Renewables & Your Energy Management Strategy...When considering a renewables strategy, consider energy efficiency as the foundation for a holistic energy management program. Even when

Renewables & Your Energy Management Strategy | © ENGIE Impact 2019 All Rights Reserved 1

Renewables & Your Energy Management Strategy eBook


Table of Contents

The New Frontier of Energy Procurement ________________________________________________________________________________________________________ 3

Forces of Change in Energy Management _________________________________________________________________________________________________________ 5

Why Now is the Time for Action ___________________________________________________________________________________________________________________ 8

Barriers to Entry with Renewable Energy ________________________________________________________________________________________________________11

Evaluating Renewables As Part of An Integrated Strategy ______________________________________________________________________________________14

The Future of Renewables Procurement __________________________________________________________________________________________________________17

APPENDIX

Integrated Energy Management: What, Who and Why __________________________________________________________________________________________20


Across parts of the globe, it’s a time of political uncertainty when it comes to sustainability and climate

action. Where European countries are making great strides toward deep sustainability goals, the United

States has not pursued sweeping commitments. But regardless of where governments stand on the issues,

another leader is emerging: big business. Large corporations are the new vanguards of the environment and

are rapidly expanding their spheres of influence in the movement towards decarbonizing entire economies.

The next frontier in a decarbonized future is a push towards renewable energy deployment, spearheaded by the large and influential companies that make up the RE100 list having committed to increase the demand and delivery of 100 percent renewable energy. Over the next decade, more than 87 gigawatts of renewable energy will be deployed worldwide by these companies alone. In the U.S., renewable energy procurement by corporations is growing rapidly due to favorable federal and state policies, improved

financial stability of developers, and finally, a drastic decline in overall costs. These factors give corporations the confidence to not only

purchase enough renewable energy to meet their needs but also lock in long-term fixed price contracts.

Meanwhile, other new adopters are entering the renewable energy picture: small and mid-sized corporations. For these corporations,

current financial structures to procure renewable energy are still a challenge. Traditional purchase power agreements (PPAs) are designed

to be longer term, large-megawatt commitments, so the space is ripe for financial innovation focused on smaller, more flexible contracts.

PPA aggregation, such as influenced by a consortium of smaller buyers, or larger companies reselling a larger contract into smaller

tranches, have gained popularity but still present the challenge for developers and financiers who need enough buyers above the

threshold creditworthiness and appropriate demand to finance the projects.

Finally, one of the most important roles of large corporate adopters working with utility providers is their ability to advocate and

influence for stronger energy policies across the country. We already are seeing tangible results. For example, a large online retailer

worked with Dominion Energy to design a green tariff program for Virginia, which has allowed the company to purchase renewable

energy in a regulated market, encouraging further renewable energy growth in the region. Several other large corporations have also

been successful in advocating for third-party leasing and supporting renewable portfolio standards (RPS).

The New Frontier of Energy Procurement

Shy MuralidharanDirector, Product Management14-year energy expert

What follows in this eBook is the result of ENGIE Impact’s many years of working with our clients on

energy procurement and energy cost optimization in both deregulated and regulated markets and the

lessons learned as we guide clients through the barriers and complexities of the new frontier of energy

procurement: renewable energy. Whether the motivation is financial, driven by regulation, or in response

to stakeholder expectations, renewables are emerging as a viable alternative to fossil fuel-based energy for

organizations. Companies should be seizing the opportunities in front of them, now.

http://re100.org/

http://there100.org/news/14276581

http://there100.org/news/14276581


What Informs Our Expertise

1.4 Millionenergy accounts for which we provide

energy supply contracts, energy sourcing

or rates analysis

10+average years of experience of our

procurement managers, transaction and

rate analysts

120+energy price indices we continuously

monitor, plus critical economic trends and

weather impacts

2.5 Billionpoints of current and historical energy data

is analyzed, processed and stored on the

ENGIE Impact Platform

1,100monthly evaluations of energy supply

offers, providing insight into market prices,

supporting negotiations

500clients who we support in every

deregulated market in North America

and Europe


Energy management has seen its fair share of evolution, with the continued growth of renewable energy being a leading force of change. With impacts across demand and supply-side management, and key interdependencies between both, we wanted to take the opportunity to discuss how we’ve seen renewables affect both sides of the energy management equation – and highlight other leading forces we’ve observed and counseled clients through.

Forces of Change in Energy Management

Ben TaylorSenior Manager, Energy & Water Advising10-year energy expert

Demand-Side Management Over the last 10 years, we’ve seen demand-side energy management evolve from a ’nice to

have‘ for reducing operating costs to a ’must have‘ for market competitiveness and business

resilience. Historically, organizations typically tasked a person (or very small team) with

dealing with energy costs. A kickoff call that began with the phrase, “Help me, I drew the

short straw!” was not uncommon. Today, organizations are realizing the value of energy

management, and are leveraging a combination of dedicated internal resources and a network

of partners to generate significant results. Although the pressures behind this evolution are

complex, we see several reoccurring themes enabling this transition to low carbon operations.

