Global Green Power HOW INTERNATIONAL MARKETS ARE CHANGING CLEAN ENERGY

Transcription

1 Global Green Power HOW INTERNATIONAL MARKETS ARE CHANGING CLEAN ENERGY

2 2015 was the tipping point for global renewable energy, as capacity additions around the world surpassed all previous records. With the signing of the unprecedented Paris Agreement, dozens of countries have pledged to be part of a broader, economic-driven climate solution. While a few large players including the U.S., the U.K., and Europe have dominated the global scene to this point, many more markets across the world are following suit, developing renewable energy and clean technology products designed to help governments, utilities, homeowners, and corporate, institutional, and industrial (C&I) buyers join the green power revolution. For the C&I sector, in particular, this is welcome news. Multinational corporations whether based in the U.S. or abroad have historically struggled to find credible, trustworthy clean energy options in many markets where they have operations. The Paris Agreement, combined with new guidance issued by the World Resources Institute (WRI) on the accounting and reporting of emissions from purchased electricity, has led more buyers to seek reliable products in emerging markets, including India, Latin America, and throughout Southeast Asia. 2

3 Table of Contents The U.S. Market, Renewable Energy Certificates, and the Rise of the PPA The Global Market Expands An Emerging, Global Customer Class and Renewable Energy Marketplace Globalization... 6 Regulation, Reporting, & Transparency... 7 Paris Agreement Changes to the GHG Protocol: Scope 2 Guidance Scope 3 Emissions and Supply Chain Transparency... 8 Market Volatility Scope Climate Action... 9 The Opportunity: How C&I Buyers Can Capitalize on Emerging Markets Mexico: Newly Deregulated Energy Market...11 India: Opportunities on the Sub-Continent United Kingdom Continental Europe: Scandinavia and the Netherlands case study Digital Realty: A Global Company, a Global Mission China Australia Singapore Time to Act: Implications for C&I Buyers This guide is for informational purposes only and not for the purpose of providing legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer if you want legal advice Renewable Choice Energy, Conclusion Glossary Contributors

4 The U.S. Market, Renewable Energy Certificates, and the Rise of the PPA This paper will provide an overview of where and how clean energy markets are developing, as well as the unique products and standards available to meet the needs of the C&I buyer with global operations. The widespread use of renewable energy by C&I buyers originated in the U.S. with the 1999 advent of the renewable energy certificate, or REC. As it s nearly impossible to trace renewable energy on the spot electricity market, RECs were devised as a means to track and trade the environmental attributes of green power. One REC represents one megawatt-hour (MWh) of renewable generation and is produced in a 1:1 ratio. RECs are a tradable commodity distinct from the wholesale electricity itself. In order to be able to claim the use of green power, an entity must bundle or match RECs to its purchased electricity, regardless of source. In effect, RECs and renewable electricity are two markets and two commodities that, when paired, represent the environmental benefits of clean generation. In 2006, U.S.-based Whole Foods Market became the first corporation to buy RECs equal to 100% of its annual purchased electricity consumption 1, allowing the natural foods retailer to claim that it was 100% wind-powered. Since that time, thousands of U.S. and Canadian companies have followed suit, and RECs have become the standard for North American renewable energy trading, as well as the basis for market development around the world. In the U.S., use of RECs by C&I buyers remains voluntary, as there is currently no cap-and-trade scheme or other compulsory mechanism (although this is subject to evolution over time as the legislative environment changes). RECs are also used in compliance markets by utilities to meet individual state mandates called Renewable Portfolio Standards (RPS) or renewable energy goals, which exist in 37 states and the District of Columbia. 2 In 2008, U.S. C&I buyers began turning towards power purchase agreements (PPAs) as the means to acquire renewable energy over a longer term. Already in use by utilities and financiers, PPAs are a form of contract for differences, where a creditworthy off-taker (buyer) agrees to directly contract with a renewable energy project (developer) to lock in renewable energy generation at a low, fixed price over a long-term duration (typically years). By securing this stable source of generation at an invariable rate, buyers can protect themselves against market fluctuations in conventional fuel prices, potentially saving millions of dollars over the life of the contract. 3 1 Renewable Choice Energy received the Department of Energy s Beacon Award for our role in assisting Whole Foods to achieve this milestone. 2 Learn more at 3 To learn more about PPAs, download our white paper Accelerate Your Energy Strategy with PPAs. 4

