Energy supply will soon no longer be a commodity, exchangeable and undifferentiated. Transparency about methods of production combined with increased consumer enthusiasm for authentic ways of ensuring their habits don’t harm the planet will ensure a shift in how energy is made, consumed and tracked.
That’s the brave new world Morten Albaek envisions as he considers the “puzzle” that is the energy mix today. Albaek is Global Senior Vice President of Global Marketing and Corporate Relations at Vestas, the Denmark-based world leading wind energy company, but his approach to the business of selling wind turbines to the world is based on a fundamental view of the sector’s place in history, and its development.
But it is impossible to change the world without the right tools. How can energy producers and corporate buyers of huge volumes of energy supply be convinced that their customers care and it make business sense to invest in wind energy? How can they demonstrably lead?
It was in part to answer those questions, and to put hard numbers around soft concepts, that Vestas originated, in partnership with Bloomberg New Energy Finance and TNS, a pair of painstakingly collected data sets that support the kinds of business decisions that Albaek says could mount to no less than changing the world.
The Corporate Renewable Energy Index (CREX) is a report that highlights many of the world’s largest companies, and dives into their use of renewable energy, providing details about how they buy renewable energy and what they think will – and should – be done about renewable energy in the coming years. The firms are ranked, and the numbers are full of surprises, with unexpected leaders and laggards.
“When it comes to corporations, it is always important to study the leaders if you want to understand where a certain aspect of business is heading, because the rest will eventually follow” Albaek told Breaking Energy in a recent interview. “All corporations study leaders, and when you note that the leaders – and potentially your biggest competitors – state they are driving down their energy costs by investing in renewable energy, you can’t ignore it”, Albaek argues.
But according to Albaek, transparency and education alone does not suffice, “according to CREX, companies invest in renewable energy because it is close to core strategy, it lowers cost, it secures energy supply and more, which means that this is very attractive to companies. The combination of core strategy and the capital intensive nature of renewable energy, however, entails that these decisions are made at the heart of the company. For instance, a recent survey showed that in 76% of companies, decision within a company’s energy consumption and investments were taken at board level. Hence, to accelerate the transition to renewables we need to be better at communicating the commercial side of investing in renewable energy to the right people in large corporation.”
The second half of the equation for Vestas and Albaek in the Energy Transparency initiative, now in its second year, is the Global Consumer Wind Study (GCWS).
The Global Consumer Wind Study brings together over 24.000 consumers from a wide range of countries around the world to answer the same questions about their perceptions of renewable energy and traditional fossil fuel energy, to test their perception of government support of various energy types, and to gauge how they feel about a wide range of brands and their links to renewable energy use.
“The combination of these two pieces of transparency provision … can change the way corporate leaders source their energy,” Albaek said, before adding that he doesn’t think the data sets perform that task unaided. “They are pieces of a bigger puzzle that together with the rapid decrease in the cost of energy for wind, and tax on carbon – like in Australia – will impact the way both corporations and consumers think about the energy mix.”
The studies work alongside other studies and data sets to underline the message that consumers do reward companies using energy types that reflect their values. “The logical response for companies is to move away from a dependence on fossil fuels,” Albaek said in discussing the 2012 study results. “In ten to fifteen years it will be difficult to sell a product produced by ‘black’ energy.”
The Enlightenment Economy
Albaek believes the economy is moving to a new model where companies will profit by providing products, solutions and offerings that enlighten and empower individuals to make a difference and have a positive impact on the world around them, he said. (For more on the enlightenment economy, read Albaek’s blog for the Huffington Post here).
The concept is simple but requires activation, which Albaek says comes through transparency. “The majority of people understand that climate change is for real and is threatening the prosperity of future generations and they sincerely want to sustain and protect the planet,” he said. “but too many don’t know how to take action besides switching of the light at home and taking the bike to work. If we look at the energy that corporations use, we know that if 25% of the world’s largest corporations’ electricity came from wind, it would equivalent to the annual electricity of Australia, Switzerland and Ireland combined. Hence, if we can motivate the largest brands in the world to change to renewable energy by preferring products that is produced with wind energy it will have a huge and fast impact”
Expanding the discussion about and the understanding of energy policies, production and use is an effort with the same real and broad impact as educating ordinary consumers about financial literacy. “In 2008 banks were able to sell products to consumers because many of them didn’t know what they were buying, which didn’t mean they were bad people,” Albaek said, and the same problem resonates in energy literacy today. “Even the best educated people know way too little about the difference in energy mixes and the difference they can make.”
This piece appears on Breaking Energy as part of the Energy Transparency series in partnership with Vestas.