To win the Race to Zero, all companies must put sustainability at the heart of their business model and undergo their own green transformation, argues Jakob Askou Bøss, Senior Vice President of Corporate Strategy & Stakeholder Relations at Ørsted.
Why homegrown renewables are taking over
September 2020 smashed records as global temperatures soared to new highs and nearly one-tenth of the entire planet experienced unprecedented heat. The Northern Hemisphere had its warmest summer on record. These bubbling temperatures, when combined with more extreme weather events and old, fragile power grids are threatening business resilience as companies become increasingly reliant on round-the-clock energy.
Antiquated grid infrastructure is crumbling as extreme weather events including heatwaves, wildfires and storms become more common, triggering increasing power outages and disruption. South Asian companies experience about 25 outages a month, the Middle East and Africa about 14 and Sub-Saharan Africa nearly nine. And the problem isn’t limited to developing countries. Outages in the US are rising so steeply that one in four businesses experience a power outage at least once-a-month.
As businesses integrate more digital technologies into daily operations and become increasingly dependent on round-the-clock access to electricity, the costs of these power failures are hitting home. This hampers economic growth which is likely to be more acutely felt in developing countries. In Sub-Saharan African countries, for example, power outages cost some companies as much as 31 percent in lost sales. Outages in the US are estimated to hurt the economy to the tune of $150 billion-a-year.
Feeling the pinch, companies are starting to become power generators by installing their own renewable energy systems on-site. Apple boasts 805,000 square-feet of solar panels on the roof of its doughnut-shaped headquarters in California (a state that’s been plagued by wildfires and frequent power shut-offs). Apple’s ambition is to meet its entire electricity demand with Apple-owned clean energy projects. As of January 2019 it had already reached two-thirds.
Other software giants including Facebook, Amazon and Microsoft that operate power-hungry data centers across the globe, are also turning to on-site solar and wind plants to power their premises. Amazon operates 60 on-site sun-energy plants that can produce as much as 80 percent of a single fulfilment facility’s annual energy needs.
The declining cost of renewable electricity per MWh means that the trend towards on-site power generation isn’t limited to giant corporates. Smaller companies, from retailers to hotels, shopping malls and restaurants are also starting to reap the rewards. In the UK, as many as one-third of businesses now generate at least some of their electricity themselves, mostly from solar. The Premier Inn hotel chain, for example, has several rooftop solar systems, Supermarket chain Marks & Spencer uses sun-power at one of its distribution centers, while another supermarket group, Waitrose, powers its Leckford dairy farm from solar panels.
Beyond dirty generators
In developing countries, where power failures and high energy prices are common, many businesses rely on expensive and polluting diesel or gasoline generators. Tapping into solar power makes huge economic sense, giving them access to a cleaner, cheaper and more reliable source of power. Telecoms provider Orange has already deployed 4,750 solar sites in Africa and the Middle East that supply its mobile telephone systems and reduce its use of fossil fuels.
“Solar is the best hedge against an unreliable grid and tariff hikes; it also makes the world a better place,” says Kunal Naik, Director of Flotek, a manufacturing business operating sites across Southern Africa. His company is implementing five solar plants at its facilities that are expected to meet at least 60 percent of their energy requirements.
Recognizing the value that clean energy can bring to businesses and economies, Governments in developing countries including that of Kenya, Chile, Brazil and India are implementing attractive policies to speed up adoption. In 2018, Kenya hit a new record with $1.4 billion investment for geothermal, wind and solar plants, according to Bloomberg New Energy Finance. In Chile, wind and solar represented 11 percent of total power generation in 2018, from nothing five years ago.
For companies operating in remote locations, the ability to pair renewable energy with battery storage can be invaluable, growing resiliency and energy independence. Rio Tinto is currently building a solar-plus-storage system at its iron ore plant in Western Australia. The Brazilian mining giant Vale, in August said it plans to install the country’s largest battery storage system to cut energy costs and as part of its plans to become self-sufficient using clean energy by 2030.
Solar and onshore wind are already the cheapest sources of new-build generation for at least two-thirds of the global population, again according to BloombergNEF. At the same time, COVID-19 is accelerating the digital transformation, pushing more people online and increasing the need for reliable, round-the-clock power. In 2019, the consultants Wood Mackenzie suggested that domestic solar + storage was reaching grid parity in Europe. This would make it cheaper to generate power at home than to buy it from the grid.
For companies, becoming more energy independent means greater resilience and security. “The opportunity for firms to become self-sufficient energy generators and to contribute to a better balanced and more reliable grid network could not only secure future energy needs but create economic resilience within a more diversified business model. All companies can embrace and benefit from more sustainable business models,” says Richard Lockington, Sustainable Investments lead at Cyan Finance.
Alok Sharma said COP26 will be the world’s best chance of building a cleaner, greener future and “our last hope of keeping 1.5 degrees alive”.
“The world we live in today has been shaped by the breakthroughs of our past – from the Model T assembly line to the spread of mobile phones across previously unconnected rural areas. Such breakthroughs continue to propel us towards a safer future, as long as governments make sure the whole of society comes along for the ride.” – UN High Level Champion, Nigel Topping.