5 RECs Drive Market Development In the age of the PPA, RECs can look rather humdrum. However, RECs have played, and continue to play, a critical role in driving renewable energy market development. RECs were the first way that organizations were able to make a choice about the type of electricity they were consuming. They remain a free-market instrument that enables buyers to make credible, environmental claims about their chosen energy source. RECs also create a demand signal in nascent markets that moves governments and utilities to action. As a result, REC markets drive new project development, and, over time, enable consumer confidence, which leads to innovative contracting and growth mechanisms like PPAs. Despite the attractiveness of PPAs, the global REC market remains strong, and many multinational companies continue to use RECs and their global counterparts to achieve their commitments. RECs also remain the predominant means for companies ineligible to participate in the PPA market to achieve their environmental and Scope 2 reporting goals. In 2015, C&I PPA buyers were the driving force behind record U.S. wind and solar capacity installations. Google has become the largest U.S.-based purchaser of renewable energy through its commitment to onsite and offsite PPAs, acquiring nearly 2.5 gigawatts (GW)4 globally since executing its first offsite deal in Several other organizations with headquarters outside the U.S., including Royal Philips and Volkswagen, have also acquired U.S.- and Mexico-based PPAs to address their North American operations. The C&I appetite for PPAs has not been confined to North America, however, with power-players Facebook, Mars, and Nestle, as well as Google, executing on PPAs in Scotland, Ireland, Norway, Chile, and Sweden, while tech giant Apple has invested directly in solar projects in China, Mongolia, and Singapore. The Global Market Expands North America is not alone in its recent progress on renewables. In 2015, wind power was the leading source of new generation in Europe and the second largest in China, while new markets in Africa, Asia, and Latin America began to emerge. Hydropower, solar PV power, solar thermal power, and bio-power have also seen rapid growth across China, Japan, Germany, the U.K., Turkey, Brazil, India, Vietnam, Malaysia, Morocco, South Africa, and Colombia.5 However, despite these advances, the means to track and trade renewable power (in a way similar to the U.S. REC trading scheme) has only developed in the last decade. In 2009, the E.U. issued Directive 2009/28/EC, which mandates a minimum 20% renewable energy usage throughout the region, pooled across the various E.U. member states. The Directive also defined guarantees of origin (GOs), which have become the E.U. equivalent of RECs. Like RECs, GOs are created in a 1:1 ratio with renewable generation, are used to track and trade renewable energy, and become the proof of purchase of that generation. While not interchangeable Energy Attribute Certificates (EACs) only Both EACs + Power Purchase Agreements (PPAs) EACs expected 4 Accessed 12/5/2016 from 5 Renewables 2016: Global Status Report. Published by REN21 and available at: 5

6 with North American RECs, GOs can be used to address C&I electricity consumption throughout the E.U. interconnected region. In 2014, the non-profit International REC Standard (I-REC Standard) was launched. The agency is overseen by a cross-industry board of directors that includes representation from some of the primary players in setting policy in international markets. Similar to the U.S. REC certification body Green-e Energy, the I-REC Standard administers the issuance, tracking, and trading of international RECs (I-RECs) in markets where reliable, verifiable trading schema do not yet exist. I-RECs are tracked via the I-REC registry and are available in China, Taiwan, Turkey, Vietnam, and Mexico, among others. 6 Now, as C&I buyers begin to turn their attention to PPAs, there are also international markets developing the capacity to pass along the economic savings of these long-term contracts. Mexico, India, the U.K., and regions of the E.U. have emerged as primary PPA markets for C&I off-takers. The opportunity in these markets will be discussed in greater detail below. An Emerging, Global Customer Class and Renewable Energy Marketplace The new role of voluntary C&I buyers as global renewable energy market leaders is primarily driven by four strategic motives: globalization; regulation, reporting, and transparency; market volatility; and climate action. Whether utilizing renewable energy by purchasing energy attribute certificates (EACs, an umbrella term for RECs, GOs, and I-RECs) or by pursuing large-scale PPAs, C&I buyers have proven themselves to be a powerful force in the advancement of renewable energy. Globalization With the rise of multinationalism, alongside increasing data and consumption demands, most corporations have gone global. While the trend of moving operations to developing nations is nothing new, a broader global community and communications network has increased both the opportunities and challenges of working internationally. One of these challenges is a rapidly expanding appetite for energy, combined with fluctuating global energy prices. A considerable portion of a company s energy and carbon footprint can lie outside the location of its headquarters, or, even harder to determine, with its suppliers. In many global markets, renewables offer a stable energy choice, while also contributing to improved air quality and human health in the communities where businesses have license to operate. Rapidly declining wind and solar prices are leading some developing countries to leapfrog fossil fuels entirely. Increased demand from growing populations and globalization has also resulted in the governments of many developed and developing nations providing incentives for renewable energy expansion. These increased governmental incentives have created considerable opportunity for corporate off-takers looking to utilize renewables to save money. 6 Learn more at 6

