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Renewables Thrive in Competitive Power Markets: Are Companies Ready to Advocate for Competition as a Critical Tool for Sustainability?

By Brian Marrs, Director, Policy & Strategy, NRG Energy

Renewables are expanding from a niche to a core corporate sustainability product

The RE100 is approaching nearly 100 commitments; it is clear that renewable energy is becoming a mainstay of corporate sustainability strategy. According to the Advanced Energy Economy, 71 companies within the Fortune 100 have set public renewable energy or sustainability targets, 22 of which have commitments to procure 100% renewable energy.[1] As a result, large companies have brought online 6GWs of new solar and wind projects since 2014.[2] According to the American Wind Energy Association, corporate and other non-utility customers held more than 50% of new wind power contracts signed in 2015.[3] To put these numbers into context, Lawrence Berkeley National Laboratory finds that today’s existing state Renewable Portfolio Standards (RPS) goals would require more than 60GWs of fresh renewables build by 2030 – the same GW development goals that Renewables Energy Buyers Alliance has targeted for corporations by 2025.[4] This growth means that corporate renewable energy buyers now have the ability to influence, and benefit from energy markets in a way that has never before been seen.

The renewable energy discussion needs to re-focus on market capabilities to accelerate deployment

For more than a decade, incentives have been at the center of the renewable energy conversation. With massive political change at the state and federal-level last year, many have understandably continued to focus on energy policy incentives for clean energy. Yet, the past decade of immense technology cost declines and improved performance have loosened renewable energy investments from dependence on tax incentives, and corporate buyers have played a critical role in driving demand for clean energy beyond RPS. In turn, these shifts have helped to direct attention to the long-term market elements necessary for truly fomenting renewables integration across today’s energy system. Policy incentives continue to serve as an essential bridge for renewables across the status quo, but clean energy must have supportive market structure to ensure success beyond incentives.

When corporate dollars chose, they chose competitive markets

The consulting firm Brattle Group finds that 44,000MWs of ‘non-RPS’ renewables have come online since 2000; 30,000MWs of renewables capacity came online beyond state RPS requirements in Texas’ competitive power market (ERCOT) and areas in the MidWest with organized markets.[5] Research from the PJM Interconnection also finds that competitive markets receive almost 5% more total generation from renewable resources than do non-competitive areas.[6] In a recent whitepaper on the company’s renewable energy development, Google points out that competitive wholesale and retail energy markets provided an ideal path to purchasing renewables.[7]

“The flexibility, accessibility, and responsiveness to customer demands that come with competitive markets make it easy for customers to purchase the products they desire. In fact, of all of the corporate renewable energy purchasing deals that were signed in 2015 and the first half of 2016, 91% occurred in either competitive wholesale markets or retail markets. Most utility regulatory regimes do not provide the right incentives for utilities to meet customer calls for new products or to create innovative solutions to unique customer needs.”

Also stressed in the white paper is the power of freedom of choice. Direct customer retail access to clean energy improves market transparency and unlocks consistent, low-cost capital deployment into renewable energy infrastructure. These attributes make retail one of the optimal means through which corporate renewable buyers can build and purchase green power. Beyond corporate procurement, retail access has a track record of supporting the expansion of renewable energy to the general public. According to the National Renewable Energy Laboratory, competitive suppliers provided some 15.4 million MWhs of green power to 1.5 million customers in 2015 – more than utility green pricing and green tariff programs combined.[8] Taken together, competitive markets provide the investment transparency, transmission access, and lower-cost integration of renewables – and ability to pay for renewables on one retail bill.

Massive change is necessary for the energy industry to address climate change

By 2050, the US economy will need to emit much less carbon than today’s power sector. As the renewable energy industry matures beyond policy incentives, optimal market structures based on competition are crucial for ensuring a renewables-centric, low-carbon future. Corporate renewable buyers can (and should) play a critical role in policy advocacy for competition in markets towards realizing lower- and lower-cost means of achieving this future. With billions of corporate dollars moving into renewables, it is vital that companies have a strong voice in the policy & regulatory space in order to drive clean energy goals past net annual metrics and towards 24/7 consumption.

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Brian Marrs is the Director, Policy & Strategy at NRG Energy, Inc., based out of the company’s Princeton, NJ headquarters. With more than 10 years of commercial experience in the energy industry, Brian leads efforts to assess and engage with the regulations & policies relevant to NRG’s wholesale and retail portfolios. His current focus is on the policy framework behind NRG’s efforts related to carbon, sustainability, clean energy deployment, and related competitive market issues. Prior to joining NRG in 2012, Brian worked as an power system economics expert for one of the largest energy companies in the European Union, Vattenfall Europe, and otherwise has extensive experience in quantitative analytics related to international power, oil, and gas markets. Brian holds a graduate degree in energy economics & policy from Yale University, and completed his undergraduate studies at the University of Virginia.

[1] AEE website, http://info.aee.net/growth-in-corporate-advanced-energy-demand-market-benefits-report

[2] Greentech media, https://www.greentechmedia.com/articles/read/the-private-sector-may-lead-the-charge-against-climate-change

[3] http://www.awea.org/Resources/Content.aspx?ItemNumber=9372

[4] http://www.forbes.com/sites/manishbapna/2016/06/21/corporate-demand-for-renewable-energy-could-rock-the-grid/#7d08a6a35b23

[5] Brattle Group, “The Role of RTO/ISO Markets in Facilitating Renewable Generation Development.” Dec 8, 2016. http://www.brattle.com/system/publications/pdfs/000/005/379/original/The_Role_of_RTO_ISO_Markets_in_Facilitating_Renewable_Generation_Development.pdf?1481213142

[6] PJM Interconnection, “Resource Investment in Competitive Markets.” March 5th, 2016. http://www.pjm.com/~/media/768E4AC9442A428AA83776AFDBF48929.ashx

[7] See, “Achieving Our 100% Renewable Energy Purchasing Goal and Going Beyond.” Available online at: https://static.googleusercontent.com/media/www.google.com/en//green/pdf/achieving-100-renewable-energy-purchasing-goal.pdf

[8] http://www.nrel.gov/docs/fy17osti/67147.pdf p39

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