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By joining RE100, more than 150 global companies have pledged to source 100% renewable electricity to power their operations around the world. Natural Capital Partners’ Chief Product Officer, Oliver Crouch, speaks to Sam Kimmins, Head of RE100 at The Climate Group, to discover why RE100 is so important to companies accelerating the transition to renewables.
Read more about RE100 and Sam Kimmins at the bottom of this article, and contact us for more information about sourcing renewable energy globally.
Oliver Crouch (OC): Can you talk a little bit about the need for a platform like RE100 and its success so far?
Sam Kimmins (SK): RE100 was launched in 2014 to rapidly build corporate demand for renewable electricity. The objective was to demonstrate that there is demand for renewables at scale and that there’s an already-thriving market; it’s not just wishful thinking or something that governments should provide because they ought to. To date, within four years, 154 companies have committed to sourcing 100% of their global electricity demand from renewable sources and, on average, the target date is 2025. It’s been a roaring success. To give an idea of the scale: the electricity demand of RE100 companies equates to more than half of that of California – over 184 terawatt hours (TWh) a year – which is significant.
OC: That’s impressive. Can you share a bit about what’s driving the rapid growth of RE100?
SK: Companies and countries throughout the world are waking up to the potential of renewable electricity. It’s no longer just the right thing to do; there’s a strong business case for buying it in many parts of the world. The cost of solar has dropped by around 80% in the last seven years and wind is following a similar trajectory. You may have noticed that the prices of coal and gas have not dropped. It makes business sense for a company to buy renewables, and in many cases, they’re opting out of utility systems because they can make savings of up to 30%.
In addition, companies are pushing for renewables in countries where they are not yet available, at least not at a viable price. In the last 18 months we’ve gone from zero to 13 Japanese companies with leaders like Ricoh, Fujitsu and AEON making it onto RE100. Together they make up around 2-3% of Japan’s electricity demand. Ricoh was very clear when they joined RE100 as our first Japanese member that they want to send a clear signal to the government that in order to be competitive, Japan needs to be on board with renewables because this is the way technology is going.
In September we welcomed seven members from seven different countries at our Climate Week NYC event. It’s not just about TWh, it’s also about geographical spread: showing that demand is global and showing policymakers throughout the world that corporates want access to renewable electricity.
OC: Are there plans for RE100 to encourage access to renewables for small and medium sized companies?
SK: We are focusing mainly on recruiting the larger players because they have the capacity to drive demand, along with the influence to create policy changes and build renewables markets as required. However, we are finding that medium sized companies are also interested in joining us.
The world will be very different in 2025, 2030, or 2035, and companies of all sizes need to lead the clean energy transition as part of developing a new energy economy. It’s true that the cost of renewable electricity varies globally, however, the price trend is the same: downwards. These aren’t just small changes that are happening on the side-lines, this is a radical shift in the way that companies are sourcing and using electricity and energy.
OC: Can you talk a little about the role that business can play in meeting the Paris Agreement commitments?
SK: Business is already playing a vital role in achieving our Paris objectives, both in terms of the practical investment in building up the number of TWh of installed capacity of renewables, but also in sending a strong signal to governments that business wants to thrive in a low carbon world because this is the future. Business is changing the way policymakers are thinking and that is powerful. Our RE-Source Platform, set up in partnership with Wind Europe, SolarPower Europe and WBCSD along with companies including several of our members - Microsoft, H&M, IKEA Group - attended European Parliament to show that business wants to invest in renewable electricity and wants the European Parliament to ensure this is possible across Europe. We were successful in ensuring key clauses in the clean energy package, focused on opening up the market for PPAs and ensuring an effective Guarantee of Origin system across the single market.
This is important because if you bought renewables, you want to show that you bought renewables; that’s what Guarantees of Origin are for. They’re not a sort of trade off or subsidy, they’re simply certificates that say “I bought renewable electricity” and make sure that companies buying renewables can prove they are doing so.
