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Renewable Energy: Can Companies Replace Federal Support for the Industry?

Many things remain unknown about what energy policy will look like in the Trump administration. On the campaign trail, President Trump vowed to revive the dying coal industry as well as repeal the Clean Power Plan, President Obama’s major climate policy that seeks to curb carbon emissions from existing power plants. The Trump administration has said very little in terms of prioritizing support for the renewable energy industry. But the change of administration may not signal the demise of an industry once dependent on federal support in the form of investments, loans, and tax credits. This is due in part to the push from American companies for renewably sourced energy.

Long-term agreements with renewable energy projects provide price stability which help companies plan better. 

Google is at the forefront of the push for renewable energy and in 2017 the American tech company, best known for its internet search engine, says it will achieve 100 percent renewable energy for all global operations. Google started down the path toward this ambitious goal ten years ago saying the company sought to “take responsibility for [its] carbon emissions and promote sustainable environmental solutions” and pursue carbon neutral operations in the near future. In July 2010 the company entered a 20-year agreement with a wind energy facility in Iowa to buy 114 megawatts of electricity, the first of many investments in wind and solar energy projects. Today Google proudly calls itself the biggest consumer of renewable energy with commitments reaching 2.6 gigawatts, or 2,600 megawatts, through long-term agreements with over a dozen renewable energy projects. Additionally, if in some areas of operation Google gets their energy from non-renewable sources, the company is paying for that amount of generation from renewable sources in other locations. This means that Google is putting renewable energy back into the grid for other consumers. It also enables Google to fund renewable energy projects across the globe, even in communities where the company isn’t currently operating magnifying their impact and expanding the renewable energy industry.

But achieving their ambitious goal of purchasing enough wind and solar electricity annually to account for all of the company’s electricity consumption globally required much more than large scale agreements with renewable energy projects. Google also spent the last ten years cutting energy consumption wherever it can, and has gotten extremely good at it. Data centers are notoriously energy-intensive, and those at Google are now 50 percent more energy efficient than the industry average thanks to its persistent efforts, tightening the target for their 100 percent renewable energy goal and saving the company significantly in operating costs. Critics are quick to point out the good publicity Google gains from their sustainable energy efforts but there are many other motives at work here as well. Renewables like utility-scale solar and onshore wind continue to decline in price and are becoming increasingly cost-competitive with conventional sources of electricity. Long-term agreements with renewable energy projects provide price stability which help companies like Google plan better.

The change of administration may not signal the demise of an industry once dependent on federal support.

Better planning for the future and understanding the trajectory of the renewable energy market is exactly why Google isn’t the only household name transforming their energy portfolio. With the objective of reducing energy use and developing high-quality renewable energy projects, Apple too has set out to cover 100 percent of the electricity use of all their global facilities with renewable energy. As of January 2016 they were 93 percent of the way there. Microsoft has also been a big purchaser of renewable energy and used its sway as a major consumer to encourage utilities to invest in renewably sourced energy. Ikea has set their eyes on reaching 100 percent renewable by 2020 and Bloomberg, Johnson & Johnson, Walmart, and many other companies have set similar goals. There are, however, barriers for some companies wanting to move to renewable energy. Smaller corporations may not have the resources or expertise to navigate the energy market and negotiate the deals necessary to reach renewable energy goals.

But Google, Microsoft and Apple’s investments in the future of renewable energy are indications of the emerging lower-carbon energy system. By making long-term pledges to the renewables industry, these major companies are fostering crucial development that will help to grow the industry and lower costs. This in turn will make renewable energy more accessible for smaller companies and even residential consumers. The future of federal policies amiable to fostering the renewable energy industry may look uncertain at the moment but renewables are just beginning to demonstrate their potential as a cost-effective source of energy. This trend will continue in the next four years and beyond.

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