7 Regulation, Reporting, & Transparency Recent regulatory trends in sustainable development such as the Paris Agreement combined with fresh reporting guidance from WRI and CDP on emissions accounting, disclosure, and transparency, are leading many C&I buyers to source products and services internationally in order to meet established mandates. These same buyers are leveraging their clout to drive changes throughout their supply chains in order to address emissions and reduce the overall impact of their products and services. Paris Agreement Adopted by the United Nations Framework Convention on Climate Change (UNFCCC) in December, 2015, the Paris Agreement 7 was agreed to by a consensus of representatives from 195 countries. While not legally binding, the newly ratified Agreement is the most historic, multi-partisan treaty of its kind, and it invites signatory countries including the U.S. and China, which together produce 40% of the world s greenhouse gas (GHG) emissions to make ambitious nationally determined contributions toward reducing global emissions. Although the Paris Agreement has been criticized for its lack of specificity and enforcement teeth, it represents a united front against climate change and in favor of renewable energy development heretofore unachieved. Individual mandates of the participating countries have already begun to be announced, such as the declaration by the U.S., Canada, and Mexico that North America will jointly commit to 50% renewable energy generation by Concerns over whether the U.S. will withdraw from the Paris Agreement under a Trump presidency remain high, but other countries have redoubled their commitments in the wake of the U.S. election. For instance, in late November, China announced it's intention to double the country's wind power by Changes to the GHG Protocol: Scope 2 Guidance Last year, WRI released released the new Scope 2 Guidance for emissions reporting on purchased electricity, heat, steam, and cooling. The new guidance introduces a two-pronged approach to Scope 2 accounting: location-based and market-based. In location-based accounting, companies must report on their actual Scope 2 energy consumption, or activities. Organizations are constrained in their ability to reduce location-based emissions; they must either lower their consumption or petition local utilities or government agencies to change the grid mix in favor of renewables. 7 Learn more at 8 Retrieved 12/5/16 from wp/2016/06/27/u-s-canada-and-mexico-to-pledge-to-source-half-their-overallelectricity-with-clean-power-by-2025/. 9 Accessed on 12/5/16 from 7

8 In market-based accounting, companies must report on their access to carbonreducing mechanisms, called contractual instruments, in their regions of operation. These market mechanisms which include EACs such as RECs, GOs, I-RECs, and PPAs, if they meet proper quality criteria imply that organizations have a choice to use clean sources of generation in many regions throughout the world. The market-based requirement goes a step further and requires companies to pair their purchases of contractual instruments with the market in which they operate. This is a departure from previous guidance, which allowed companies to use U.S. RECs, for example, to meet their international load. Now, organizations must be as specific as possible when buying contractual instruments that match load region. This change is forcing many multinational corporations to begin sourcing clean energy products from regions that were previously untapped particularly if they intend to report to CDP and, as a result, is driving market development. 10 Scope 3 Emissions and Supply Chain Transparency Since Walmart launched its Sustainability Index back in 2009, a desire to gain greater transparency into, and control over, supply chain responsibility has been on the rise for multinational entities. Supply chain sustainability remains one of the most pressing issues facing these companies, as it is within the supply chain that a majority of environmental and social impacts lie and often where they are the hardest to change. For many companies, measuring and acting on Scope 3 emissions those generated indirectly and outside of an organization s direct control presents an enormous hurdle. Supply chain emissions are part of Scope 3 reporting, and C&I buyers are looking for ways to influence their suppliers in order to reduce these emissions. While many rely on indices akin to the Sustainable Apparel Coalition s Higg Index to measure emissions, few companies are requiring suppliers to act on their findings. Renewable energy development in emerging markets such as India and China, where many of these suppliers are located, presents an opportunity for multinational corporations to influence and reduce supplier footprints and their associated Scope 3 emissions, while also helping them save money on their electricity. Market Volatility Energy is the most volatile commodity in the world. 11 For most sizeable organizations, purchased electricity is one of their largest operating expenses. As a result, the rapidly decreasing prices of wind and solar technologies and the "free" fuel sources offered by renewables stable in comparison to fossil fuels are very attractive. Particularly when aided by subsidization or other government incentives C&I buyers stand to save millions of dollars by using renewables over conventional generation. 10 For more information on the Scope 2 guidance and its relation to emission reduction and marketing claims, download our guide, Clean Energy and Emission Reduction Claims: What You Need to Know. 11 Why Are Electricity Prices So Volatile? Retrieved 12/5/16 from blog/wp-content/uploads/2015/08/ why-are-electricity-prices-so-volatile.pdf. 8