When considering a renewables strategy, consider energy efficiency as the foundation for a

holistic energy management program. Even when working through traditional brown power procurement, a short payback project such

as a lighting retrofit can reduce the purchase volumes and further decrease costs. Buildings also have a natural tendency to become

more efficient as older, inefficient equipment reaches the end of its useful life and is replaced by newer, higher efficiency equipment.

If energy efficiency and future energy consumption are not considered before a procurement contract is signed, a facility might not

meet its expected purchasing volume and incur a penalty from the supplier. This consideration becomes more important as a portfolio

makes the transition from brown to green power purchasing. Although the market is evolving quickly, many renewables purchasing

agreements still include a premium as compared to alternative brown power options, so the benefit of applying energy efficiency as

the first layer to reduce total energy needs is amplified.

Finally, when considering on-site renewables for load-shaving and load-shifting strategies, it is often best to implement energy

efficiency projects first. In addition to typically having a shorter payback period than an on-site renewable project, reducing the

overall facility load through energy efficiency will help ensure proper sizing of the renewable system and avoid unnecessary cost of a

system designed to shave/shift a larger load.

In addition to establishing and aligning internal strategy, the following market advancements can be leveraged

to accelerate implementation.

Disparate data analytics approaches are merging to provide holistic benchmarking and performance monitoring across

large, geographically dispersed portfolios. Synthesizing monthly bill data, granular energy data, BMS data and operational

characteristics of each facility, organizations are quickly analyzing thousands of locations, prioritizing those with savings opportunity

and maximizing returns.

Today we see the typical LED retail price more than 80 percent lower than 2011 prices


Improvements in technology are reducing price and enabling adoption at a rapid pace. Today we see the typical LED retail price more

than 80 percent lower than 2011 prices. Real-time energy monitoring solutions are now available at a fraction of the price and can be

economically favorable even for small locations. These types of advancements are dramatically increasing access to energy efficiency and

continuous commissioning services that were previously limited to major players or large facilities with large capital pools.

This combination of data-enabled program design and accessibility to technology is also creating a new generation of outcome-focused

’as-a-service’ business models. These approaches help spread financial risk and asset management responsibility, further enabling

transformative programs that did not previously meet financial requirements. Infrastructure-as-a-service often involves a commitment

to achieving a reduction target, such as ENGIE’s commitment to improve Ohio State University’s energy efficiency by 25 percent in the

first 10 years of a long-term engagement. Redaptive’s innovative utilities-as-a-service program enables capital projects to be cash flow

positive, treating the investment as an operating expense while transferring risk away from the owner.

We live in an exciting time where data is readily available, advanced technology is readily accessible, and innovative business models are simplifying the implementation process.

https://www.ledinside.com/news/2018/8/global_led_lighting_products_price_trend

https://vutiliti.com/

https://news.osu.edu/one-year-later-ohio-state-energy-partnership-benefiting-campus-students/

https://redaptiveinc.com/our-services


Supply-Side Management Over the last several years, renewables have carved out increased market share, due in

large part to declining costs but also to more environmentally-conscious federal, state, and

corporate policies. In fact, electric generation from all renewable sources nearly doubled

from 382 million MWh in 2008 to a new record of 742 million MWh in 2018, around 17.6

percent of U.S. generation. Furthermore, as technological advancements reduce production

and operational costs, the price of renewable generation is reaching parity with traditional

sources in many regions, leading to even more investment in renewable capacity growth.

With the

U.S. electric generation landscape continuing to shift toward cleaner sources, policies at the

state, utility, and end-user level have followed suit.

Federal policies can change from administration to administration, so decisions over

renewable and sustainability efforts have increasingly trickled down to the state and local

level. Many states currently have renewable portfolio standards and goals that direct how

much electric generation must come from renewable sources.

But the latest trend to sweep across the nation is with states adopting a higher renewable portfolio percentage, with some reaching as high as 100 percent.

As the states set their targets, utilities operating within their borders must also realign to

be compliant. Many utilities, though, have been proactive and taken over the mantle to not

only produce cleaner electricity, but also provide opportunities for their customers to take

part. Several utilities across the country are experimenting with combining renewable

technologies to provide improved dispatchability, such as installing solar and wind

resources with battery storage. Additionally, many utilities in regulated and deregulated

markets are creating green tariffs to provide opportunities for customers to source their

electricity directly from renewables.