OC: In the last 18 months, the price of a GO has more than quadrupled. Are you hearing any rumblings within the membership that the price of meeting these targets is becoming a problem?
SK: The rise in the cost of GOs is a good thing: it shows that the market is working, it shows that there is demand, and that demand is starting to push on the supply side. It’s interesting because what we’re seeing in our data is that, as companies get used to buying renewable electricity and they settle into their strategies, they start to engage in ways of buying renewables that make long-term business sense: that save them money, give them price security or give them a competitive advantage. So, we’re seeing an increasing proportion of onsite renewables and PPAs and other mechanisms in the longer-term members as part of the evolution of corporate renewable energy programmes, although these are not yet viable in every location around the world.
OC: GOs are starting to get the attention of the project development and project financing communities as a dependable source of financing for a project, and that’s exactly where we need the market to be for consumer demand to start to have a real impact on capacity.
You talked about the average target deadline being 2025 – what advice do you have for new members as they select a target deadline that works for their business?
SK: There’s no cookie-cutter approach. However, I would say: be ambitious. Change is happening fast, and by setting a really challenging target, it focuses the organisation on creating solutions. By committing to renewables now, they’re generating the procurement techniques of the future.
Few companies know exactly how they’re going to get there when they set their 100% target, but by setting the target, they leave no room for doubt. They gear up the entire organisation towards that goal.
OC: We read a lot about companies taking a portfolio approach. Do you think there’s a best practice approach to reaching the RE100 goal and are there any stand-out companies setting an example?
SK: Our founder member IKEA Group has more wind turbines than it does stores. We applaud efforts at that scale, but there are other kinds of leadership too. We released a leadership and impact report back in August that outlines different ways that companies can lead this transition. I talked a little bit earlier about political influencing and we are also seeing an increasing number of companies reaching into their supply chains to encourage them to buy renewables. One of our Japanese members, ASKUL, recently spoke at a conference saying that they saw RE100 as a “passport to international trade.” Many companies are now asking for renewable electricity as a key part of their supply chain sustainability strategy.
I spoke with Citigroup at the recent REBA conference about the new methods that they are using to sell renewable electricity by packaging PPAs into time-bound chunks. There are all kinds of innovation going on. It’s not possible to say sticking a wind turbine in the ground of your office is better than doing something else because each company and country is unique and it’s a rapidly evolving market – we need a diversity of methods.
OC: What is your advice to companies that are contemplating joining RE100 but haven’t yet taken that step?
SK: Do it now. The more companies that join us, the louder our voice and the more rapidly we can create change. Joining RE100 not only gives you the profile for what you’re doing but it demonstrates the size and momentum that this movement has. RE100 is a group of leading organisations that actively share their experiences, their wins, their near misses and their best practice. This is the place to be if you want to be preparing your business for the renewable energy future, and if you don’t want stakeholders asking why you’re the odd one out.
Led by The Climate Group in partnership with CDP, RE100 is a collaborative initiative bringing together the world’s most influential businesses committed to 100% renewable power. Renewables are a smart business decision, providing greater control over energy costs while helping companies to deliver on emission reduction goals. RE100 members, including Global Fortune 500 companies, have a total revenue of over US$4.5 trillion and operate in a diverse range of sectors – from information technology to automobile manufacturing. Together, they send a powerful signal to policymakers and investors to accelerate the transition to a low carbon economy.
About Sam Kimmins
Sam is Head of the RE100, which brings together the world's most influential companies committed to 100% renewable power. He has 20 years’ experience leading sustainability projects in the shipping, aviation, food, construction and NGO sectors. Prior to joining RE100, Sam spearheaded Forum for the Future’s Sustainable Shipping Initiative, which recently won the Guardian Sustainable Business Award for innovative consultancy. He is currently non-executive director of the Ethical Consumer Research Association, and an MSc in Pollution and Environmental Control from the University of Manchester and a BSc in Natural Environmental Science from Sheffield University.
Contact Oliver Crouch to discuss how to meet your renewable energy goals: firstname.lastname@example.org.