Recently, tech giant, Amazon announced three renewable energy projects totaling 265 megawatts (MW) that would provide power to its data centers. The tech giant said these new projects are all part of Amazon’s efforts to power 100% of its operations via renewable energy.
The three projects consist of a wind farm with a maximum capacity of 50 MW in Scotland, and two solar projects with 215 MW capacity in North Carolina and Virginia. All three projects are expected to start generating power by 2021.
Amazon’s new renewable energy is all part of the company’s commitment to helping the environment. “We are committed to minimizing our carbon emissions and reaching 80% renewable energy use across the company by 2024,” Amazon’s Director of Sustainability Kara Hurst said.
Amazon is not the lone global brand to make headlines recently for its commitment to renewable energy. Likewise, The Estée Lauder Group announced that it has already reached 100% in renewable power in the United States and Canada ahead of its target date. The brand also announced that it has signed a virtual power purchase agreement (VPPA) for wind energy. This makes the Estée Lauder Companies Inc the first prestige beauty firm to execute a VPPA.
Under the signed VPPA, the beauty company will purchase power 22 MW from the Ponderosa wind farm in Beaver County, Oklahoma owned by NextEra Energy Resource. The company says this new development is a great addition to its renewable portfolio “We’re so pleased to meet our 2020 RE100 commitment for North America early. Projects like the Ponderosa wind farm and others in our Net Zero portfolio are all significant achievements toward our commitments to address climate change,” said Nancy Mahon, Senior Vice President, Global Corporate Citizenship and Sustainability of The Estée Lauder Companies Inc.
Corporate renewable energy procurement has been aggressive in the last few years as private firms do their best to honor their commitments to zero emissions.
In 2018, corporate renewable energy deals were on a roll as clean energy contracts entered into by corporations more than doubled from 2017. There was a total of 13.4 gigawatts signed by 121 corporations across 21 nations last year.
Corporate renewable energy deals are impressive but are they enough to meet the world’s commitment of net-zero carbon by 2050?
The answer is no, since gas, oil and coal still dominate the energy mix according to Nick Butler, chairman of The Policy Institute at King’s College London and energy commentator for Financial Times. He stressed that in 2018, only $300 billion out to $1.8 trillion in investments in the energy sector went to renewables. The rest of the money went into fossil fuels, particularly gas and oil.
Butler says the established hydrocarbons for energy remain resilient since renewables only supply five percent of the global power demand. Within 10 years, renewable power is only likely to contribute 12 percent to global energy. Coal will continue to dominate in the next few decades.
This is not to say that renewables will never be the primary source of energy. Butler points out that renewables could dominate the world’s power mix but it will take more than 20 years.
The chairman says that the key to a faster energy transition is more involvement from the public sector. So far, return on investments for renewable energy is still far from the returns in oil and gas projects.
Butler proposes the adoption of a mixed economy model where the state will provide long-term capital to balance the low rate of with the value that renewable power brings to the public. He cites the cases of BP, and Equinor, formerly known as Statoil. The latter was put up by the Norwegian government as the state’s oil company and later became a major player in the gas market and the world’s largest oil and gas offshore operator. The company has rebranded into Equinor and now actively investing in solar energy and offshore wind.
For the Philippines, this will require a major shift in its energy policy. The EPIRA clearly steered the Philippine power sector to more private investments rather than the government. Its intention was to make the power sector “market driven.” Unfortunately the Philippine energy market is not efficient and still too young to be a reliable indicator of market prices. Therefore relying on this current market structure will not bring in new renewable energy projects in the scale and speed at which we need to put in place in the country.
There are ways to make the shift possible even under the current EPIRA regime. The Renewable Portfolio Standards (RPS) regulation is one way to go albeit its contribution will be very small. The issuance of a tariff policy requiring more stable power rates will help bring this surge in renewable energy investments. There are other ways. However, the government must first realize the need for more RE investments. Otherwise, all its policies and directives will be palliative solutions to what is going to be a major challenge in the country’s energy security situation.