New trends have also emerged in the corporate space, with sustainability efforts starting

to move beyond just building retrofits to how and where the energy consumed. Energy

procurement strategies are evolving into brown power purchases supplementing needs

in overall green power contracts. The list of solutions continues to grow, but as of now

there are products like Physical PPAs, Virtual PPAs, on-site renewables, green retail

contracts, and Renewable Energy Credits. There are certainly some risks associated with

each solution that must be fully vetted before moving forward to provide the best value.

Ultimately, corporations and their energy and sustainability policies will guide the growth

of renewables implementation. If utilities and energy suppliers see an increased market

demand for such products, they will work to provide cost-effective solutions.

Jonathan LeeManager, Analytics Intelligence10-year energy expert

Electric generation from all renewable sources nearly doubled from 382 million MWh in 2008 to a new record of 742 million MWh in 2018, around 17.6 percent of U.S. generation

https://www.eia.gov/todayinenergy/detail.php?id=38752





Adoption and consumption of renewable energy has grown tremendously over the last decade. According to industry reports, by nearly 60 percent in fact. Several factors are driving this increase, including customer and shareholder pressure on companies greening their portfolio, declining costs, increasing options, favorable regulatory conditions and so many more.

We’d like to explore these drivers, in particular, the key factors making the case for renewable

energy adoption today. For multi-site businesses with hundreds, if not thousands, of sites

across varying markets, crafting a renewables sourcing strategy portfolio-wide comes with

massive challenges. But with data-based goals, a systematic and consistent approach to

evaluation, market and solution intelligence, and a well-defined roadmap, those challenges

can be overcome.

Why Should Renewables Be in Your Sourcing & Procurement Strategy?As mentioned above, there are several drivers of renewable energy adoption. While many

are consistent organization-to-organization, there are others that are unique. For multi-site

businesses, there is a consistent series that ENGIE Impact hears and advises customers around.

We’re Currently Experiencing the Most Competitive Pricing in History

Record-level investment is driving the development and diversification of options and

increasing supply. In fact, global investment in clean energy reached $332B in 2018, the

highest annual amount on record. Even more encouraging, annual global investment in clean

energy has reached at least $300B every year since 2014. This suggests a longer term, global

expansion of markets regardless of current price supports around the world. We’re also seeing

continued and spiking participation of venture capital and private equity, signaling robust

continued development of clean energy capacity for the near term.

Renewable Portfolio Standards

The establishment and continued expansion of Renewable Portfolio Standards in select markets

set the regulatory framework to signal to capital markets that there would be a continued,

financially stable group of purchasers. For example, California, Connecticut, Massachusetts

and New Jersey increased RPS goals from the initial goals they set. And though the portion

of additional renewable energy generation forecasted to be operational in the near term is

declining, the establishment and increases in RPS goals set in motion a pivot by financial

institutions to assess the opportunities and generate products that expand well beyond the

demand required to meet current RPS goals.

Why Now is the Time for Action

Brian DooleySenior Director, Renewables Consulting19-year energy expert

Did you know:

of Fortune 500 companies have

sustainability targets


renewable energy targets


committed to 100%

renewable energy

of U.S. large buyers are

pursuing renewable energy

48%

43%

5%

72%

https://data.bloomberglp.com/professional/sites/24/BNEF-Clean-Energy-Investment-Trends-2018.pdf


Stakeholder Pressure Will Only Continue to RiseCorporate stewardship is increasing, which is in some part understood to be driven by consumer purchasing patterns becoming more and

more influenced by environmental concerns and climate actions taken by businesses. Whether onsite, offsite or through green tariffs,

many businesses are looking to renewable energy sources as a strategy to increase climate solutions in their portfolio, lessen their

impact on the environment, and show their customers that they’re listening.

Do Your Brand a FavorCertainly related to the point above, consumers are making judgements on brands based on their environmental stewardship. Studies

show that from GenZ to Millennials to Baby Boomers, many generations prefer to purchase from companies who are known for being

environmentally friendly.

Renewables are One (BIG) Way to Make Progress Toward Sustainability Goals

As more organizations set sustainability goals, it’s important to have a pointed action plan on how to achieve them. Whether specific

renewable energy targets, greenhouse gas reduction targets or carbon emission targets are included, incorporating renewable energy

into the supply mix is a great way to make a big impact on sustainability goals. And with more options that carry less risk and legal

complication, organizations are finding it easier to move forward than ever before.

Climate Risk Forecasting

With 94 of the world’s major stock exchanges making environment and climate disclosures a requirement for listing, environmental and

climate factors are growing factors in assessing companies’ credit rating and thus access to capital.

More Options with Less Risk

Record-level investment in renewables has many developers and suppliers creating new renewables products based on demand. Retail

solutions like Physical Green Supply (supply contracts for renewable energy with shorter terms than traditional renewable products) allow

businesses to purchase contracted physical volumes of renewable energy – primarily wind or solar – directly with generators or through

intermediaries. Physical volumes are incorporated into traditional retail supply contracts along with RECs. A product like this provides a

lower risk option with short-term, simplified contracts and can provide fast progress toward renewables targets.

