What’s Driving Corporate America’s Big Bets on Clean Energy?

Corporate America’s appetite for renewable energy is booming. In 2020, large businesses signed deals for over 10 GW of new clean generation, equal to a quarter of the total electric power capacity added in the United States for the year. The growth in corporate deals for clean power comes as the price of renewable energy has fallen, and as companies have increasingly felt pressure from the public, investors, and their own employees to address their climate impact.

Miranda Ballentine, CEO of the Renewable Energy Buyer’s Alliance, and Bryn Baker, REBA’s director of policy innovation, discuss the factors that are driving American corporations to make more, and bigger bets on clean energy. The pair also talk about how state and federal policy influences the rate of clean energy procurement, and policy changes that might accelerate development. The Renewable Energy Buyers Alliance is an industry association that represents the U.S.’s largest corporate clean energy buyers.

Full Transcript

Andy Stone: Welcome to the Energy Policy Now podcast from the Kleinman Center for Energy Policy at the University of Pennsylvania. I’m Andy Stone. Corporate America’s appetite for renewable energy is booming. In 2020, large businesses signed deals for over 10 gigawatts of new, clean generation, equal to about a quarter of the total electric power capacity added in the United States for the year. The growth in corporate deals for clean power comes as the price of renewable energy has fallen and as companies have increasingly felt pressure from the public, investors, and their own employees to address their climate impact.

On today’s podcast, we’ll take a closer look at corporate demand for renewable power and at the combination of factors that’s driving companies to make more and bigger bets on clean energy. We’ll also talk about the impact of state and federal policy on clean energy procurement and how policy might accelerate development. My guests are from the Renewable Energy Buyers Alliance, an association that represents the country’s largest clean energy buyers. Miranda Ballentine is REBA’s Chief Executive Officer. Bryn Baker is Director of Policy Innovation. Miranda and Bryn, welcome to the podcast.

Miranda Ballentine: Thanks, Andy.

Bryn Baker: Great to be here.

Stone: So let’s jump right in. REBA has tracked 30 gigawatts of new corporate clean energy purchases since 2014, and two-thirds of those additions have come in the last two years. What’s driving the recent acceleration in corporate clean energy purchasing? Miranda?

Ballentine: Thanks, Andy, and thanks again for having me and Bryn. So thanks to you and the Kleinman Center, and the university, of course, as well. It’s just such a pleasure to be able to talk with your audience about the role that large clean energy buyers have to play in driving the zero-carbon energy future that we’re all hoping to see. So what has driven the incredible increase in the last couple of years of corporate energy procurement is your question. I think you actually have to go back to the beginning of corporate energy procurement, which really started in 2005 with the first major announcement to be supplied by 100% renewable energy. And that was Walmart in 2005, when they set the first corporate renewable energy goal. And since then, it has been a series of companies working hard to set up new procurement tools and learn how this all works. Because if you think about it, Andy, most companies are just like you and me and most of the people listening today. They just pay a monthly utility bill, and they don’t really think too much about where that power comes from, as long as the lights are on.

In the mid-2000s, a lot of companies started to recognize that they had a big role to play in solving the climate crisis. And they have a big role to play because they knew that they were a big part of the challenge. And so many companies started setting goals to be supplied by zero carbon power or set net zero goals and just started the hard work of transitioning from paying a monthly utility bill to actually caring where their energy comes from and trying to use their procurement power to change where their energy comes from. So as you can imagine, there is a lot of inertia around the old business models of how energy users would buy energy. So it just really took time to start to build those different contracting tools, learn from the early movers, and then share those best practices and how to do projects with the next generation of buyers. And that’s really what we’ve seen over the last, I’d say, two or three years. There is just a dramatic acceleration in the number of new companies that are actually procuring clean energy in the market — and the size of the deals. But really what it took was the early movers to set the stage, create new contracting mechanisms, and then share their learning with the next generation.

Stone: As I understand, most of these companies have been in the information technology space. Is that right?

