The sun is finally shining on solar energy – but is guaranteed supply of power more important than CSR?
In 2017, solar power was declared the fastest growing source of new energy and, according to the International Energy Agency (IEA), new installation projects are rolling out at their fastest rate for four years. It finds ever-improving photocell technology will reduce the cost of converting energy from the silicon wafer and silver-paste built panels by 16-35% by 2024, creating the impetus to add 600GW of solar capacity to the global network.
Solar capacity is soaring
The top ranked country for installed capacity is China (545.2GW), followed by the US (214.7GW) and Brazil (122.9GW), with Germany, Canada and India all making strides to catch up. And more businesses are making a beeline for it as they face disclosure and brand reputation pressures to report (and reduce) their carbon footprint.
At the start of the year, Microsoft declared its aim to be carbon negative by 2030. It follows the likes of Facebook, which last summer took 75% of its power from renewable sources. In fact the social network giant was the largest corporate buyer of renewable energy in 2018. It has signed contracts totalling 2GW of solar energy. In December 2019, its newest partnership – with Georgia-based Bancroft Station Solar Farm – went live, with the capacity to supply all its Newton Data Center power needs.
How does it work?
Solar energy is captured in two ways, using photovoltaic (PV) cells, which take energy from the sun and generate electricity. These are the most popular solar panels found on rooftops, and also many of the huge solar farms sited in deserts. Their total life carbon footprint is among the lowest of all energy types, with 87-97% of the energy produced creating no emissions. Solar thermal panels also exist, which heat water in the panels to generate electricity.
Business is leading investment
Such has been the scale of corporate investment in solar, it’s created more than half of all installed capacity since 2016. Much of it has been through US power purchase agreements, where companies enter into an agreement (typically for 20-30 years) to buy power from an electricity provider. Google’s plan to boost its worldwide portfolio of wind and solar agreements by more than 40%, to 5.5GW, will create more than $2bn in new energy infrastructure alone. But with sector growth comes new choices for businesses – such as whether to simply buy from commercial energy providers, partner with electricity producers, or run their own solar installation [Amazon, for instance, has more than 50 rooftop solar installations operating across its fulfilment and sorting facilities].
The trade-off for solar is the variability of supply – and not just in areas where the sun doesn’t always shine. In California, where all new homes have to be built with solar panels, there has recently been an issue of over-capacity, driving down electricity prices, forcing the state government to order plants to “throttle back” solar production. Companies opting for their own generation will still need a back-up option if levels can’t be sustained, to ensure business continuity.
The clear win for organisations is the brand advocacy solar creates. Green initiatives improve brand perception. Tuned into this fact, some 85% of S&P 500 companies published a sustainability report in 2017, including detailing their renewable energy policies. A Unilever study revealed 21% of consumers said they would choose brands that made their sustainability credentials clearer.
The path to solar may not yet be clear, and obstacles still exist, but it will be trailblazing firms that can show they’re able to source or buy into power from the most abundant source of them all – the sun.
Corporate deals for solar
Long used in the US, corporate power purchase agreements (PPAs) – where a business signs up for renewable energy from a generator – are growing in popularity in the UK and Europe. This year, French airport operator Groupe ADP signed a 21-year solar PPA with Urbasol, which will develop three solar plants to meet about 10% of ADP’s electricity needs and help meet the firm’s aim to be carbon neutral by 2030.