Source: Berkeley Lab (October 2018)Notes: Target percentages represent the sum total of all RPS resource tiers, as applicable. In addition to the RPS policies shown on this map, voluntary renewable energy goals exist in a number of U.S. states, and both mandatory RPS policies and voluntary goals exist among U.S. territories (American Samoa, Guam, Puerto Rico, US Virgin Islands).

WI: 10% by 2015

NV: 25% by 2025

TX: 5,880 MW by 2015

PA: 18% by 2021NJ: 54.1% by 2031

CT: 44% by 2030

MA: 41.1% by 2030 +1%/yr

ME: 40% by 2017

NM: 20% by 2020 (IOUs)10% by 2020 (co-ops)

CA: 60% by 2030

MN: 26.5% by 2025Xcel: 31.5% by 2020

IA: 105 MW by 1999

MD: 25% by 2020

RI: 38.5% by 2035

HI: 100% by 2045

AZ: 15% by 2025

NY: 50% by 2030

CO: 30% by 2020 (IOUs)20% by 2020 (co-ops)10% by 2020 (munis)

MT: 15% by 2015

DE: 25% by 2026

DC: 50% by 2032

WA: 15% by 2020NH: 25.2% by 2025

OR: 50% by 2040 (large IOUs)5-25% by 2025 (other utilities)

NC: 12.5% by 2021 (IOUs)10% by 2018 (co-ops and munis)

IL: 25% by 2026

VT: 75% by 2032

MO: 15% by 2021

OH: 12.5% by 2026

MI: 15% by 2021

Increasing and extending RPS targets: More than half of all RPS states have raised their overall RPS target or carved-out at some point since initial RPS adoption; many in recent years.

https://www.nielsen.com/us/en/insights/article/2015/green-generation-millennials-say-sustainability-is-a-shopping-priority/


Why Renewables Today?There are many reasons to consider renewables, but we believe these truly make the case for adoption of renewable energy now.

Expanding Renewable Requirements Renewable energy portfolio

standards are increasing in

many markets which is a

primary driver of investment in

increased generation.

Growing Installations and Forecasted CapacityWith record investment comes

increased capacity and supply

that will make renewable

solutions more readily available.

This also puts pressure on pricing

to decrease and diversification of

products like shorter term retail

solutions to increase.

Record-Level InvestmentOver $300B has been invested

annually in renewable energy

projects since 2014.

Declining Costs REC pricing has continued to

step down, and coupled with

federal tax credits and tax

equity, markets continue to

be economically attractive.


Barriers to Entry with Renewable Energy

While all signs point to investment in renewables, that doesn’t mean an organization’s go-forward plan will come without challenges. Even with a methodology to evaluate your options, it’s important to go into the process with potential barriers identified and a strategy to overcome them. This section will cover a variety of barriers that prevent companies from making rapid forward progress to acquiring renewable energy, whether they are early adopters or mature and seasoned veterans of renewable purchasing, as well as best practices to stay on track.

BARRIER: Complete & Accurate Data

The Issue: Many organizations lack complete and accurate resource data across their entire portfolio of sites, including lack of

data in the format that allows for comparative analysis of renewable solutions verses current sourcing strategies.

The Solution: Tracking consumption and other data internally or via a trusted third-party partner will allow organizations to

understand needs across their entire portfolio of sites and better plan an energy management strategy to meet goals.

BARRIER: Understanding of & Ability to Assess Available Options

The Issue: Terms and conditions of different renewable energy solutions will vary across providers and markets. Maintaining a

working knowledge of markets, transaction types and pricing is very difficult, especially for multi-site organizations.

The Solution: Ideally, organizations can leverage one or more partners who regularly evaluate these solutions to make

strategic recommendations on what makes the most sense based on their goals.

BARRIER: Funding Options for Onsite Renewables

The Issue: Incorporating renewable solutions into an operating budget involves identifying a business case and a cost for

some solutions, which may give rise to unforeseen funding issues or at least timing challenges of getting funding included in

forecasted budgets.

The Solution: In capital-constrained environments, organizations can pursue renewable solutions that do not require an

upfront capital expenditure, or they can partner with vendors who offer performance-based contracting through which services

are paid for via shared savings.

BARRIER: Counter-Party Risk

The Issue: When assessing renewable energy options, it can be difficult to assess stability, fitness and experience of different

renewable energy service providers and products (i.e. batteries, fuel cells, solar panels).

The Solution: Organizations can mitigate risk by working through financially stable energy service providers who can source

and bundle solutions and potentially act as a counter party to shield from market risk.



BARRIER: Executive Buy-In

The Issue: Executive buy-in is a pervasive theme across organizations looking to transition a portion of their portfolio to

green power. Providing market data on the scope of opportunity, investment, pricing trends, availability of price supports, and

comparative risks is critical to obtaining support.