Ballentine: I would say yes and no. Actually, the earliest movers between, say, 2005 and 2012 or 14-ish were more in the retail and consumer product company groups. So it really was the Unilevers, the Coca-Colas, the Walmarts, the Procter & Gambles, General Motors, Johnson & Johnson. Those were actually some of the earliest movers in the mid-2000s. Starting around 2012, 2013, and 2014, we started to see a dramatic increase from the tech sector, and that’s partially because all those other businesses were digitizing. So whether you’re General Motors or Johnson & Johnson or Walmart or Target, everyone’s businesses were moving more and more to the digital space. So there was a dramatic increase in need for data centers and servers, which are very energy-hungry. So the tech companies really started to get engaged in that 2012, 2013, 2014 time frame, and then they just really took this work to the next level and put the pedal to the floor, innovated some new contracting tools, and of course had the benefit of building significant new facilities across the country.

So as new data centers have been built, and as new technological facilities have been built, these companies have the significant power to be able to negotiate for clean energy, as they were looking for locations to site these facilities. And that was a big distinction between what the tech companies brought to the community, versus what some of the other companies, who maybe already had existing facilities or potentially were even beginning to close some bricks and mortar facilities. So I’d say from 2014 to 2017, we saw the space very dominated by the tech companies, and then we’ve seen a broadening again of the number of sectors engaging. In fact, in 2020, one of the trends that I’m really excited about for last year is that more than half of the new buyers in 2020 — so there were 17 new buyers in 2020 — and 8 of them were from the industrial sector and the materials sector. Two of the top ten largest buyers in 2020 were from major steel companies. So each year we see a broadening of the landscape of the different sectors engaged.

Stone: Bryn, I’d like to put this into context. So of the new clean energy additions to the grid in recent years, what portion is attributable to corporate demand, and what is being driven by utilities and, I guess, other entities?

Baker: I think in some sense it’s a little bit hard to parse the data because a lot of what we see corporates announcing are the contracted capacities. But to give you a sense of comparison, last year’s procurement of over 10-1/2 gigawatts of contracted capacity is about equal to a quarter of the total electric capacity installed on the grid in 2020. And it’s a pretty significant portion of all of the new renewable capacity added. By our estimates, it’s about 80% of the total installed capacity — of renewable installed capacity last year.

Stone: So Miranda, REBA advocates on behalf of large clean energy buyers, and those include a long list of well-known companies such as Amazon, Google, GM, and Walmart. Can you tell us a little bit more about REBA’s mission, and since we’re on an energy policy podcast here, give us a little introduction to some of the policy objectives of the organization, as well?

Ballentine: Yes, absolutely. REBA’s vision is simple, but it’s very powerful. We have a vision of a resilient zero-carbon energy system where every organization has a viable, cost-effective path to procure renewable energy. So there are really two pieces, right? The first piece is that resilient zero-carbon energy system. The second piece of our vision is focused on empowering energy customers to drive that transition. Now you might say, “Oh, well that’s a market-driven approach, so therefore REBA must not work on public policies or regulations. And of course we know that every market is underpinned by the regulatory environment and the policy environment. What large energy buyers find very quickly when they attempt to move beyond just paying a utility bill each month, to actually procuring a particular type of energy, is that they quickly start to face both regulatory and public policy barriers.

So we do, actually, a fair amount of work to unlock markets in order for customers to really leverage their demand-side power and to green the grid for all, because large companies really believe that we’re not going to get a fully decarbonized grid one contract at a time. So we really need to decarbonize the grid broadly so that everyone has access to zero-carbon power at a low cost. Ultimately, that’s our vision, that resilient zero-carbon energy system.

Stone: We talked in the first few moments about this acceleration of renewable energy buyers buying clean energy today and most recently. I’d like to dive a little bit deeper on some of the motivations for the companies to lower their carbon footprint. We talk about social license, pressure from everything from investors, from the general public, from the companies’ own employees, but Bryn, could you give us a little bit more insight into what the key drivers are for these companies to dive into clean energy and actually make their own direct deals for clean energy?

