How businesses are putting eco-friendly energy strategies into play

With more companies looking to reduce their carbon footprint, their energy strategies play a big part in achieving their targets

June 24, 2020

For all companies with ambitious carbon reduction goals, how they source and how they use energy across their real estate and delivery networks go hand-in-hand.

Growing numbers of corporates are making commitments to 100 percent renewable energy sourcing in the coming decade. Spanish telecoms multinational Telefónica recently signed a Power Purchase Agreement (PPA) with renewable firm ACCIONA to supply 100GWh of renewable energy for 10 years to Telefónica’s data processing facilities, offices and work centres in Spain.

Others, such as Visa, have already hit their targets. Indeed, the amount of clean energy that corporates have bought from renewable power providers has tripled in the past two years.

Despite the progress, it’s only half the story. With UK commercial property estimated to be wasting £60 million in unnecessary energy bills, more needs to be done to reduce energy usage, says David Mead, utilities director at JLL Property & Asset Management.

“We’ve seen significant switching to renewable energy supply,” he explains. “But real change will come from an acceptance that too much energy is being used. Buying green and then wasting it doesn’t make sense financially or environmentally.”

The same applies for the move to electric vehicles; if more companies go electric but do not tackle energy efficiency, then overall usage at site and grid level will grow, increasing the cost to sites and the strain on infrastructure.

Monitoring energy use

Technology could help in the drive to cut energy usage. Being able to track energy use in the workplace should become more straightforward if more smart sensors are installed, Mead says.

These adjust lighting, heating and air conditioning when areas of a building are under-occupied. Sensor-based predictive maintenance can equally help to flag issues when they arise.

Such tech could cut energy use in commercial buildings by an estimated 14 percent, according to the Green Alliance – not to mention making substantial cost savings.

“Proving the financial as well as environmental advantages will be key,” Mead says. “Practically, that means using data more to analyze usage, for example, and putting best practice guidance for staff in place.”

Buying in renewable energy

When it comes to sourcing, most suppliers can provide power from existing renewable generation sources. The difficulty is ensuring that it’s verifiable and transparent. 

This can be done through certification schemes, but for larger customers, PPAs for renewable energy provide certainty - and are becoming increasingly popular.

Last year, major tech firms, including Facebook, Google and Microsoft, were the world’s biggest buyers of renewable energy to help power their data centres, according to BloombergNEF. Google alone has 18 wind and solar energy agreements in place in Europe, the U.S. and Latin America.

Meanwhile, beer giant Anheuser-Busch InBev is getting power for its operations from solar energy from Spain. In France, solar developer Voltalia is providing energy to retailer Boulanger, national rail firm SNCF, Crédit Mutuel and hypermarket chain, Auchan.

But alignment between a C-suite looking to achieve net zero targets and their property management division is complex, Mead explains.

“There’s often friction and understandably so, when they cannot align a seven-year office lease with a 10-year PPA energy supply agreement,” he says. “Squaring that is, and will continue to be, a challenge, especially in a fast-paced business environment in constant flux.”

A lack of size and scale also means that smaller businesses face additional issues locking in PPAs.

“We may therefore begin to see smaller companies come together and follow the example of UK universities,” Mead adds. Twenty UK universities joined forces late last year to sign a 10-year renewable energy package with UK windfarms.

Creating a future surplus

Transformation is happening. Late last year, 23 commercial property owners signed a Climate Change Commitment covering more than 11,000 commercial properties globally, committing to publish their own pathways to net zero by the end of 2020 – and achieve the target by 2050.

More corporates are formulating energy strategies beyond renewable power. Lloyds Banking Group, for example, is looking to source 100 percent renewable electricity, create net-zero fleets and improve energy productivity.

The current challenge in renewable energy contracts is in additionality, where new renewable energy is generated. One of the steps in the Net Zero Framework, it can either be achieved through on-site generation or off-site through a PPA with a generator.

“In the longer term, the next challenge will be to achieve net positive, whereby companies generate more renewable energy than the energy they consume and therefore reduce overall carbon emissions, not just their own,” says Mead.

Global coffee chain Starbucks is aiming to become resource-positive, storing more carbon than it emits and providing more clean water than it uses.

“So far, the drive for net-zero has mainly seen companies switch provider, self-power, or offset their carbon,” says Mead. “But being able to create additionality is something which will enable material change and go well beyond just eliminating operating carbon footprint.”