The Solution: Partnering with a development partner with diverse experience across technologies, suppliers and markets can

help de-risk renewable sourcing strategies in the perspective of executives.

BARRIER: Managing Regulated and Deregulated Locations Across Your Portfolio

The Issue: There can be a tendency to separately approach renewable sourcing strategies and traditional energy sourcing. This

can be further exacerbated by separating those strategies between regulated and deregulated markets.

The Solution: Renewable opportunities will have to be balanced with traditional energy strategies already in place, and the

development of new, diverse products will require more a more frequent assessment of both renewable and traditional energy

supply strategies.

BARRIER: Facility Ownership Versus Lease

The Issue: Both the term of leased facilities and the relationship with landlords can complicate renewable energy strategies.

The Solution: A strong sustainability strategy will start with a materiality assessment—identifying energy usage profile,

location and facility terms & conditions—from the outset. With those characteristics established, organizations can

prioritize sourcing strategies and incorporate solutions for leased portfolios that emphasize term and source flexibility

over other attributes.

BARRIER: Timing of Capital Investment

The Issue: With a finite amount of capital available to pursue an organizations goals, distinguishing the relative value of

deploying capital for renewable solutions can be a difficult sell internally.

The Solution: The priority goals of an organization will drive whether capital deployment for renewable solutions may be

advantageous at any given time across differing market conditions. State and market level programs and incentives can help

create a compelling business case regarding why to prioritize capital allocation to renewable solutions. However, such programs

and incentives often have caps on the amount of participation or windows of time for eligibility which will require that

customers respond in a timely fashion. Ideally, customers will partner with energy service providers with broad and continued

market engagement to help flag those timely opportunities early enough to participate.

BARRIER: Uncertainty of Operation

The Issue: Commonly a concern for retail and quick-serve restaurants, businesses that are testing new locations have a level

of uncertainty to the length of time their business might operate in that location. This uncertainty can make it difficult to plan a

renewables procurement strategy that meets the flexibility and contract terms needed.

The Solution: Every business seeks to maintain flexibility to respond to market conditions and thus customers should be

evaluating sourcing renewable solutions in coordination with expected operating schedules for facilities, sales performance and

any other criteria that might lead to cessation of a location’s operations. Increasing demand for renewables solutions year over

year are prompting the development of new products that allow for greater flexibility and more favorable contract terms that

more closely resemble traditional energy supply contracts than long-term PPA type structures.


No barrier is insurmountable. By understanding what barriers they might come up against, and creating a plan to overcome them, organizations will be more likely to succeed and experience greater movement toward purchase.

BARRIER: Time Constraints

The Issue: Many organizations can feel the pressure to act when they make time-bound commitments to renewable energy

and have quickly approaching deadlines, but little progress. They need a clear roadmap and a strategy to communicate their

short and long-term plan to achieve those goals.

The Solution: Depending on the goals of an organization, diversifying renewable solutions can help generate near-term

success and mix in other longer-term strategies. It is critical to map out the location of usage, ownership structure of consuming

facilities, regulatory restrictions of the markets where usage occurs, current contracted commitments for energy supply, and

contracting flexibility of customers, to move from assessing opportunities to identifying executable options.


Most multi-site commercial and industrial (C&I) businesses are likely working toward an integrated supply mix across coal-fired generation, offsite renewables and distributed energy resources to support their sustainability goals. Each provide their own value, and depending on regulations, availability and conditions on a site-by-site basis, each portfolio will be unique. Supply strategies are also highly dependent and interconnected with demand-side strategies. The following illustrates the value of both demand and supply-side strategies.

Evaluating Renewables as Part of an Integrated Strategy


For a more in-depth look at supply and demand-side strategies, including an explanation on what kind of company would benefit and

why an organization should consider them, skip ahead to our appendix at the end of this eBook.

Specific to renewable energy options on the supply side, ENGIE Impact’s approach to identifying the best strategies for our customers

starts with reviewing a set of 12 characteristics of renewable solutions to help prioritize what is important to a given organization and

match those characteristics to the products that best align. Having this clear, concise and repeatable process helps create a smooth

experience and ensure no question is left unanswered. As with any organizational-level strategy, establishing the priorities, a process

to evaluate specific opportunities, executing and measuring against expected outcomes is key to launching a successful initiative and

making incremental gains through continued refinement.

Supply Management Demand Management

Coal-Fired Generation

Offsite RenewablesDistributed Energy

ResourcesEnergy Efficiency Demand Response

Value Value Value Value Value

lower cost clean/decarbonizediversification/

decarbonize

expense management, shave

consumption

expense management, shift

consumption


Organizations considering renewable products should review the following 12 characteristics. Based on their priorities – locality or

marketability, for example – organizations may determine that a particular project is not right for them.