Baker: There are many reasons that companies focus on zero-carbon energy and renewable energy, but the primary motivating factor really is solving the climate crisis. These companies recognize that commercial and industrial energy-related greenhouse gas emissions are the number one source of energy-related greenhouse gas emissions in the United States. They know that the power required to power their operations is a primary driver of U.S. greenhouse gas emissions, and they want to be a part of the solution to solve that challenge. That’s number one.

Number two, these companies really believe that it’s in the long-term best interest of their business. You will hear them say, “It’s good for our shareholders. It’s good for our customers, and it’s good for our employees.” So they also believe it’s good for business. Additionally — now, this was not necessarily true in the early days — but now the cost of wind and solar has gotten to the point where, for many of these companies, the cost of procuring wind and solar directly is actually below the cost that they can get their regular power for. So they can pass those savings on to their customers. So it’s a whole host of reasons, but honestly the initial driver really starts with solving the climate crisis.

Stone: You know, I’d like to dive a little bit more deeply into the economics of this. Economics clearly is an enabler as well here. So when does it make sense for a company to go out and buy clean energy, particularly in light of the complexity and risk that comes again with sourcing this electricity on its own? At what point do the economics make sense? Does it simply have to be cheaper than other options, or are there other considerations that a company is going to take into consideration before making such a decision?

Ballentine: I think the story has certainly been evolving on this one. In the beginning, of course, it was a lot harder to make the pure economic case, although actually some of the very first movers were even able to tell that story, that this was economically beneficial, particularly with some early projects on rooftop solar. But I think now that case is obviously a lot easier to make, and it’s really what’s driving the significant uptake that we’re seeing in these trends, the last two years alone being the most significant corporate procurement we’ve seen out of the last decade. But there are certainly different motivations.

A lot of the early movers were also just willing to pay a slight premium because of the importance of demonstrating progress on these projects and towards their own goals. What colors that in further, though, is the market and regulatory dynamics of whether companies can even access cost-effective projects. So the vast majority of that 10-1/2 gigawatts last year or even the 35 gigawatts cumulatively deployed have been virtual power purchase agreements, because they’re doing them where they can find a place to clear those deals. That’s not necessarily down the road from their facility.

Where we’re starting to see companies head is through much stronger interest in making that more direct connection by location. They want to be able to procure projects on the same grid where they are located. That’s not always possible because of the economics. And one of the things that influences the ability to access cost-effective projects is the presence of an organized wholesale market, which the very presence of it determines whether they have a place to clear the deal, and then within those markets, then they start to compare the actual economics to what they’re paying on that retail bill. So it’s a complicated picture, but I think the overall trend is that as these prices continue to come down for renewable energy, more and more companies are seeing the bottom-line benefits and are going after it in a much more aggressive way.

Stone: Bryn, in recent years there has been a winding down of tax incentives for renewable energy projects. To what extent has this reduction incentivized or sped up investment in clean energy projects? And what impact will the continued reduction of the incentives likely have on corporate clean energy purchases in the years to come?

Baker: I think the short answer is that of course, the loss of the incentives will have an impact on the bottom line economics of the project. The boom-bust cycle of using incentives has played out in terms of its impact in the corporate community. If you look at the bar chart of scale of deals, I think it was 2016 that was an enormous year up until that point because everybody was trying to jam in their deals before December 31st. And then, of course, we ended up getting an eleventh hour extension, and things sort of continued to build from there. So the buy side is in no way immune from those boom-bust cycles. I think we would expect to see a hit on the economics of the projects. That being said, the supply side of the renewable energy industry was telling a story that renewables can compete on their own.

