The Path Forward for how Business Sector Uses Energy is a Work in Progress
More and more companies are developing a clear vision of where they want to be energy-wise in the next decade or so; that’s the easiest part, setting a goal and putting it out there for all to see in the short-term. The destination is well known but the journey will be the mystery in the long term.
By 2030, major global companies such as Unilever, Schneider Electric and Anheuser-Busch plan to use or purchase all their energy via renewable sources or even be “carbon-positive.” Dozens of other well-known firms also are heading that way, if not as ambitiously or in as public a manner. Forty-eight percent of Fortune 500 companies have set targets either to reduce carbon footprints by half or more and deploy more than 60 GW of new, renewable energy by 2025.
Getting there, however, puts the “Dis” to the “rup” to “tion.” Reaching lofty goals won’t be as easy as the press releases make them sound, due to a combination of electric transmission logistics, finances, stakeholder resistance, regulatory hurdles and all the unknowns that muddy up five- and 10-year or even multi-decade plans.
Business plans are built to embrace this disruption (and be seen embracing it), because company souls believe that’s where their consumers of the future want them to go.
“They obviously see it in their business interest,” John Jimison, executive director of Americans for a Clean Energy Grid, told POWERGRID International. “They want to appeal to the rising generation, which sees the evidence is valid that we’re cooking the planet. The young and better educated are more likely to accept the science.”
If signing on the dotted line is acceptance, then companies of all market stripes and histories are committed, too. In addition to Unilever’s 2030 goal and the companies already mentioned, an extensive list of famous firms—Apple, Bank of America, Bloomberg, Facebook, General Motors, Johnson & Johnson, Kellogg’s, Nike, Salesforce and Walmart, to name a few—are already buying into renewable energy offsets or contracting for their own on-site renewable energy services or both.
Such movement does not happen in a vacuum. These decisions impact the business plans of other players in the energy space, such as microgrid service firms and, of course, power utilities. Duke Energy’s recently announced sustainability plan promised to invest $40 billion on converting its fleet to electric vehicles, lower carbon generation output and some grid modernization to capture demand response and energy efficiencies.
Utility-scale solar and tailored microgrid projects surely are part of the plan for Duke and numerous other utilities, working hard to curtail the market disruption wrought by rooftop solar and other distributed generation offerings. Wind power’s heightened capabilities in the U.S. southwest and Midwest also is attractive to demand centers eager for the cleaner energy, but there are hundreds of miles to go before they can even make the connection.
In a March 27 webinar focused on the Wind Energy Foundation “Corporate Demand and Transmission” report, consultant David Gardiner—whose firm prepared the report—pointed out that 15 states situated between the Mississippi River and the Rocky Mountains hold 88 percent of the nation’s wind energy potential and 56 percent of the solar photovoltaic (PV) capability. The same area, however, holds only 30 percent of projected electricity sales demand, which is more concentrated on the east and west coasts. Those gaps are complicated by the array of elected state regulators, regional transmission operators and political winds, pardon the pun, which dominate the current energy climate.
“We have a somewhat balkanized planning system rather than a national approach,” Gardiner said. “There’s a need for us to step up transmission planning beyond a level we even see today.”
Once again, sounds good in theory. Many longtime renewables observers have noted the need for long-distance, high voltage projects to get that wind into the load centers. Getting various states to go along on the way is something else entirely.
Clean Line Energy Partners has found that out the hard way. The Houston-based company has long planned a series of ambitious, interstate high voltage direct current (HVDC) transmission lines to deliver wind power from Oklahoma and Kansas through Arkansas, Missouri and other states toward a more concentrated demand that will pay back the billions of dollars invested. Yet resistance in Missouri has put Clean Line’s Grain Belt Express on hold, as did Arkansas’ blowback against the Plains & Eastern Clean Line. Those delays are coming after Clean Line spent years and untold millions on public hearings, community meetings and deals with potential project vendors.
Part of the problem is that most of the wind-generated electricity would be flowing across Oklahoma, Missouri and Arkansas and will not be used by customers in those states. The historical regulator framework allows utilities to pay for capital investments through new rates for customers because customers benefit from the energy.
Long-term renewable adoption by companies and customer bases outside the usual regional framework is something new.
“The transmission is expensive, it’s intrusive and it does create land-use impacts,” Jimison said. “And it’s not something serving everybody under it.”
In fact, while many of the companies adopting disruptive energy use plans do pay for on-site or near on-site generation, most of those power purchase agreements (PPA) are renewable credits or off-sets. The private sector puts the seed money into the grid so that the wind and solar is paid for, but the actual clean energy could be going to anybody, anywhere on the systems. It’s kind of like buying anniversary flowers that go to somebody else’s wife by happenstance. But at least the flowers are getting to bloom.
Pretty in theory, but perhaps not the most satisfying legal or business construct. Those who most deeply believe in a new way of doing things see a communal, if national benefit to new transmission planning can be proven and regional transmission organizations (RTOs) such as Midcontinent Independent System Operator (MISO) help light the way.
Yet MISO’s senior advisor Eli Massey believes the RTOs have their hands somewhat tied with respect to the PPAs signed between renewables-seeking companies and their power providers. MISO, for instance, can inform siting issues and determine points of interconnection for long-distance transmission which crosses its territory. State and federal bodies often determine rates involved.
“Because MISO is not a signatory to the PPA, we don’t always know about these PPAs, so it’s difficult to plan in that context,” he said during the Wind Energy Association webinar.
So, to quote Gandhi, many of the corporate interlopers who want to change the power grid must become the change they want to see. Unilever, for example, is a holding company with some 400 brands that sells nearly everything in the world, from ice cream to cooking oil to soap to petroleum jelly. It is a production-intensive business but one that company sustainability senior manager Stefani Grant promised will become more carbon neutral with each passing year until going nearly pure clean energy by 2030.
“By becoming carbon positive, we can lower operational costs and build stronger relationships with our customers,” Grant said during the Wind Energy Association webinar. “We’re not alone in making these commitments.”
Grant echoed the theme that companies need to step up and help on some of the heavier lifting to begin changing the grid business model.
“Companies really need to engage on the transmission planning process, and I have to admit we’re engaged on lower levels,” Grant said. “We need assistance. We really don’t have people on our staff who are experts in transmission. We need assistance from other organizations that will help us and reach out to us.”
Perhaps all of this just goes to show that the impact of energy’s future disruption on business plans will yield results and new ways of doing things in just a few short years. If major companies stay committed to ambitious renewable goals, something will have to give. And what gives is always the old way of doing things.
It just takes some help getting on down the road.