Sustainability Marketing: Promoting Your Renewable Energy Purchase

As concern for the environment grows, both consumers and stakeholders are pushing companies towards developing long-term sustainability goals. Organizations looking for innovative, economic, and impactful ways to meet major sustainability commitments has led to a rapid increase in corporate renewable energy procurement. But how can organizations effectively communicate everything they’re doing to support clean energy usage? By engaging in sustainability marketing.

What Is Sustainability Marketing?

Sustainability marketing, also known as renewable marketing, green marketing or green PR, is a type of marketing strategy that focuses on an organization’s commitment to the environment by promoting its sustainability efforts. Developing the right green marketing strategy can have a huge impact on securing investors, cultivating loyal consumer relationships, hiring and retaining employees, and gaining a competitive edge. 

Using RECs to Create Green Marketing Strategies

In order to demonstrate their investment in renewable energy, companies acquire Renewable Energy Credits (RECs), which is the mechanism that allows a buyer to claim the renewable benefits of a clean energy project. The EPA defines a REC as the property rights to the environmental, social, and other non-power qualities of 1 Megawatt Hour (MWh) of renewable energy generation. Solar Renewable Energy Credits (SRECs) are a form of RECs which represent the attributes from solar projects.

How a company procures RECs is extremely important as this can frame or, in many cases, limit how the company can market their renewable energy efforts. In the past, companies were able to make broad green marketing claims regarding their renewable energy usage. But now, the market,and many market participants,  will evaluate or even police these claims to ensure that the company is accurately representing its impact.

It can’t be overstated enough that your REC purchases need to support your sustainability marketing claims. There are many 3rd-parties and competitors that will evaluate your green PR claims and check to make sure that they are accurate. There are a plethora of examples of large companies whose green marketing efforts backfired due to misrepresentation.

The Three Ways to Purchase & Market Renewable Energy Credits

Renewable Energy Credits (RECs) can be purchased three ways; through a Direct purchase, through a Power Purchase Agreement (PPA), or through a Utility sponsored program. 

Direct purchase — Least opportunity for green marketing

Purchasing RECs directly is a popular option but gives you the least opportunities to engage in sustainability marketing. Often, these RECs are called “unbundled”, meaning they are not specific to a particular renewable energy project. Unbundled RECs are widely available at very low cost, and in some cases represent electricity generated from “dirty” resources such as  trash incineration. The availability and low cost of these unbundled RECs means that your REC purchases didn’t support the construction of a new Renewable Energy project, so there’s no way to claim additionality. This also limits your efforts real impact and any claims that you might make related to these sustainability efforts. 

Utility programs with RECs

Across the country utilities are responding to customer demand by creating programs to purchase renewable energy through new tariff structures, often called Green Tariff Riders. One example of this would be a utility tariff that adds a rider to utility bills for the purchase of renewable energy. As part of the tariff, the utility transfers RECs from a renewable project to the customer. In Virginia, Dominion Energy created Schedule RF for this purpose. These tariffs, depending on their particular structure, provide large customers a way to procure renewable energy and make green marketing claims. The downside is that utility tariffs are often more expensive.  Depending on the program, the RECs may come from new renewable energy facilities, giving you the opportunity to claim additionality, in other cases the program may not. It is important to understand the specifics of the program to confirm the extent of the claims you can make based on your purchase, and get transparency about what type of generation produces the RECs. 

Entering into a PPA with bundled RECs — Most opportunity for Green PR

Purchasing RECs by entering into a PPA gives your organization various green marketing opportunities, and it’s the most cost effective way to buy RECs. By entering into a traditional Power Purchase Agreement (PPA), or Virtual Power Purchase Agreement (VPPA) — that includes transfer of the project specific RECs — an organization can verify the exact source for those RECs. Plus, because of the significance of signing a PPA with a project, and that projects ability to secure financing and be built, you will be able to claim additionality. Additionality means that, without your organization’s investment, the renewable energy project otherwise would not have been constructed. This can be a powerful statement to consumers and stakeholders.