9 Market volatility can also be felt in the unstable infrastructure in developing countries, where high demand, outdated technologies, and even corruption can impact the ability to reliably deliver electricity. In these circumstances, renewable power particularly when delivered from an onsite system or, in many markets, from grid-connected systems can provide electricity without disruption, despite political or infrastructure instabilities. Renewables offer similar resiliency to C&I buyers who may fear operational disruptions from extreme weather events. Climate Action Hundreds of large organizations participate in one or more reporting or commitment frameworks, such as the RE100, CDP, GRI, and WWF s Corporate Buyer s Principles/Climate Savers. These companies have made public commitments to either increasing the volume of renewable energy they purchase, reducing their carbon emissions, or both. Fulfilling these commitments, and relieving the NGO pressure many of these companies face to be more responsible, is one powerful reason multinational companies use EACs or are considering larger-scale PPAs. Additionality has become a driver for many companies considering renewables at scale. Additionality refers to the concept of renewables beyond business as usual. Projects that achieve additionality have demonstrated that, but for the C&I buyer s action, the project would not have been completed. Additionality can also be achieved by specific environmental attribute products, such as GoldPower, which provides RECs sourced from projects in countries without Kyoto Protocol targets. By certifying these projects as additional, C&I buyers can be assured that their purchase is actually displacing global emissions on the grid. The Difference Between GoldPower and I-RECs GoldPower and I-RECs are both EAC products designed for global markets and available in a large and growing number of countries where established national REC schemes do not yet exist. While I-RECs were designed as a mechanism for tracking verified renewable energy generation and ownership of the renewable energy attributes, GoldPower was designed to actively support the uptake of renewable energy. GoldPower has a number of quality features that I-RECs lack, including additionality; social and environmental safeguards and verified, ongoing benefits to the local community and environment; a maximum plant age; requirement to use recent-vintage credits; strict criteria regarding full aggregation of carbon and renewable energy attributes; transparency of voluntary retirements; and an annual audit of suppliers and transactions. WWF s involvement in the development of GoldPower, and ongoing support for it, reflects these quality features. I-RECs do have a slight advantage because they are an independent, non-profit global standard. As a result, they are formally recognized by the Scope 2 reporting guidance and related CDP technical guidelines, whereas proprietary products, such as GoldPower, are not. This differentiation ultimately leaves the decision up to buyers to make their own judgement as to GoldPower s eligibility for Scope 2 reporting, although Renewable Choice is confident that GoldPower does meet all quality criteria. To learn more about GoldPower, visit Acting on climate by purchasing renewables has other positive side effects, sometimes referred to as co-benefits. A reduction in overall global emissions can potentially mitigate the effects of climate change that can impact a 9

10 company s operations, including disruptive weather events and population displacement. Renewable energy also uses a fraction of the water required for either coal-fired generation or natural gas extraction, which can reduce water consumption in drought-impacted operating regions. Finally, renewable energy has a direct, positive effect on reducing pollution and improving air quality, which improves human health outcomes in the markets where companies operate. The Opportunity: How C&I Buyers Can Capitalize on Emerging Markets The opportunities for C&I buyers to source international clean energy products are considerable, but nuanced. Below is an overview of progress occurring in several emerging markets, with Mexico and India topping the list thanks to available incentives and timeline constraints. International Product Availability REGION PRODUCT TYPES DESCRIPTION NOTES North America: U.S. & Canada North America: Mexico RECs, PPAs CELs, I-RECs, PPAs Domestic REC standard for credible renewable energy products. International standard for credible renewable energy products. Domestic REC products in new market regime. Europe (inc. U.K.) GOs, PPAs Established standard for most E.U. member states. India China RECs, I-RECs, GoldPower, PPAs I-RECs, CERs, GoldPower Difficult market due to confluence of voluntary and compliance schemes. Existing carbon markets; nascent REC market. Singapore I-RECs, TIGRs, PPAs Market constrained by supply options, with no government involvement to date. Malayasia/ Thailand/Laos Japan GoldPower Green Power Certificates Limited market, with only GoldPower available at this time. Limited liquidity of products and technology types. Vietnam I-RECs, GoldPower In development. -- Taiwan GoldPower In development. -- Australia GreenPower, PPAs Government-accredited tracking system, open to voluntary buyers. C&I PPAs have been popular in the U.S. due to attractive incentives and project economics. Immediate, but time-limited, opportunity for economically attractive PPAs. Act now for most favorable market conditions. GOs are Scope 2 compliant with caveats due to production claims. Aggressive goals for renewables have created highly incentivized markets for PPAs. Act before 2018 to receive subsidies in certain states. Labels are working together to create a credible product. Products are sourced from limited project and technology types. Interconnectedness of grid may allow for assignment of RECs throughout peninsula. Green Energy Certification Centre tracks certificates. GreenPower must come from generators built after Brazil I-RECs In development. Emerging market where products are primarily bundled with purchased electricity. Turkey GoldPower, I-RECs In development

