive advantage in the marketplace. This causes a
network effect for renewable energy adoption and we are already seeing tremendous growth in products and services with a sustainable
supply chain.
We hope this eBook has shown you that the renewable energy journey is unique to your organization. You can either take
a ‘wait and see’ approach for government policies or legislation to incentivize businesses and provide financial support for
renewable energy, or you can explore the steps to take based on your risk appetite and growth ambitions. Already, local policies
in several markets, demand from consumers and investors, and advancing technologies are driving ambitious sustainability goals
and the growth of renewables is apparently influencing some key financial performance metrics. This means that renewable
energy investments might very well transition from the realm of ‘nice-to-have’ to a competitive advantage. And as this space
evolves and grows – because all signs point to growth – you can be sure we’ll keep a close eye on what the future brings.
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 19
About the ExpertsContact our experts to ask questions and learn more.
Shy Muralidharan Director, Product Management
Shy Muralidharan is the Director of Product Management for Energy Intelligence Services at ENGIE Impact, leading a product team
to deliver a suite of world-class advisory, data analytics and technology services enabling organizations to solve problems related
to managing energy resources as part of a broader sustainability initiative. Shy has more than 14 years of worldwide experience in
product management, consulting, and thought leadership in the field of new energy systems and sustainability. A System Design and
Management fellow from MIT, Shy has a bachelor’s degree in mechanical engineering and an MBA from University of Mumbai.
Brian Dooley
Senior Director, Renewables Consulting
Brian Dooley is the Sr. Director of Renewable Consulting at ENGIE Impact leading clients through the transition to low and zero
carbon business solutions that implicate those clients’ business model, financial return requirements, sustainability and corporate
responsibility goals, corporate governance structures, operating portfolios, executive approval processes and public reporting
expectations. Brian has 19 years of renewable energy experience including development of industry-leading programs from
within Fortune 50 companies and enterprise solution development for such clients as an external development partner. Brian has
a bachelor’s degree in political science from the University of Wisconsin, Madison and a J.D. from William Mitchell College of Law,
Saint Paul, MN.
Jonathan Lee
Manager, Analytics Intelligence
Jonathan Lee leads ENGIE Impact’s Energy & Sustainability Analytics Intelligence team, which focuses on energy market intelligence,
utility rate forecasting, and historical data acquisition to help provide insight into clients’ current and future energy spend. Jonathan
has 10 years of experience in the energy industry and is a regular contributor to various natural gas industry polls and articles,
including Argus Media, Bloomberg, Platts and Reuters. He also has a bachelor’s degree in finance and marketing from Concordia
University, Portland, Oregon.
Ben Taylor
Senior Manager, Energy & Water Advising
Ben Taylor leads ENGIE Impact’s Energy & Water Advising team, which applies a data-driven strategic approach to developing
and managing programs which optimize resource consumption and improve facility operations as part of a holistic sustainability
management initiative. Ben has 10 years of experience in the energy industry, with roles in engineering, consulting, and operations
management. He has a bachelor’s degree in mechanical engineering from California Polytechnic State University, an MBA from
Eastern Washington University and is a Certified Energy Manager and a licensed Professional Engineer.
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 20
WHAT Is It? WHO Can Benefit? WHY Consider It?
Energy
Efficiency
A low-risk, cost-reduction opportunity for delivering economic, operational, and sustainable value.
• Equipment upgrades, such as LED retrofits and HVAC optimization
• Technology upgrades, such as controls optimization
• Maintenance and monitoring
Customers who are aiming to:
• Achieve energy reduction targets
• Meet sustainability goals
• Replace outdated equipment
• Improve infrastructure
• Reduce maintenance costs
• Improve workplace safety
• Potential savings from reduction in energy use (kWh)
• Potential savings from managing peak demand (kW)
• On-bill financing for qualifying customers
• Utility incentives for increased ROI and payback
Demand
Response
Reductions in consumption for periods of two hours or less at frequencies dictated by the market and/or the ISO.
• Price alerts• Demand alerts• Real-time metering• Reliability-based programs • Economic/ancillary programs
Customers with:• Smart or IDR metering• Ability to curtail load for short
periods• Load flexibility
• Large commercial and industrial customers with significant curtailable load could achieve savings in consumption and in annual energy costs
Appendix
Integrated Energy Management: What, Who and Why
So you know renewables are inevitably part of your energy supply future, but with so many options available it can be difficult to keep
up with what’s on the market, what companies will benefit and why you should consider it as a part of your holistic energy management
strategy. Let’s break down the basic demand and supply side options to better understand each.
Demand-Side Strategies
Supply-Side Strategies – DERs
WHAT Is It? WHO Can Benefit? WHY Consider It?