I think that’s true, but on the face of it, you’ve got to be comparing apples and oranges on what’s going to create a level playing field. If renewables, the one incentive, the PTC and ITC that they receive goes away, and they’re competing against technologies that have long-embedded incentives, that’s not a level playing field. And so I think you have the renewable energy industry somewhat rightfully arguing that we shouldn’t take those incentives away. I think they’ve got some backing and sympathy from the customers of those products, and I think we saw that from a policy angle being mobilized last summer with a pretty unprecedented letter from buyers to Congress saying, “In light of pandemic-related squeezes on tax equity and the ability of projects to actually monetize these credits, the customer community supported extending those incentives and making sure that they could be utilized because there was going to be a very direct impact on customers’ ability to procure the projects. I think the bigger story out of that was also showing how committed these customers and large companies in particular are to their goals as they continue to grow the market.

Stone: You spoke a few minutes ago, Miranda, about the importance of the wholesale electricity markets — the competitive markets to drive all this. There’s an interesting statistic that I saw. I think maybe you all came up with it. I can’t recall exactly where I got it at this point, but about 80% of corporate clean energy purchases take place within the context of a location where there’s actually a competitive wholesale market, not the traditional integrated utility. Can you tell us a little bit more about how wholesale markets really are enablers of corporate clean energy purchasing? Again, why is this so important?

Ballentine: Yes, you’re spot on, Andy. So over 80%, 82% in 2020 of corporate renewable energy deals are happening in wholesale markets. And actually wholesale markets only cover about 60 or 65% of corporate facilities, so it’s not just because, “Oh, that’s where their facilities are.” It’s because that’s where they can do deals. Now those are not the only kinds of deals happening in the market. We know that large energy customers are doing deals directly with their utilities in vertically integrated markets, whether those are power purchase agreements or green tariff deals or direct green power purchase deals with their utilities. However, the vast majority of corporate procurement is through power purchase agreements in wholesale markets. Bryn can tell us a little bit more about why that is.

Baker: I think it comes down to not just where they can do deals, but having more customer-centric, organized wholesale markets is what customers have found can unleash cheaper, cleaner, more reliable and ultimately more innovative sources of power. So if it comes down largely to cost and ability to deploy clean energy, wholesale markets — and the data backs this up — are really critical to that. REBA Institute did a study last year with Brattle that found that wholesale markets lower the cost of every other pathway that we looked at that was designed to increase customer access to clean energy and deployability of clean energy. Brattle separately has estimated that wholesale markets can reduce production costs of 3 to 9% annually, and that translates into really big customer savings. And again, as Miranda said, they’re also only available to customers in two-thirds of the country. So if you look at the Mid-Atlantic or the Mid-Continent regional markets, for example, those customers save an excess of $3 billion a year each. Other smaller markets like Southwest Power Pool provide above $500 million in benefits each year. And when you look at the regions of the country that don’t have these structures, primarily the Southeast and the West, there are now studies coming out and showing, “Well, what happens if we put organized markets in those regions of the country?”

One really important study that came out last year from Energy Innovations found — and again, looking at this from a technical potential lens — found that customers across the Southeast would save upwards of $20 billion a year moving to a more organized wholesale market structure. Now note, one really important thing you said, though, is that this is about competitive wholesale markets. We’re not talking about the next step in the spectrum of going to full retail competition. These studies are looking at what happens when you have competition on the generation side, not necessarily competition on choosing your retail power provider.

So where we found customers and companies really rallying around are the benefits from a cost perspective of these competitive wholesale markets. But that’s not the only reason to look at organizing power markets. It’s also about how clean and how fast can we get our power. How fast can we make this transition? And so if you look at federal data, over 80% of all the wind and solar added to the U.S. electric grid in total has been in these RTO or regional transmission organization regions. RTO is really just another word for an organized wholesale market. And again, 82% of those deals have been done in those markets because it provides a place for those projects to actually clear.

If you look at ERCOT, it’s the region with the highest corporate PPA activity. They’ve actually added 18 gigawatts of wind and solar above their own 2025 RPS target already. And so this market, despite all of its recently-identified flaws, has been quite good at supplying clean energy. And it’s not just about deploying the clean. It’s what are the emissions impacts from that?