11 Mexico: Newly Deregulated Energy Market In January of 2016, the Mexican government began electricity market deregulation in accordance with la Ley de la Industria Eléctrica. Under this reform, the market in Mexico will open to competitive distribution and generation, as more developers enter the newly established wholesale marketplace. This is outstanding news for C&I buyers with Mexican operations, as the reform will expand their capability to sign bilateral PPAs directly with independent renewable power producers. Over time, the reform will also push market development, as competition and investment in new generation capacity increases. However, while the new wholesale market finds its feet, there are a number of ongoing uncertainties regarding future fixed and variable electricity-related costs and PPA structures. With this in mind, the best opportunity for bilateral PPAs currently exists under the self-supply regime, a regulatory structure available to C&I buyers for a limited period into early Participating in this regime reduces costs, risk exposure, and operational limitations to buyers. A self-supply PPA contract mimics a virtual net metering agreement, which allows customers to realize the benefits of an agreed-upon, fixed-price cost of energy at any time of day. Under this contract, electricity produced by a renewable project is delivered to the grid to be used in realtime, at which point CFE, the Mexican state-owned utility, banks the associated fixed-price energy credits to the buyer. These credits can be used by the buyer at any time to realize the benefits of their renewable purchase, which is helpful when using an intermittent energy source like wind or solar. Self-supply contracts also use low, fixed-cost wheeling charges that allow C&I buyers to enter into a PPA with a renewable project located anywhere in Mexico. This is useful because it helps buyers avoid operational and transmission risks, and it gives flexibility when siting a project close to the operational facilities that will take delivery of the contracted electricity. A primary reason to act with urgency on the Mexican self-supply opportunity is Clean Energy Certificates (CELs, a type of EAC), which will be mandated under the new deregulated regime. CELs are predicted to cost anywhere from USD$10 20 each; C&I customers with Mexican operations will be required to purchase them at a minimum of 5% of their electricity consumption beginning in By sourcing clean power directly via a PPA, buyers avoid this mandate and its associated CEL costs. Signing a self-supply agreement by the end of 2016, for a period of years, affords C&I buyers stability in an unpredictable, newly deregulated market. Buyers have already begun to take advantage of this favorable situation; so far, more than 25 global companies including Home Depot, Praxair, and Nissan have executed wind and hydro projects in Mexico Learn more on the Mexican market opportunity in our vlog: 11

12 India: Opportunities on the Sub-Continent India is already home to many multinational companies Asian operations and presents tremendous commercial opportunities for growth. However, with a population of over a billion people, India faces extraordinary social and environmental challenges that impact the companies that operate there. Recognizing its particular energy and electricity needs, the incumbent Modi Government has enacted several policies designed to accelerate the installation of renewable energy projects of various technologies and sizes. The centerpiece of these policies is an aggressive installation target of 175 GW of new renewable capacity by Of this, 100 GW is predicted to come from solar (40 GW of which will be rooftop), 60 GW from wind, 10 GW from biomass, and the remaining 5 GW from small hydropower. While the policy is national, many of the levers needed to achieve these targets are designed and administered at a state level. This has two implications for C&I buyers. The first is that some states particularly those in the south, including Karnataka, Telangana and Tamil Nadu are more attractive than others. The second is that companies operating across several state regions will need to take a geographic approach to their renewable strategy. Companies with regional load as low as 1 megawatt (MW) can now access offsite renewables at competitive rates via PPAs. This competition was created in the energy sector by the Open Access system, which allows consumers to choose from where they purchase their electricity. This system, which has been in place for over a decade, has proved valuable in enabling renewable energy access at scale. Indian PPAs have similar benefits to all other PPA deal structures, including savings on energy expense, locked-in power prices over the life of the contract which is particularly valuable in an uncertain and volatile Indian market and the contractual ownership of the associated environmental attributes, allowing for zero-carbon Scope 2 claims for Indian loads. The low 1 MW power consumption threshold is also an enormous benefit; typically, U.S. offsite PPAs require loads upwards of 20 MW at a minimum. In addition, there are other state-specific benefits that buyers can take advantage of by acting quickly. For example, companies signing solar PPAs in Karnataka realize a 10-year exemption from a significant cross-subsidy charge. However, this exemption only applies to projects commissioned before the deadline of March 31, Onsite solar solutions are also an attractive option for many buyers with Indian operations. Companies have installed systems as large as 4 MW, saving money and securing a captive supply of electricity Learn more on the Indian market opportunity in our vlog: 12

