Why Green Power is Hip

on May 21, 2013 at 9:00 AM

A picture taken on May 9, 2011 in Les Me

An increasing number of businesses want to be seen as green; go figure.

The demand for renewable energy is predominantly driven by mandatory targets such as renewable portfolio standards (RPS) in the US, lucrative feed-in-tariffs (FITs) in Europe, or other requirements such as renewable fuel obligations in the UK. Subsidies such as production tax credits (PTCs) are among other instruments used to promote their development. What is less known, but increasing, however, is the growing interest from consumers, large and small, who insist on meeting a large percentage or all of their needs from renewable resources, and appear willing to pay a premium for green power.

In its latest release of such data in mid April 2013, the US Environmental Protection Agency (EPA) lists the top 10 buyers of green power. For some time, Intel has been on top, not only in absolute terms but also as % of total use – in this case 100%. Few companies are listed with numbers exceeding 100% – they not only use a lot of renewable electricity but also generate additional amounts on top of what they buy; in other words, they are net producers of green energy. There are no energy-intensive industrial companies on the list – the costs would presumably be prohibitive to remain competitive, either with their domestic rivals and/or overseas competitors.

Companies who make it on the list get certain bragging rights – they can point out how responsible and green they are and how much they care about the environment. It may be an effective message in a crowded world where businesses must increasingly differentiate themselves from their rivals. Whole Foods Market, an up-scale supermarket chain that specializes in high quality organic food, fresh fruits and vegetables, for example, cannot go wrong by vouching its environmental credentials. It is one more reason for the up-market, fussy, health-conscious or environmentally active customers to shop there, rather than a store that does not give a damn about the environment.

High-tech companies have always been eager to be seen as green, especially given the recent negative publicity about how much energy they use in their data centers and the like. In March 2013, for example, Apple’s CFO, Peter Oppenheimer, announced that the company will operate its largest US data center entirely on renewable energy, supplemented with on-site generation from rooftop solar panels and fuel cells.

Some 167 million kilowatt hours (kWhrs), or 60%, of the electricity used by Apple’s biggest data center, based in Maiden, North Carolina, which supports internet storage and the company’s service-hosting iCloud product, are supplied from a 100-acre solar farm and fuel cells with the rest coming from external renewable purchases. The company is building another 20 megawatt (MW) solar farm at the same site with solar panels supplied by SunPower Corp. Overall, Apple says it has increased the proportion of renewable energy to 75% of its consumption with the aim of eventually relying entirely on renewable energy at all its global facilities. Other high-tech companies are likely to notice; Microsoft is already on the list.

Becoming green, sustainable, and highly efficient, however, is not only a good marketing ploy but increasingly seen as a way to survive in the future.

Wal-Mart, the world’s biggest retailer and a top Fortune 500 company, for example, surprised everyone by announcing an ambitious commitment to become more energy efficient and green. In mid April 2013, its CEO Mike Duke announced the company’s goal of being supplied 100% by renewable energy by 2020. That sets a tall order for other retailers to match.

Mr. Duke said Wal-Mart will procure 7 billion kWh of renewable energy globally every year, a 600% increase over 2010 levels, while reducing its energy intensity by 20% measured in kWhr/sq. ft. of retail space compared to 2010 levels. The two new commitments are anticipated to generate more than $1 billion annually in energy savings once fully implemented.

Big deal? Indeed. With 10,500 stores in 27 countries and annual sales of $466 billion, Wal-Mart employs more than 2.2 million people worldwide and serves more than 200 million customers weekly. If Wal-Mart can demonstrate that being green and energy efficient is feasible and cost-effective, others are likely to notice, perhaps follow.

“When I look at the future, energy costs may grow as much as twice as fast as our anticipated store and club growth,” Duke said. “Finding cleaner and more affordable energy is important to our everyday low cost business model and that makes it important to our customers’ pocketbooks.”

Wal-Mart plans to install solar PVs on at least 1,000 US rooftops and facilities by 2020, increasing the use of highly efficient LED lighting in stores and parking lots, installing high efficiency HVAC, refrigeration systems and sophisticated energy/building control systems and increase the fuel efficiency of its trucks, among other measures. Being green and efficient increasingly means good business.

Perry Sioshansi is the editor of EEnergy Informer, and a consultant for energy firms. He can be reached at fpsioshansi@aol.com.

A recent book, Smart Grid: Integrating Renewable, Distributed, and Efficient Energy, edited by Sioshansi, explores the many dimensions of the smart grid . With contributions from a number of prominent experts, scholars and practitioners with different perspectives, the book provides a broad coverage of the what, how, when, why and other facets of the smart grid.