And again, if you look at federal data, it shows that CO2 emissions are dropping faster in these regions — 23% in organized markets, compared to 18% in parts of the country without those markets. And again, it’s because these structures provide that level playing field for clean energy to compete without discrimination. And there’s a regional market operator that’s independent. It owns no generation, so there’s no skin in the game; therefore there’s no real incentive to favor any particular resource, which can happen in parts of the country where clean energy providers are shut out from competing on fair terms. So it’s really what I call “bringing the three A’s” to all customers. It’s about affordable, accessible clean power, and it’s about bringing that decarbonization on an accelerated timeline.

Stone: You said just a moment ago — you point out the fact that there are certain regions of the country that don’t at this point have full competitive wholesale markets, notably the Southeast and much of the West. You obviously also, as we’ve just been talking about, are very much in favor of competitive wholesale markets as enablers of decarbonization. So you’ve proposed some regulatory and legislative changes that might help expand wholesale electricity markets, and some of these would include potential changes to the Federal Power Act. The Federal Power Act gives the FERC, which is the primary wholesale electricity market regulator, its power. What are the specific challenges that you’re seeing here, and how would policy, either legislative or regulatory changes, kind of help achieve this expansion of wholesale markets for the benefit of expansion of clean energy?

Baker: First, there are a lot of things that we need to do to make existing wholesale markets work better while we’re also expanding them. But we’re operating from the standpoint that having wholesale markets, as imperfect as they may be, is ultimately better than not having them because of all the benefits that we just talked about. But of course on one end of the spectrum is amending the FPA, and that was even in the recently re-released Clean Futures Act, and it basically would require all utilities to join an RTO. That’s sort like the stick at the end of the process. But we’ve got to have a lot of carrots to get there, and no one is pretending that organized market expansion isn’t contentious or complicated. There are absolutely deep-seated views on — is this going to impinge on states’ rights and their ability to plan and manage their own resource mixes, set their own goals, ensure their own reliability?

And so a lot of this progress toward wholesale market expansion needs to come from within those regions themselves, the Southeast and the West, driven by the states in those regions. And that means supporting states and utilities collaborating to explore market formation. The federal government can really use some of these upcoming infrastructure and funding packages to support interested states, utilities and regions by providing that funding and technical assistance that would support multi-state led organizational efforts, state boards that will help reduce the upfront costs, and some of the studies required, some of the governance challenges of organized market formation.

Stone: Related to that, over the last year or couple of years, there has been quite a debate within the wholesale markets regarding state subsidies for clean energy. And some of our listeners may be familiar with this. It’s a bit complex, but there’s a new rule in the largest of the markets, which is called PJM Interconnection. This rule is called the Minimum Offer Price Rule, and basically it is a rule that ensures that any state incentives that may lower the price for wind and solar are not reflected in the wholesale markets. It’s to keep any distortion out of those markets. This has also obviously been a potential problem for the renewable energy industry because it might make those resources less competitive in these markets. What’s REBA’s take on that, and has REBA considered any possible policy solutions to address state incentives and their impact on these wholesale markets?

Baker: We are focused on the long game. There is no doubt that MOPR, some of the other buyer-side mitigation measures, and even the absence of a capacity market and the impacts that that had in Texas are creating a very healthy debate about how we ensure reliability, build capacity, the right amount of capacity to support the grid. And I think what all of these events have really teed up — events and regulatory proceedings have teed up — is a bigger discussion and question about optimizing market design. What are the ways that we need to be building and optimizing capacity markets for the grid of the future? Because underpinning all of this is the fact that our grids are built using twentieth century assumptions, needs, and technologies. And we need to be evolving all of these market structures rapidly to meeting the needs and the constraints, and frankly the extreme weather events as part of the planning process that will be part of what the grid needs to look like in the twenty-first century.