13 United Kingdom The U.K. has been a leader on climate action and renewable energy development. In July, even in the wake of Brexit, the government announced a world-leading climate target to cut emissions by 57% by 2032, 14 and the U.K. has been heralded as a strong voice in favor of the Paris Agreement last December. The U.K. s deregulated market along with the excellent wind resources available in Scotland, in particular has created an opportunity to identify attractive PPAs for C&I buyers. 15 Nestlé and Mars have both announced U.K.- based PPA deals in the past six months. Given high transmission and distribution costs, however, many companies have taken the first step into offsite PPAs by developing ground-mounted solar projects close to their operations. If a company is on a site with owned land around it, or where land could be leased, then establishing a project with a private wire connection to the facility can be an extremely striking proposition. Projects are typically up to 5 MW in size, depending on various factors, such as load profile and land availability. Complementing this approach is the option to sign much larger offsite deals. While energy prices are currently at extremely low levels, several organizations have taken the view that this cannot last and that, over the life of a PPA, they will end up in the money. Like their U.S. counterparts, U.K. PPAs become a practical approach to insulating companies from expected energy price increases while helping them meet their environmental goals. Continental Europe: Scandinavia and the Netherlands In June, Google announced the latest in its string of international PPA purchases, 236 MW of wind from farms under development in Norway and Sweden. Prior to this announcement, the tech giant had executed three additional PPAs in Sweden for a total of 241 MW and a deal in the Netherlands for 63 MW of wind. While other corporations have not yet publicly announced any European deals, several jurisdictions across the continent look promising. Scandinavia and the Netherlands, especially, are most ripe for PPAs hence Google s deals there. While deals may not necessarily be most attractive in their first year similar to the U.K. the view is that they will yield results over the course of the PPA contract that make them financially advantageous. With the well-regarded GO system underpinning transactions and enabling robust reporting of environmental attributes, the European market is one that should be on the radar of most large multinationals. 14 Climate change: UK backs leading climate target. Retrieved 12/5/16 from 15 Learn more on corporate PPAs in the UK: watch?v=az5cmmsmala 13

14 c a s e study Digital Realty: A Global Company, a Global Mission Digital Realty (DR) is a U.S.-based provider of energy-conscious data center solutions that has taken a unique approach to handling its international footprint. The company manages more than 140 data center properties in 32 global markets, alongside a robust colocation services business, and is committed to energy efficiency and clean generation across its portfolio. It is the only data center provider to offer both its wholesale real estate and colocation retail customers the ability to use green energy. DR s Clean Start program provides its customers with the choice of carbon-free computing by bundling EACs with its domestic U.S. and international passthrough electricity load. In the first year of any customer s real estate lease, DR provides these EACs at no additional cost. In 2015, the company procured 100,000 MWh of domestic and international EACs on behalf of its customers. The bundled electricity allows DR to pass the emissions savings onto its customers, who receive the ability to make carbon-free electricity claims for their leased data center space. DR also strives to match the EACs it purchases to the geography where its facilities are located, ensuring a positive regional impact across its international operations. All of DR s EACs are either certified by Green-e Energy or GoldPower to warrant that they are of the highest quality. The company also executed its first utility-scale PPA in Over the 12 year contract, the project, located in Texas, is estimated to displace more than 275,000 metrics tons of carbon dioxide equivalent. The company will use this power to reduce the impact of 100% of its U.S.-based colocation services, allowing colocation customers to also make carbon-free computing claims. What is truly unique about DR s PPA is that it was the result of customer demand. Many of DR s customers were interested in the benefits of clean generation without the means to complete a PPA on their own. The DR PPA was structured from the outset with the ability to parcel out the environmental benefits of the PPA to its clients, allowing these customers to overcome the hurdle of scale and creditworthiness required to execute a U.S.-based PPA. Global Global Green Green Power: Power: How How International Markets Markets are Changing are Changing Clean Clean Energy Energy AUGUST, DEC