PPAs ensure all green marketing claims originate from the real, measurable impact of an organization’s investments in procuring RECs or renewable energy. There is definitely a wide spectrum of impact. It ranges from the minimal value of a low cost REC with no additionality, to procuring RECs from a renewable energy project in close proximity to your facilities. As mentioned above, additionality is a key criterion in evaluating the impact of your investment and the claims that you can publicly make.  To take it a step further, many companies try to procure RECs in the areas or power grids where their facilities are located in order to support even stronger claims of impact. Companies like Amazon and Facebook try to match their renewable energy procurement to the region or grid where they have facilities that are consuming the power. While this is an emerging trend, it is not a widespread practice. 

Promoting REC Purchases Through Sustainability Marketing

Now that you know how purchasing your RECs can make a difference on what you can claim, let’s talk about some of the must-have elements of  green marketing strategies.

Renewable Marketing is All About Knowing Where and How to Publicize

There are plenty of places you can publicize your efforts to support the sustainability movement. To develop a successful green PR strategy, try to get your message out across as many platforms as possible, while keeping it consistent and on-brand. Some of these places include:

  • Company/Corporate Websites
  • Company Social Media Pages (Twitter, FB, LinkedIn, etc.)
  • The RE Project’s Developer Site

You can also join groups that match your goals, and report your efforts to important organizations to gain increased exposure. Some of these groups include:

When it comes to large off-site Renewable Energy projects, there are usually multiple organizations involved in the investment. Leveraging each other’s reach and doing a series of press releases that can be published across all sites is a great way to publicize your renewable energy purchase. Oftentimes, groups involved with an RE project will also go on press tours; speaking on panels and at conferences related to their project. 

Elements of a Green Marketing Mix

Once you’ve narrowed down what you’re going to say, how to frame it, and where to publicize it, it’s time to get creative with your green marketing mix. Contrary to popular belief, a green marketing strategy doesn’t need to be restricted to Press Release type-content. It can be anything; from images to community stories, to an email outreach campaign from the CEO.

When publishing anything on social media especially, your content must stand out to get noticed. Use high-resolution images with short, powerful messaging. The more visual content you release, the better the engagement will be. If you have video content available, leverage that as well. Focus less on the technical aspects of the renewable energy project and more on the direct impact it’s making. Also, whenever possible, use numbers, percentages, and statistics to tell your story and make your green marketing message more tangible.

Example: We’ve committed to offsetting 100% of our energy usage with solar power by 2020, and this new project gets us 80% there!

In the U.S., the FTC has also published a series of “Green Guides” for the use of Environmental Marketing claims. These renewable marketing guides explicitly outline all the rules and restrictions around sustainability marketing claims, so you can avoid greenwashing and remain compliant.

How To Avoid Greenwashing In Your Renewable Marketing Efforts

Greenwashing refers to making exaggerated, deceptive, or false claims about corporate environmental efforts. There are a lot of ways to procure renewable energy and be creative in promoting it, but how your green marketing statements are framed makes a huge difference in how the company is perceived. If anything is framed incorrectly, or is outright dishonest, you can run into serious legal issues. 

A great way to make sure you don’t accidentally engage in greenwashing is to consult industry experts and key stakeholders. Ask them to review your green PR communications and green marketing materials to help ensure that they are accurate and adhere with industry standards and best practices —  including the FTC’s Green Guides. Experts and stakeholders could include individuals from third party certification programs, your legal counsel, or your project developer.

As a utility-scale solar project developer, Urban Grid has the experience needed to make sure your sustainability marketing efforts are truthful and compliant. We can help position your green marketing strategy in a way that conveys the message you’d like to get across, while staying in the confines of what you’re legally allowed to claim. 