And so when REBA and customers look at the impact of the MOPR, even in the Texas crisis, it’s how do we start having a more constructive dialogue around evolving capacity and market structures and not necessarily even taking a position on whether capacity markets themselves are good or bad, but just how do they need to be optimized to deal with the pressures and the demands of this century?

And so one of the things that we’re going to be really seeing shortly is a study from the REBA Institute side of things, which really looks at these questions of market design, what needs to be optimized, and how can customers play a much more active role in the discussions around market design? Customers have largely been absent from so many of these discussions, largely due to their complex processes that require intense amounts of time and expertise. But I think that just as we’re seeing the wave of customers doing procurement in the market, we’re now seeing growing interest and sophistication on the part of customers to really get engaged in these questions of what happens after MOPR? How do we redesign in capacity markets? How do we look at resource adequacy planning? How do all of these things start to intersect on such a complex set of issues, but driven from a customer perspective?

Stone: I think it’s interesting, as well, that Google, and I suppose a few other large industrial clean energy buyers that are members of REBA have actually joined some of these electricity markets as members, and that’s kind of a new thing because these markets generally include transmission companies and electricity generators and large utilities, but we’re actually seeing large corporate buyers enter. I assume that’s to exert some influence on the policies in those markets.

Baker: Yes, and I think that alone indicates the direction of where all of this is headed. Of course behind the scenes, we have other companies asking those that have joined, “What is it like? How have you been affected? Should we be considering doing that?” And it’s because these processes are intensely complex and time-intensive. And so it is really daunting for customers to start to think about how to engage in these processes. But I think that the general recognition is that because the customer voice hasn’t been represented, we have to figure out a way to be in those conversations in the room. And even though it’s a marathon sport, we’ve got to start training.

Stone: An article I saw that was published about a year ago was talking about — I think it might have also been Facebook, Google, some of these larger companies talking — and they said basically, “Yeah, we have an important role to play in decarbonization, but we’re not the end-all, be-all.” And they kind of threw the responsibility back to the utilities saying, “Really the utilities need to be behind this energy transformation, the energy transition to clean energy.” What’s your thought about that?

Baker: I think there is probably a very healthy debate about even that. I think to the utilities’ credit, we’ve seen some really ambitious goals, and not always backed up by plans. But at the same time, I think there’s a general recognition that utilities are in a good position to mobilize around this transition. But at the same time, customers are concerned about speed and cost and access. And so when it comes to questions of how can really tip-of-the-spear companies like Google and Walmart and others that have really ambitious goals be able to meet their own goals on the time frame they’ve set them, they need to be able to access those projects. And that puts pressure on the system for creating a menu of options.

So when you think about how can companies actually meet physical delivery between their renewable operations and where they’re actually consuming load, they want to see an evolution of what products are available in the marketplace, whether they can do it themselves. And viewing utilities are partners in that, as well as really needing to evolve the regulatory and market structures to be able to meet those changing needs on behalf of customers is really what so much of the dialogue is going to be about going forward.

Stone: Miranda, we’ve talked about economics and other incentives for companies to buy clean energy, but looking at the climate challenge itself directly, to what extent does climate science inform companies’ decarbonization targets and how ambitious they are in cutting their carbon emissions?

Ballentine: Oh, this is such a wonderful question. We are seeing more and more large companies taking a science-based approach to setting their greenhouse gas targets. And in fact, there is a program. It’s not a REBA program. It’s called the Science Based Target Initiative, SBTI. It really is designed to support large companies in thinking through not just setting arbitrary goals or a stab in the dark on what the right level of ambition is, but to actually have their goals be science-informed. And we’ve just seen a big increase in companies using that platform and that program to focus their ambitions on what the science tells us we have to do.

Stone: Miranda, let me ask you another question here. Google, which is a REBA member, has a goal of getting 100% of its operating electricity from renewables. That’s 24 hours a day, 365. How might a company like Google or other companies achieve such a goal, given the intermittency of renewables and the challenge of matching clean energy production with consumption in real time?