15 China All eyes are always on China. As the largest emitter of greenhouse gases by twice more than its nearest competitor (the U.S.), and the country with the highest wind-power capacity in the world, a conversation on international clean energy wouldn t be complete without at least a cursory examination of China. As of now, the market for widespread, private (or voluntary) adoption of renewables either EACs or PPAs has been limited, particularly given the oligopoly of state-owned enterprises and lack of an underpinning REC market. Things are changing, however. While the direction is currently uncertain, the central Chinese government is exploring ways to increase competition and efficiency in the electricity market. There is also a desire to create a robust REC scheme to pair with an emission trading scheme. One thing is certain: once an approach has been determined, implementation will follow swiftly. It is a market to watch carefully, particularly given the vast number of U.S.- and Europeanbased companies with Chinese operations and suppliers. Australia The renewable energy market is emerging in Australia. While the country still derives approximately 85% of its power from non-renewable sources, programs like the government-managed GreenPower REC scheme are helping renewables to gain traction. After a significant lack of investment in renewables under the previous Abbot Government, the environment for renewable energy has been reinvigorated. Domestic REC prices are high (c. USD $60 per MWh at present) due to lack of supply, with no prospect of significant falls in the next couple of years. This presents opportunities for project developers, as well as for companies willing to take an innovative approach to deals. For example, contracts could look very attractive indeed for a company willing to look at monetizing all or some of its RECs. Savings could be recycled into other products or reduction initiatives. The corporate PPA market is also growing. While there have been only a handful of small transactions made to date, hopes are high that a more significant transaction will be structured in the coming months. This is likely to be via an aggregation model where multiple corporations join together to generate sufficient demand to structure a deal and generated in the east coast-focused National Electricity Market. 15

16 Singapore Singapore suffers from obvious geographical and topographical disadvantages. However, as a center for innovation and an importer of energy, the state is willing to look for ways to diversify its energy mix. Corporate PPAs are possible, as evidenced by Apple s transaction in late 2015, utilizing aggregated solar rooftop installations to satisfy demand for electricity. While not necessarily as economically attractive as in other parts of the world, there are some opportunities to tap into supply while it is available that will allow companies to meet their significant demands for renewables in Singapore. Given the innate constraint on supply, the opportunity will be relatively time-limited, so should be explored sooner rather than later. In May, Singapore announced the new TIGR (Tradeable Instruments for Global Renewables) product. The development of TIGRs was driven, in part, by the interests of corporate purchasers, as a means to capture environmental attributes in the region. Like other EACs, TIGRs represent clean generation in a 1:1 MWh ratio. TIGRs are a highly credible product, as they are backed and tracked by APX, one of the largest and best-known global clean tech registries. Developers and projects are vetted closely to ensure the validity of TIGRs. While only currently available in Singapore, the TIGR product is likely to expand into other Asian markets, and potentially elsewhere, dependent on demand. The TIGR registry has been active since September 1, Time to Act: Implications for C&I Buyers While many global markets are still nascent, now is an ideal time to begin developing an international sourcing strategy. For buyers with load or suppliers in Mexico or India, in particular, there is a limited window to take advantage of the most optimal contract conditions for PPAs. In other regions, C&I buyers can play a critical role in market development by demanding credible EACs in those areas. As of the publication of this paper, Green-e, the U.S. consumer protection standard for North American REC purchasing, is developing its international framework, which will assist in the certification of international products. Buyers can also rely on the GoldPower and I-REC standards to ensure they are receiving products of the highest quality. The recent release of TIGRs in Singapore demonstrates the ever-changing and innovative nature of the EAC market. Multinational C&I buyers can also leverage their considerable market position by influencing governments, utilities, suppliers, and NGOs in the regions where they operate. We ve seen this at work already in the U.S., where both Google and Apple have applied pressure to local utilities by supporting renewable energy development, alongside registering their own energy subsidiaries with the Federal Energy Regulatory Commission (FERC). This direct energy market participation by corporations represents a sea change for an industry previously dominated by utility commissions. 16

17 Conclusion With energy markets all over the world rapidly expanding as policy advances, technology improves, economies scale, and prices fall, now is an opportune time to consider a multinational approach to renewable energy sourcing to match multinational operations. The great news is that there are outstanding products and projects emerging in many international markets to support a global strategy. Contact us today to learn more about how your organization can take advantage of this opportunity. For 15 years, the team of experts at Renewable Choice Energy has been connecting consumers to clean energy and carbon-reducing products and services. Recognized as a market-leading supplier by the Environmental Protection Agency and Sustainable Purchasing Leadership Council, Renewable Choice is the exclusive 2016 North American partner to CDP on offsite renewables. Renewable Choice works to help its commercial, industrial, and institutional buyers set and achieve strategic emissions reduction targets through the purchase of EACs, VERs, and PPAs. Together, Renewable Choice and its clients have to date added more than 1,000 MW of new wind and solar to the U.S. grid. The company works throughout North America, the E.U., and Asia. To learn more visit WALNUT STREET, STE. 230 BOULDER, CO