Distributed
Energy
Resources
(Onsite
Generation)
Installing onsite generation to produce energy. For example, solar, either with ground-mounted or rooftop panels that are typically connected to the local utility grid. Used to offset consumption, reduce energy costs, and improve environmental responsibility.
Customers with:
• Sustainability targets
• Space availability
• High electricity rates
• (solar) High solar radiation with good roof quality
• Large energy offset
• Favorable lease agreements or sites at owned locations
• Usage and potential demand reductions enable significant cost reductions
• Offsets peak usage
• Ensures fixed price for portion of demand
• Supports sustainable brands with environmental and marketing claims
• Declining costs of producing solar power
• State incentives and federal tax credits
Distributed
Energy
Resources
(Storage)
Battery-based storage that enables customers to use power more efficiently and sustainably by storing and retrieving electricity in cycles.
Customers aiming to:
• Reduce high electricity costs by addressing energy demand (kW)
• Improve emergency preparedness
• Increase sustainable impact if coupled with renewable technologies Ensure resiliency during potential supply disruptions
• Greater control over energy costs with time-shift usage, deploying stored energy when prices are high and charging systems when prices are low
• Revenue generation potential
• Hedge against rate changes
• In favorable markets, rapid ROI, with typical returns achieved in less than five years
• State incentives and federal tax credits
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 21
WHAT Is It? WHO Can Benefit? WHY Consider It?
Renewable
Energy Credits
(RECs)
Renewable Energy Credits (RECs) offset the indirect greenhouse gas emissions of organizations while funding the operation and development of domestic renewable energy. A fungible and tradable commodity, each certificate represents 1MWh of renewable generation.
• Compliance RECs available in states with mandated regulatory requirements for renewable generation
• Voluntary RECs (Green-e certified RECs) available to support states without regulatory requirements for renewable generation while providing cost optimization in non-ERCOT markets
Customers seeking:
• Contract simplicity and flexibility
• Fast progress on sustainability goals
• Low-risk opportunities to strengthen environmental responsibility
• Can buy for a portion, or all, of energy consumption
• Marketing claims
• Rapid turnaround time for sustainability impact
• Minimal contract complexity
Power Purchase
Agreements
(PPAs)
Sometimes referred to as an electricity power agreement, PPAs and VPPAs represent a contract between two parties that includes sourcing RECs and renewable energy or for RECs alone respectively.
Customers seeking:
• Expense management opportunity in favorable markets
• Fixed portion of energy expense or fixed REC pricing
• Potential sustainability impact when RECs are sourced with the energy
• Potential financial hedge for financial power purchase agreements verses physical PPAs
• Source renewable energy at advantageous rates in markets with price supports or incentives
• Source volumes of renewable energy that exceeds usage at one site and may be allocated to multiple sites
• Hedge against energy price volatility using a REC financial hedging strategy for VPPAs
Physical Green
Supply
Contracted physical volumes of renewable energy – primarily wind or solar – direct with generators or through intermediaries. Physical volumes are incorporated into traditional retail supply contracts along with RECs.
Customers who are:
• Aiming for fast progress on renewables targets
• Seeking to reduce environmental impact – and market actions – within one or two months
• Limited to load following fixed-price or block-and-index contract structures
• Environmentally responsible with low-risk appetites
• Firm volume and fixed-price offerings ensure predictability in costs
• Significant sustainability impact
• Marketing rights to reference specific assets
• Rapid turnaround time to project initiation
• Flexible terms and simplified contracting through standard retail supply agreements
Supply-Side Strategies – Offsite Renewables
WHAT Is It? WHO Can Benefit? WHY Consider It?
Green Tariffs Green tariffs are optional programs in regulated electricity markets offered by utilities and approved by state public utility commissions that allow larger C&I customers to buy bundled renewable electricity from a specific project through a special utility tariff rate.
Customers who:
• Have sites/locations in regulated markets
• Need sourcing strategies with shorter term, more flexible transactions
• Opportunity to source renewable energy in regulated markets when retail choice is not available
Supply-Side Strategies – Tariff Monitoring & Optimization
Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 22
Don’t Wait. Start Today. To explore opportunities and discuss your current strategy
further, schedule a discovery session with an ENGIE Impact
consultant today.
Contact UsIf you would like to discuss any of the findings or best practices presented in this report, please reach out to your ENGIE Impact representative or contact us at:
ENGIE ImpactENGIE Impact works with multi-site businesses that aim to thrive in a sustainable world. With accurate and comprehensive resource data – including energy, water, waste and telecommunications – ENGIE Impact applies technology and people expertise to lower costs, drive efficiencies, and reduce environmental impact. Leading customers, including 25 percent of the Fortune 500, turn to ENGIE Impact to drive their sustainable resource management initiatives forward.
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