Dozens of U.S. retailers and restaurant chains have set science-based targets to reduce their contributions to climate change. Their climate strategies focus on reducing greenhouse gas emissions from their electricity purchases and transitioning to renewable energy.
Buying renewable energy makes financial sense. According to CustomerFirst Renewables, an advisory firm supporting renewable energy purchases, some companies are reducing renewable electricity costs up to 15 percent by aggregating purchases. Some generate additional financial returns on their renewable energy investments.
Renewable energy — electricity generated from sources like solar, wind and hydroelectric dams — avoids the polluting climate change emissions created by generating electricity from fossil fuels like coal, oil and natural gas. Those historic electricity sources, according to the U.S. Environmental Protection Agency, create 25 percent of current U.S. greenhouse gas emissions.
While the financial and environmental benefits of switching to renewable and carbon-free electricity sources are appealing, a fragmented regulatory landscape across the United States makes it challenging for companies with stores, restaurants and distribution centers in multiple locations across the country. These challenges were addressed throughout a recent NRF webinar.
Some recommendations addressed in the webinar include:
Focus on corporate goals — Many larger retailers have published greenhouse gas emission goals to reduce their contributions to climate change. Buying renewable energy can be an important part of a strategy to reduce emissions. Attempts to buy renewable energy that are not part of a broader corporate strategy can be more challenging to implement.
Look beyond on-site generation — When considering renewable energy, many people imagine rooftop solar panels. On-site rooftop solar is just one option. Consider other options such as solar parking canopies, off-site solar or wind farms, purchasing renewable energy direct from utilities, buying renewable energy credits or entering virtual power purchase agreements.
The NRF renewable energy webinar slides and a recording of the February 22 webinar are available to NRF members.
Develop a renewable energy strategy — Given the complexity of current renewable energy markets and the variety of options for installing or purchasing renewable energy, it is important to develop a coordinated strategy across the organization. Ad hoc purchases will not generate the greatest ROI and might limit the ability to meet or exceed corporate greenhouse gas emission reduction goals. It is important to align all stakeholders around a coordinated organization-wide strategy.
Consider multiple renewable energy approaches — Renewable energy solutions are complex and diverse. They vary by size, location, risk tolerance, return on investment and duration. Some solutions might have higher upfront costs and generate larger long-term returns. Others might offer lower or zero initial cost but produce smaller long-term savings. In some approaches the company owns the generating equipment (i.e., the solar panels or wind turbines) while in others the company leases the equipment. In some scenarios, the company does not own or lease any equipment and instead agrees to a long-term contract to buy the electricity that others produce.
Partner with experts — Given the variance and complexity of the renewable energy markets in different parts of the country, the need to execute a strategic change management strategy within the organization and the various financial models to acquire renewable energy, companies hire outside experts to provide insights and advice. CustomerFirst Renewables was part of the NRF renewable energy webinar because it supported the NRF member’s renewable energy purchases. Other firms provide similar services.
Collaborate with others and aggregate demand — As with other goods and services, buying larger volumes of renewable energy creates potential economies of scale and volume discount opportunities. Smaller retailers can increase their renewable energy options and lower renewable energy costs by aggregating their demand with other retailers that are also seeking to buy green power. CustomerFirst Renewables has experience working with groups of businesses to aggregate their purchasing power. Retailers interested in exploring this option should contact NRF.
Lots of retailers are buying renewable energy. The U.S. Environmental Protection Agency’s Green Power Partnership program ranks Walmart as the fourth largest purchaser of green power in the country. It also lists the top 30 retailers purchasing green power and identifies retailers that are now only buying green power, including companies like Aldi, Starbucks, Ikea, H&M, Sephora, REI and The Container Store.
Retailers also dominate other lists of renewable energy purchases. The Solar Energy Industries Association identifies Apple, Amazon, Walmart and Target as the companies with the largest solar installations. The Clean Energy Buyers Association lists Amazon as the company with the largest renewable energy deals in 2021 and alongside additional deals by Target, Walt Disney, McDonald’s and others.
The retail industry powers the U.S. economy and, increasingly, renewable energy powers the retail industry.