18 Glossary of Developing International Products & Standards I-REC: Developed by the International REC Standard to open markets in a number of countries where renewable energy markets are not currently well developed. GOLD STANDARD: New REC product in development by the Gold Standard, a certification body established by WWF and other international NGOs to verify carbon offsets projects developed under the Clean Development Mechanism (CDM). GOLDPOWER : Based on the Gold Standard for carbon offsets. GoldPower RECs are unique in that carbon offsets are retired simultaneously with the generation of the RECs, which gives GoldPower RECs valuable additionality. GREEN-E INTERNATIONAL: International certification currently under development by leading U.S. consumer protection agency for renewable energy purchasing. GREENPOWER : Government-accredited renewable energy tracking system and standard for Australia. Established for compliance purchasers, but open to voluntary buyers. Green Power is an outstanding example of a government-run REC system; these types of governmental tracking systems already exist, or are developing, in other regions such as Japan and Brazil. TRADABLE INSTRUMENTS FOR GLOBAL RENEWABLES (TIGRS): Tradeable renewable energy certificate designed by APX, a leading infrastructure provider for environmental markets in greenhouse gases. TIGRs will help document sustainability efforts in emerging markets and make it easier for companies to find legitimate renewable energy projects and sellers. While initially available in Singapore, TIGRs are expected to advance rapidly throughout Southeast Asia and other emerging markets. zarecs: An emerging REC product in development for the voluntary market in South Africa. At this time, zarecs are administered by a private company. 18

19 Contributors Aran Rice VP OF STRATEGIC RENEWABLES Aran Rice oversees the business development efforts for Renewable Choice Energy, where he is responsible for the Commercial and Green Building sales teams as well as the Domestic and International Commodities Development group. Aran has served Renewable Choice in a variety of leadership roles during his nine-year tenure, including Director of Operations, Director of Commodities Sourcing, and VP of Business Development. With deep expertise in renewable energy and carbon markets, Aran is directly involved in helping Renewable Choice clients achieve complex renewable energy and sustainability goals. He holds a BA from the University of California, Los Angeles. Amy Haddon VP OF COMMUNICATIONS & ENGAGEMENT AHADDON@RENEWABLECHOICE.COM Amy Haddon is responsible for driving communications, marketing, and sustainability strategy for Renewable Choice Energy. Amy also works closely with Renewable Choice clients to design and execute communications strategies and content that highlight their commitment to clean energy and sustainability. Concurrent to her role at Renewable Choice, Amy served for five years as the marketing manager and a sustainability consultant for Renewable Choice s former subsidiary, Mosaic Sustainability, where she led consulting engagements with several top international brands. She is a frequent contributor to the conversations on renewable energy, sustainability, and responsible business. Amy received her M.Ed. from Colorado State University. James Lewis SR. DIRECTOR, STRATEGIC RENEWABLES, INTERNATIONAL MARKETS JLEWIS@RENEWABLECHOICE.COM James Lewis leads Renewable Choice Energy s work in international markets. He has over 10 years of experience in sustainability with a background in sales, marketing, consulting, and research. James has helped clients such as Hilton, Microsoft, UEFA, and WWF achieve their sustainability objectives in markets including the U.K., Switzerland, India, China, and Singapore, together with the development of the international GoldPower REC product with WWF. James has lived and worked in the U.K., Australia, and France, and he is a citizen of both the U.K. and Australia. He has a Masters of Environmental Technology from Imperial College, London. Ian Law PROGRAM MANAGER, STRATEGIC RENEWABLES ILAW@RENEWABLECHOICE.COM Ian Law is responsible for the evaluation of RFP solicitations, direct communications with clients and developers, domestic and international market research, and project management for Renewable Choice. Ian brings four years of experience in the energy industry, including over three years at Renewable Choice across the Strategic Renewables, Environmental Commodities, and Sustainability Consulting divisions of the company. He has additional experience consulting on energy efficiency strategy for corporate & industrial development, as well as a background in both domestic and international economic development models. He holds a Bachelor of Arts Double Major in International Relations and Spanish from the University of Oregon. 19