Additionality Describes transactions that support the

construction of new clean energy facilities –

additional emissions reductions that would not

otherwise exist.

Locality/Proximity The ability to point to a specific source of

renewable power within a certain proximity.

Sustainability Impact How much influence a product will have on

achieving sustainability goals.

Marketability Determines what organizations can publicly

state about their investment in renewables.

If customers are not retaining the renewable

energy credits from a sourcing strategy or

replacing those they sell, there is marketing

guidance from the Federal Trade Commission that

prohibits making statements about these types of

transactions.

Company Credit Rating Can influence which renewable investment is

right for an organization.

Lead Time The amount of time required to deliver renewable

products, which can range anywhere from weeks

to years depending on the structure.

Price Risks Potential of material movement in the

basis curve.

Budget Certainty Predictability in month-to-month costs.

Contract Simplicity Certain products require complex legal

documents with intricate compliance, tax,

and accounting requirements.

Developer Credit Risk The risk of default or contract termination that

stems from a renewable energy developer’s

credit rating.

Contract Term Flexibility The ability to contract for short terms (3+ years)

or longer terms (10-20+ years), assignability,

shifting deliverables across multiple locations,

termination for convenience and other terms

related to customer performance.

Volume Risks Exposure to real time spot market volatility when

load is short or long relative to renewable supply.


Current State Assessment

• Current generation portfolio

• Review goals

• Industry and regulatory watch

Integrated Sourcing Strategy

• Business case development

• Procurement planning across traditional

(Brown) and renewable (Green) energy options

Procurement Program Management

• Procurement plan execution

• Proposal evaluation and contracting

Measure & Report on Performance

• Benchmarking of existing assets

• Tracking progress towards goals

• Verification of performance

Performance Optimization

• Performance optimization on both

supply-side and demand-side

Understanding organizational priorities from these 12 criteria is just the start. It takes a thorough process to understand the current state

of sourcing strategies and portfolio characteristics to help develop a business case for renewable solutions. But the process is critical and

can help to surmount obstacles that may arise even as organizations move forward.

Ongoing reporting on performance is key to ensuring long-term satisfaction and trust and to ensure additional investment in future

recommendations. Organizations should also look to performance data to support long-term program optimization and maximize their

approach to renewables.

Strategic Energy Sourcing & Procurement Process


Throughout this eBook, we discussed the current state of procurement and the forces that have shaped where we are today. We looked at what’s driving urgency and action as well as the barriers that still exist for companies looking to integrate renewables. And we discussed considerations for evaluating renewables as part of an integrated procurement strategy.

So to close, here is what ENGIE Impact believes the future of renewable energy procurement holds for businesses.

Sustainable, Climate-Resilient Assets Will Rise in Value

Large, global companies are sitting on the forefront of sustainability and renewable energy procurement. Nearly 50 percent of Fortune

500 companies have sustainability and renewable energy targets, and in 2018, C&I buyers procured a record 5.3 GW of renewable

energy nationally. This increase in investments in sustainability initiatives—and especially in renewable energy—is gathering momentum

as the link between sustainability and financial performance becomes stronger. Corporations are looking at these investments from a

financial value perspective and beyond the initial, emotionally-driven motivation.

As the world feels the increasing effects of climate change, there is value in sustainable and climate-resilient assets, and leading companies are not only reducing carbon emissions but generating financial returns while creating platforms and incentives as models for others to follow.

Upfront Strategy Development will be a “Have-to-Have”

It is important that corporations pursue their own unique sustainability journey and define their values and principles upfront before

they get into the finer operational details. Their investment strategy must be backed by the right amount of metrics that can track their

progress effectively by analyzing foundational metrics such as energy usage intensity, water usage intensity and GHG intensity

of their operations.

Companies will Continue to Face (and overcome) Hurdles

Despite the overall momentum in this space, renewable energy procurement in the broader C&I sector continues to face hurdles. For

example, traditional PPA structures are complex for small and medium-sized corporations, as they do not have adequate knowledge or

understanding of incentives to get into long-term contracts. But we see corporations overcoming these barriers innovatively, for example,

signing PPA deals with other buyers (i.e., aggregated PPAs) and negotiating for more flexible contracts. Also, financial instruments in the

form of synthetic PPAs are cropping up, which provide some relief from longer term contracts by offering shorter terms at a premium.

Based on the risk profile of corporations, this market is evolving to offer differently structured renewable energy supply contracts for

different types and sizes of buyers. All this is leading to a strong wave of adoption as more and more companies hop on the renewable

energy bandwagon.

