The potential for increasing renewable energy demand and corporations' plans to increase participation in the electricity value chain are accelerating energy industry convergence.
FREMONT, CA: Irrespective of the ongoing global pandemic and an economic recession, states, cities, utilities, and businesses continue to pursue decarbonization strategies. Even in the absence of a direct opportunity for green infrastructure development in the economic stimulus measures enacted in response to COVID-19, clean energy demand remained resilient, as renewables and storage recorded decreased costs, rising capacity, and usage factors. When electricity demand fell this year, renewable edged out other electricity generation sources.
Supportive federal actions can help improve timelines for further expansion into new technologies, such as highly advanced batteries and other types of storage, offshore wind, and green hydrogen technology, for an industry that has focused primarily on solar and wind. As these innovative technologies, mainly green hydrogen production and storage, reach commercialization, people may see increased power-to-x projects to store, convert, and reconvert excess solar and wind energy into carbon-neutral fuels and chemicals.
The capability of increased renewable energy demand, electrification of the transportation and industrial sectors, and strategies by oil and gas companies to increase their involvement in the electricity value chain will accelerate energy industry convergence. These trends may encourage collaboration, which may lead to the development of new business models and the advancement of the energy transition.
More diverse companies are inking procurement deals
Big techs have been a pioneer in corporate clean energy contracts since the beginning. The sector continues to lead the field, draw more deals, negotiate more significant transactions, and introduce new contract models.
Especially, heavy industries like steel and heavy machinery have started to embrace renewable energy. The fact that significant emitters are acquiring renewable energy is essential. Industrial emissions account for one-third of global emissions, and it is high time for these industries to decarbonize.
Prioritizing grid decarbonization
Several corporate energy buyers want to contribute more than just implementing more clean energy. They want to ensure that it drives decarbonization in the power system.
This is a shift in perspective, such as from project outputs to project outcomes. Even though several businesses may have been compelled to purchase solar or wind power to meet internal 100 percent renewable energy targets, net-zero commitments motivate clean energy buyers to consider the larger picture of emissions.
The human impact of clean energy procurement
As new contract models and structures arise, companies will use more advanced criteria while negotiating long-term contracts.
This strategic lens can be used to evaluate upstream impacts like an energy company's labor practices or the material sourcing of a solar panel manufacturer. It can even be used to confirm that renewable energy deployments benefit the local community and create well-paying jobs that encourage innovation, equity, and inclusion.