The Growth of Corporate Renewable Energy Procurement

Corporate renewable energy procurement is growing rapidly. More and more companies around the world are voluntarily and actively purchasing renewable energy through traditional and virtual power purchase agreements. This trend is set to continue in the coming decade, as companies will need to buy significant amounts of renewable energy to achieve their often ambitious corporate renewable energy goals. These deals are part of a trend in which companies across all industries are taking a greater role in controlling their energy supply. 

What is A Corporate Renewable Energy Procurement Strategy?

Corporate renewable energy procurement is the act of purchasing and promoting renewable energy as part of an organization’s sustainability program. Motivations vary by company as do procurement strategies, but the development of the Power Purchase Agreement (PPA) in the mid-2000s has prompted significant growth in corporate demand for renewable energy and has made it easier for companies to meet long-term sustainability goals. 

PPAs Lead to Cost Effective Corporate Renewable Energy Procurement

Until recently, large organizations and businesses were limited in the strategies available for making significant progress in addressing sustainability and corporate renewable energy goals. Power purchase agreements (PPAs) have become the popular option for commercial, industrial and institutional organizations to procure renewable energy. Bloomberg New Energy Finance recently reported that 2018 saw a record number of PPAs, tripling the number from 2017. US companies led the way, purchasing 8.5GW or 60% of global purchases. Thirty-four of those companies signed their first PPA in 2018, comprising 31% of total US corporate renewable energy procurement. But, the corporate power purchase agreement is not a new structure, so why then are we seeing such a rapid increase in both the number of deals being done and the total MW of renewable energy being procured?

The Virtual Power Purchase Agreement (VPPA)

With limited energy production available from company-owned roof or land space in comparison to total electricity load, companies found that onsite solar provides a limited opportunity for real impact on their corporate renewable energy goals. New contracting structures have opened the door for larger organizations to procure renewable energy from offsite solar installations, offsetting a meaningful amount of the organization’s electricity load. The primary driver of this change has been the Virtual Power Purchase Agreement (VPPA), often called a Synthetic PPA, which has enabled major US corporations and institutions to procure large amounts of renewable energy along with its attributes in a cost-effective manner. 

With new contract structures available for corporate renewable energy procurement, organizations are now able more than ever before to maximize the benefits from their renewable energy purchases, including “green,” financial, and economic benefits.

Corporate Renewable PPAs Provide “Green Benefits”

Organizations today are much more engaged and committed to their impact on the environment than in the past. There is increased pressure, especially on the major corporations in the US, from both internal and external stakeholders pushing for more impactful sustainable business practices. Announcing sustainability efforts and introducing corporate renewable energy goals has proven to be a boost to employee pride and moral; a key driver in talent recruitment. Morgan Stanley found that millennials are up to three times more likely to want to work for (and buy from) companies that share their values and manage environmental issues well. Customer demands and expectations are trending towards more sustainable products and services. A 2015 Neilsen survey found 66% of respondents would pay more for a product or service if the company was committed to positive social and environmental change.

Not surprisingly, this pressure has led over 150 major companies to sign on to the RE100, pledging to use 100% renewable energy. And, 63% of Fortune 100 and 48% of Fortune 500 companies have at least one climate or clean energy target. 

“Green Benefits” to the Community

Companies also have expressed an interest in maximizing the benefit to the communities in which they operate. The 71 signatories of the Corporate Renewable Energy Buyers Principles have indicated that when possible, they will procure renewable energy projects near their facilities. Local projects drive economic investment, job creation, and enhance the resilience and security of the local grid.

Many companies like Mars, Starbucks, and Nestle, realize that climate change is a real threat to the raw materials necessary for them to do business. Reputational risk is also a motivator; A company that does not look to its entire supply chain may still suffer reputational damage if one of its suppliers is a major polluter. This has motivated leading companies such as Apple, IBM and Kellog’s to require suppliers to set and publicize energy and emissions goals. While individual motivations vary, the reality is that companies around the world are deciding to take responsibility in the fight against climate change. 