Ballentine: Yes, that’s a great question. One of the really fun things about being in this community is we get to see companies achieving goals and then saying, “Okay, how can I go farther and do more and make a greater impact?” And that really was what was behind Google setting this new round of ambition. They achieved 100% renewable energy on an annualized basis a number of years ago, but then they looked at their data centers and said, “Okay, so on an annualized basis, we’re buying enough renewables to offset all of our power use. But on any given day, that data center over there or that office building over there is still plugged into a grid that’s being served by carbon-intensive power sources. So we’re not really satisfied with just buying 100% renewables on an annual basis. How can we make sure that we’re actually consuming — which is different than procuring — how can we make sure we’re actually consuming zero carbon power all the time, everywhere?”

And that really has started a whole movement and trend in the corporate off-taker community. There are a number of barriers to getting there. And sure, the intermittency of some renewables is part of the barrier, but there are some more fundamental barriers, as well. They really just have to do with how the markets are set up. So today, if you were a company based in the Pacific Northwest, and you wanted to work with your utility to revitalize an aging hydropower plant to avoid the building of a new gas peaker plant, let’s say. There are no contracting mechanisms to work with your utility to do that. You don’t get any voluntary credit or reputational credit for that because it’s not a “new renewable project.” You can’t get a rec for it. It doesn’t count towards many of your goals, your RE100 goals or your EPA Green Power Partner Program goals. So there’s not a lot of incentive to do that kind of project, even though that’s a 24/7 zero-carbon project.

Likewise, there are parts of West Texas, for example, where we know we are curtailing wind because there has been so much wind built in that region. Or there are parts of California where we’re curtailing solar because there is so much solar that has been built in those regions. And today there really aren’t the incentives for companies to say, “Hmm, instead of curtailing that wind, what if we used that wind and made hydrogen — used electrolysis to make hydrogen — and then we use those hydrogen fuel cells to either power our vehicles or replace our diesel generators behind our facilities, or just as an electricity source?” Well, today there are no contracting tools to do those kinds of projects. You can’t get renewable energy certificates for those kinds of projects, and you don’t get any reputational credit for them. So there’s so much to how do we actually solve for a fully decarbonized grid everywhere, all the time, that has a very high penetration of renewable energy but also makes room for some of these other supporting technologies that are going to be required to truly get to that 24/7, 365 at every location, zero-carbon power.

Baker: I will point out here that this is another perfect example of why competitive wholesale markets become so critical to all of this, because you’ve got to have a way that those technologies can compete and deliver value, but the other piece of this is how do you manage that intermittency? The basic tenet here is that the larger the grid region is that you’re operating across, the more you’re going to be able to balance these intermittent resources and coincidentally be able to integrate other balancing technologies so that you can avoid some of the grid failures that we’ve seen in California and Texas, when you have grids that are too isolated or not well interconnected with other regions to be able to draw power from in major events.

Stone: Just going back for a moment to this Google example, Google is working on this concept called “carbon aware load,” which I think is potentially a solution to this whole intermittency that we’re talking about. They kind of moved the focus of their operations — I don’t really understand it — but to wherever the renewable energy is being produced, that’s where they’re going to actually do a lot of their work. Can you fill me in a little bit more on what that’s about?

Ballentine: I don’t want to speak on behalf of Google, so I don’t want to go into too much detail on their program. What I will tell you is that the concept of moving your load or moving your mission to different facilities in different parts of the world for a variety of reasons is certainly not a new one. In one of my past lives, I was the Chief Energy Officer for the United States Air Force. And one of the key elements of energy resilience and electricity resilience, leading to mission resilience in the military, for example, is being able to say, “If we lose power to this base over here or this facility over here, how can we quickly transition control of the mission that was being run from that facility or that base to another similar base, potentially half-way around the world?”

And actually you saw this in 2019, where the Air Force Central Command switched all of their air operations control for the entire Middle Eastern area of operation from the Middle East to Sumter, South Carolina in a completely seamless transition. That clearly demonstrated that if they lost power to their air operations center in the Middle East, that they had ways to ensure that the entire Middle Eastern operation was still functioning.

