KPMG investigates the impact of increasing demand for renewables from corporate consumers.
A game changer is underway in the world’s renewable energy sector.
Up until now, the renewable revolution has been led by energy developers and generating companies who were able to build renewable capacity with the help of government tariffs and subsidies. In many cases, the cost of this government support was passed on to consumers as part of the final electricity charge. There is broad consensus that renewables were vital for the global transition to a low or zero-carbon economy, and the consumer should help pay for this transition, with the investment in renewable generation being the first stage of that journey.
We are now seeing something completely different – consumers themselves are looking for ways to become 100 percent renewable in the energy they use and are considering the use of alternative technologies and solutions to address the low-carbon challenge. This is most obvious in the case of a growing number of global corporations who want to be part of, and indeed control, this transition. This trend is reshaping how energy markets will function in the future.
The main factors driving corporations to adopt renewables include the following:
Energy providers have developed two methods for delivering power to their corporate consumers:
Corporations are not necessarily experts in renewable energy, but they often have to engage with multiple renewable providers or contractors to develop a solution that fits their needs. The most pressing issue is usually determining a price that works for both the generator and the corporate consumer. Simply put, green energy costs more in many countries, and corporations must be willing to pay a ‘green premium’ for renewables.
For utilities, the trend toward renewables and more distributed energy solutions is definitely a cause for concern. It will be interesting to see how utilities respond to this development. They might well become part of highly complex energy platforms in the future that include multiple energy sources, producers, distributors and consumers.
In any case, the renewable revolution is well underway, and with the support of corporate consumers, there is now no going back.