“Green Benefits” for the Corporate Renewable Energy Buyer

This surge in corporate interest has been a driver of large-scale renewable energy projects. The impact of a new large-scale renewable energy purchase is an important differentiator, where the buyer can champion their renewable energy purchase through renewable energy credits (RECs), and claim additionality. While these green benefits have been a major driver in the growth of large scale renewable energy purchases, there are other key factors at play here. With innovative contracting structures, economies of scale, and reductions in costs, the decision to use green energy is not only good for the environment, but makes financial sense and contributes to long term business success.

The Financial Benefits of Power Purchase Agreements

Another motivator for the growth of corporate renewable energy procurement is that renewable energy costs have dropped dramatically. They have decreased to a point now where a Virtual PPA with a large-scale solar project can provide significant financial upside to the buyer. Lazard’s annual Levelized Cost of Energy report shows that the costs of wind and solar have dropped 88% and 69% respectively since 2009, while coal and nuclear energy costs rose by 9% and 23%. Even without subsidies, Lazard’s report shows that utility-scale wind and solar can be the same or cheaper than traditional fuel generation.

Companies are taking advantage of renewable energy resources to achieve long term energy price stability and to hedge against energy price risk. The electricity markets in the US are inherently volatile, influenced on an hour by hour basis by supply and demand for electricity produced using a variety of generation resources. Traditional energy generation is subject to fluctuations in price and availability of fuel to generate electricity. Weather has had a major impact in recent years as extreme weather events put additional pressure on energy markets leading to price spikes. Companies find that A VPPA can insulate them from this price volatility and potentially provide profit from the project. 

Finally, companies realize that an added benefit to renewables purchases is that it puts them in an advantageous position in regards to future regulation. Overall, 67 jurisdictions, representing about half of the global economy and more than a quarter of global greenhouse gas emissions, are putting a price on carbon. Solar power purchase agreements significantly reduce carbon emissions and put the buyer ahead of the regulatory curve. 

Explore Your Corporate Renewable Energy Procurement Options

With prices for renewable energy in a competitive position against traditional power sources in the United States, there is little reason not to explore your options for large-scale corporate renewable energy procurement. Your organization will be able to reap the extensive and impactful environmental and sustainability benefits of renewable energy while also positively impacting your bottom line. For larger organizations, you need diverse strategies for meeting corporate renewable energy goals across a sometimes scattered footprint, in a way that is both meaningful and smart business. 

Urban Grid can help you navigate the complex and ever-changing marketplace for large-scale solar energy procurement, and make sure your organization finds the solution that is best for your goals. Contact Urban Grid today to get started.

What is a Renewable Portfolio Standard?

A Quick Rundown of Renewable Portfolio Standards 

On Monday, April 8, 2019, on the last day of the Maryland Legislative Session, the Clean Energy Jobs Act was passed in both houses of the Maryland Legislature. The act requires an increase in the state’s Renewable Portfolio Standard (RPS)  to 50% by 2030, including a 14.5% carve-out for in-state solar energy. It’s expected to result in approximately 20,000 new solar jobs and $10 billion dollars in economic value to the state over the next 10 years. With the passing of this most recent RPS legislation, Maryland joins the ranks of D.C. and 29 other states (representing 55% of total U.S. retail electricity sales) who’ve established or expanded their RPS policies to increase the amount of electricity that comes from renewable energy resources. 

So, What Is A Renewable Portfolio Standard (RPS) & Why Does It Matter?