So I don’t think it’s a stretch to say that our really advanced leading clean energy buyers who do have some of that flexibility and data centers are certainly in that camp. The move their “mission” around for a variety of reasons, certainly not out of the realm of possibility that they could say, “Okay, let’s run the data center in Norway, when it’s peak wind in Norway, and move it to Toronto when it’s peak zero-carbon nuclear in Toronto, and move it to California when it’s peak zero-carbon solar in California.” So again, I don’t want to speak on behalf of Google’s plans specifically. You’d have to speak with them, but I think it’s one of many very interesting ways that the real leading companies are thinking about how we carbon-optimize our load.

Stone: Miranda, let me ask you a final question here. So a lot of the companies that are within REBA are really some of the largest corporations in America. What I want to ask is what is REBA doing to democratize clean energy? In this sense, I mean make it possible for smaller companies with fewer resources and without their own internal energy-buying departments and expertise — what is it doing to actually make it possible for these companies to also access renewable energy? And again, that’s important in the overall shift to clean energy as we move forward.

Ballentine: Yes, that’s a great question, Andy. So even though we now have well over a hundred large energy-buyers actively participating in clean energy markets, we’re still talking about a hundred companies, right? And we know we’re not going to get to a fully decarbonized grid one power purchase agreement at a time. So REBA really has sort of a dual theory of change approach because part of our vision, as I mentioned earlier, is that every energy customer has a pathway to be supplied by very low-cost, zero-carbon power.

So we have sort of a dual theory of change. One is to truly unlock markets, so that those organizations, whether it’s corporations or cities or universities or federal government agencies, that do want to use their procurement power to directly participate in markets, have a way to do that. Secondarily, or in parallel, I should say, because it’s not second to but in parallel to, we are focused on greening the grid for all. That looks at things like ensuring that we’ve got zero-carbon power on all grids, working with utilities to build zero-carbon energy sources and make those sources available to every single customer on their grid. And it’s really both. We need to lift the floor for all customers, and we need to raise the ceiling for those customers who want to actively play and participate in markets.

Baker: I think I would add that there’s another piece to the question that you asked around democratizing clean energy, and it’s how do we ensure that we’re not just greening the grid for all, but that we’re actually bringing opportunity and jobs and the bigger benefits to every corner of the country, because it’s important to not lose sight of the bigger opportunity that lies at the end of this decarbonization transition, and along the way. We’ve got study after study coming out, saying that we can affordably and maybe even cost neutrally get almost all of the way to decarbonization. A UC Berkeley study in particular stands out in my mind, saying that we can get 90% emission reductions, notably at no additional cost to customers, and create half a million jobs a year. The question is where are those jobs going to be, and who is going to benefit from that?

I think we all hold the obligation to ensure that this is an equitable transition, but customers are also stepping out and calling for that kind of transition and saying, “Involve us and help create incentives to ensure that we do bring these jobs and opportunities to all corners of the country.” And ultimately, that goes with this call by the customers to link opportunity to access clean energy with where they’re actually consuming energy. If you’re a Walmart that’s got a store in every corner of the country, enabling them to procure clean energy close to their load is ultimately part of what helps ensure that we’re bringing the jobs and the benefits to every part of the country.

Stone: Miranda and Bryn, thanks for talking.

Ballentine: Our pleasure. Thank you.

Stone: Today’s guests have been Miranda Ballentine and Bryn Baker of the Renewable Energy Buyers Alliance. Thanks for listening to the Energy Policy Now podcast from the Kleinman Center for Energy Policy at the University of Pennsylvania. If you’ve enjoyed today’s episode, please like us and leave us a comment or suggestion. Your comments help us to get word out about the show. And for more energy policy insights, visit the Kleinman Center’s website or subscribe to our feed on Twitter. Thanks again for listening to Energy Policy Now, and have a great day.