The Future of Renewables Procurement

Shy MuralidharanDirector, Product Management14-year energy expert


Renewable Energy will Become a Competitive Advantage

Another variable driving growth in this space is large companies pioneering business-to-business market incentives (also known as

Renewable Value Chain Initiatives), that encourage upstream companies and midstream suppliers to produce products and services that

are made by renewable energy. If other companies adopt sustainability-influenced supply chains that rank suppliers based on their

renewable energy commitments, the use of renewable energy could become a competitive advantage in the marketplace. This causes a

network effect for renewable energy adoption and we are already seeing tremendous growth in products and services with a sustainable

supply chain.

We hope this eBook has shown you that the renewable energy journey is unique to your organization. You can either take

a ‘wait and see’ approach for government policies or legislation to incentivize businesses and provide financial support for

renewable energy, or you can explore the steps to take based on your risk appetite and growth ambitions. Already, local policies

in several markets, demand from consumers and investors, and advancing technologies are driving ambitious sustainability goals

and the growth of renewables is apparently influencing some key financial performance metrics. This means that renewable

energy investments might very well transition from the realm of ‘nice-to-have’ to a competitive advantage. And as this space

evolves and grows – because all signs point to growth – you can be sure we’ll keep a close eye on what the future brings.


About the ExpertsContact our experts to ask questions and learn more.

Shy Muralidharan Director, Product Management

Shy Muralidharan is the Director of Product Management for Energy Intelligence Services at ENGIE Impact, leading a product team

to deliver a suite of world-class advisory, data analytics and technology services enabling organizations to solve problems related

to managing energy resources as part of a broader sustainability initiative. Shy has more than 14 years of worldwide experience in

product management, consulting, and thought leadership in the field of new energy systems and sustainability. A System Design and

Management fellow from MIT, Shy has a bachelor’s degree in mechanical engineering and an MBA from University of Mumbai.

Brian Dooley

Senior Director, Renewables Consulting

Brian Dooley is the Sr. Director of Renewable Consulting at ENGIE Impact leading clients through the transition to low and zero

carbon business solutions that implicate those clients’ business model, financial return requirements, sustainability and corporate

responsibility goals, corporate governance structures, operating portfolios, executive approval processes and public reporting

expectations. Brian has 19 years of renewable energy experience including development of industry-leading programs from

within Fortune 50 companies and enterprise solution development for such clients as an external development partner. Brian has

a bachelor’s degree in political science from the University of Wisconsin, Madison and a J.D. from William Mitchell College of Law,

Saint Paul, MN.

Jonathan Lee

Manager, Analytics Intelligence

Jonathan Lee leads ENGIE Impact’s Energy & Sustainability Analytics Intelligence team, which focuses on energy market intelligence,

utility rate forecasting, and historical data acquisition to help provide insight into clients’ current and future energy spend. Jonathan

has 10 years of experience in the energy industry and is a regular contributor to various natural gas industry polls and articles,

including Argus Media, Bloomberg, Platts and Reuters. He also has a bachelor’s degree in finance and marketing from Concordia

University, Portland, Oregon.

Ben Taylor

Senior Manager, Energy & Water Advising

Ben Taylor leads ENGIE Impact’s Energy & Water Advising team, which applies a data-driven strategic approach to developing

and managing programs which optimize resource consumption and improve facility operations as part of a holistic sustainability

management initiative. Ben has 10 years of experience in the energy industry, with roles in engineering, consulting, and operations

management. He has a bachelor’s degree in mechanical engineering from California Polytechnic State University, an MBA from

Eastern Washington University and is a Certified Energy Manager and a licensed Professional Engineer.


WHAT Is It? WHO Can Benefit? WHY Consider It?

Energy

Efficiency

A low-risk, cost-reduction opportunity for delivering economic, operational, and sustainable value.

• Equipment upgrades, such as LED retrofits and HVAC optimization

• Technology upgrades, such as controls optimization

• Maintenance and monitoring

Customers who are aiming to:

• Achieve energy reduction targets

• Meet sustainability goals

• Replace outdated equipment

• Improve infrastructure

• Reduce maintenance costs

• Improve workplace safety

• Potential savings from reduction in energy use (kWh)

• Potential savings from managing peak demand (kW)

• On-bill financing for qualifying customers

• Utility incentives for increased ROI and payback

Demand

Response

Reductions in consumption for periods of two hours or less at frequencies dictated by the market and/or the ISO.

• Price alerts• Demand alerts• Real-time metering• Reliability-based programs • Economic/ancillary programs

Customers with:• Smart or IDR metering• Ability to curtail load for short

periods• Load flexibility

• Large commercial and industrial customers with significant curtailable load could achieve savings in consumption and in annual energy costs

Appendix

Integrated Energy Management: What, Who and Why

So you know renewables are inevitably part of your energy supply future, but with so many options available it can be difficult to keep

up with what’s on the market, what companies will benefit and why you should consider it as a part of your holistic energy management

strategy. Let’s break down the basic demand and supply side options to better understand each.