A Renewable Portfolio Standard (RPS) is state legislation (there is no federal Renewable Portfolio Standard as of yet) which requires that a specified percentage of a state’s electricity production be generated by renewable resources.  States are able to use Renewable Portfolio Standards as a way to leverage long-term policy stability to help grow the local renewable energy industry. RPS requirements apply to utilities, and many states also include municipalities and electric cooperatives (Munis and Co-ops). Utilities that are subject to these mandates, but don’t generate enough renewable energy themselves, must buy eligible renewable energy certificates (RECs). One REC represents the environmental benefits of one megawatt-hour of renewable energy generation. The requirement feature in an RPS creates a market mechanism for compliance, i.e. the purchase of RECs.  Like all markets, REC supply and demand set the market price for those attributes. By increasing an RPS, a state is increasing demand for RECs (and thus the price) which incentivizes new renewables deployment.  For a corporate energy buyer, a strong RPS leads to increased availability of projects to meet your specific needs and innovative structures for procuring renewable energy and meeting your goals.

Renewable Portfolio Standards by State

The first RPS was passed by Iowa in 1983, and since then over half the country has followed suit. Twenty-nine states, Washington DC, and three US territories have passed an RPS, while eight states and one US territory have passed non-binding renewable energy goals. However, the details can vary significantly from state to state as shown in this map by DSIRE.  

Most states’ renewable energy targets are between 10 and 45 percent, although Washington, D.C. and seven other states, including Maryland, have requirements of 50 percent or greater. Eligible resources for RPS compliance include wind, solar, biomass, geothermal, and some hydroelectric facilities. Several states also include additional resources such as landfill gas, tidal energy, combined heat and power, trash incineration and even energy efficiency in their Renewable Portfolio Standard. Many RPS’ also include specific “carve-outs” which require a certain percentage of the overall renewable energy requirement to be met with a specific technology, or “multipliers” which award additional RECs for electricity produced by these technologies. The ranking preference for different resource classes is often referred to as different Tiers (Tier 1 RECs).

If you’re buying REC’s in your company’s service footprint, it’s important to know what resources are covered by your state’s RPS. Since some states allow waste-burning and “dirtier” resources to produce Tier 1 RECs, there’s a chance you could be getting renewable energy from a resource that could violate, or taint your sustainability claims. 

The RPS Effect on Renewable Energy Growth

According to Berkeley Lab’s Electricity Markets and Policy Group, RPS’ have been responsible for roughly half of the growth in renewable energy since 2000. However, in recent years RPS policies have played a declining role, accounting for only 34% of all national renewable capacity additions in 2017NB1. This is due in part to declining costs and other pro-renewable energy policies. Nevertheless, RPS policies continue to play a significant role in supporting renewable energy growth in the Northeast, Mid-Atlantic, and West.

As discussed, in most cases, a Renewable Portfolio Standard sets up a market for RECs.  In markets with a strong RPS impact, it makes building renewable energy projects more cost-competitive, so more projects can be built.  

General RPS Trends

Most RPS programs are over 10 years old, but states continue to make revisions. More than half of all states with a Renewable Portfolio Standard have raised their overall RPS target and carve-out percentages due to achieving the target early or policymakers wanting to increase renewable deployments. For example, California increased its RPS requirement to 60% by 2030 and added a goal of 100% zero carbon electricity by 2045. Some states have also refined the eligible resources, with particular attention on hydro and biomass. 

REC Pricing Trends

REC prices vary greatly by state and can be volatile. RECs that are eligible to meet state RPS compliance requirements tend to be relatively expensive compared to RECs in states with voluntary wholesale markets. Even the wholesale values for compliance-eligible RECs can vary greatly depending on the specific policy and current supply-demand dynamics.  For example, in states with a solar RPS carve-out, solar RECs (SRECs) tend to be more expensive. Over time, as RPS goals are reached and demand declines, an oversupply of RECs may result, with a subsequent decline in REC prices. The overall success of renewables has enabled many states, including Texas to meet their RPS requirement early.

Be aware of the market dynamics in the state in which you are looking to procure renewable energy as the value of the additional income from RECs can have a major impact on the deal’s economics.

If you’d like to discuss how solar project development can help you meet your renewable energy goals, or need help understanding the market dynamics of your state, give us a call at (866) 256-0912.