Demand-Side Strategies

Supply-Side Strategies – DERs


Distributed

Energy

Resources

(Onsite

Generation)

Installing onsite generation to produce energy. For example, solar, either with ground-mounted or rooftop panels that are typically connected to the local utility grid. Used to offset consumption, reduce energy costs, and improve environmental responsibility.

Customers with:

• Sustainability targets

• Space availability

• High electricity rates

• (solar) High solar radiation with good roof quality

• Large energy offset

• Favorable lease agreements or sites at owned locations

• Usage and potential demand reductions enable significant cost reductions

• Offsets peak usage

• Ensures fixed price for portion of demand

• Supports sustainable brands with environmental and marketing claims

• Declining costs of producing solar power

• State incentives and federal tax credits

Distributed

Energy

Resources

(Storage)

Battery-based storage that enables customers to use power more efficiently and sustainably by storing and retrieving electricity in cycles.

Customers aiming to:

• Reduce high electricity costs by addressing energy demand (kW)

• Improve emergency preparedness

• Increase sustainable impact if coupled with renewable technologies Ensure resiliency during potential supply disruptions

• Greater control over energy costs with time-shift usage, deploying stored energy when prices are high and charging systems when prices are low

• Revenue generation potential

• Hedge against rate changes

• In favorable markets, rapid ROI, with typical returns achieved in less than five years

• State incentives and federal tax credits



Renewable

Energy Credits

(RECs)

Renewable Energy Credits (RECs) offset the indirect greenhouse gas emissions of organizations while funding the operation and development of domestic renewable energy. A fungible and tradable commodity, each certificate represents 1MWh of renewable generation.

• Compliance RECs available in states with mandated regulatory requirements for renewable generation

• Voluntary RECs (Green-e certified RECs) available to support states without regulatory requirements for renewable generation while providing cost optimization in non-ERCOT markets

Customers seeking:

• Contract simplicity and flexibility

• Fast progress on sustainability goals

• Low-risk opportunities to strengthen environmental responsibility

• Can buy for a portion, or all, of energy consumption

• Marketing claims

• Rapid turnaround time for sustainability impact

• Minimal contract complexity

Power Purchase

Agreements

(PPAs)

Sometimes referred to as an electricity power agreement, PPAs and VPPAs represent a contract between two parties that includes sourcing RECs and renewable energy or for RECs alone respectively.

Customers seeking:

• Expense management opportunity in favorable markets

• Fixed portion of energy expense or fixed REC pricing

• Potential sustainability impact when RECs are sourced with the energy

• Potential financial hedge for financial power purchase agreements verses physical PPAs

• Source renewable energy at advantageous rates in markets with price supports or incentives

• Source volumes of renewable energy that exceeds usage at one site and may be allocated to multiple sites

• Hedge against energy price volatility using a REC financial hedging strategy for VPPAs

Physical Green

Supply

Contracted physical volumes of renewable energy – primarily wind or solar – direct with generators or through intermediaries. Physical volumes are incorporated into traditional retail supply contracts along with RECs.

Customers who are:

• Aiming for fast progress on renewables targets

• Seeking to reduce environmental impact – and market actions – within one or two months

• Limited to load following fixed-price or block-and-index contract structures

• Environmentally responsible with low-risk appetites

• Firm volume and fixed-price offerings ensure predictability in costs

• Significant sustainability impact

• Marketing rights to reference specific assets

• Rapid turnaround time to project initiation

• Flexible terms and simplified contracting through standard retail supply agreements

Supply-Side Strategies – Offsite Renewables


Green Tariffs Green tariffs are optional programs in regulated electricity markets offered by utilities and approved by state public utility commissions that allow larger C&I customers to buy bundled renewable electricity from a specific project through a special utility tariff rate.

Customers who:

• Have sites/locations in regulated markets

• Need sourcing strategies with shorter term, more flexible transactions

• Opportunity to source renewable energy in regulated markets when retail choice is not available

Supply-Side Strategies – Tariff Monitoring & Optimization


Don’t Wait. Start Today. To explore opportunities and discuss your current strategy

further, schedule a discovery session with an ENGIE Impact

consultant today.

Contact UsIf you would like to discuss any of the findings or best practices presented in this report, please reach out to your ENGIE Impact representative or contact us at:

ENGIE ImpactENGIE Impact works with multi-site businesses that aim to thrive in a sustainable world. With accurate and comprehensive resource data – including energy, water, waste and telecommunications – ENGIE Impact applies technology and people expertise to lower costs, drive efficiencies, and reduce environmental impact. Leading customers, including 25 percent of the Fortune 500, turn to ENGIE Impact to drive their sustainable resource management initiatives forward.

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Documents

Renewables & Your Energy Management Strategy...When considering a renewables strategy, consider energy efficiency as the foundation for a holistic energy management program. Even when