The energy transition is lagging but there is hope

This article was first published on WePower - Medium
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There’s a saying that there are two types of problems — good and bad ones. Let me give you an example of both. Larry Fink, CEO of BlackRock, the largest asset manager globally, recently told that in order to reach global sustainability goals, all companies will have to change their business models and adapt to climate-compatible operations. This is a good problem to have because by the time we reach this point, the progress towards full sustainability will already be significant, and momentum will be strong.

However, we can’t create this good problem without a concrete plan on enabling companies of all sizes to buy green energy directly from producers or at least have this option provided by their energy suppliers.

The price of renewable energy is no longer a problem. In their New Energy Outlook Summary (NEOS), Bloomberg reports that either wind or PV are the cheapest new sources of electricity in countries making up around 73% of world GDP. Economic incentives are there to develop renewable energy projects even without government subsidies. So, what’s stopping us from getting more renewable energy adoption?

The real issues come from the renewable projects financing process. It is unnecessarily complicated, expensive and lengthy. The majority of renewable energy projects are financed by Power Purchase Agreements which are direct agreements between corporate energy buyers and green energy generators. Due to their complexity and cost, these deals are accessible only to the small number of corporate global energy consumers with yearly energy spending in millions of dollars.

So, we get to the real problem (the bad one) — despite making up 2/3 of the global energy consumption, most corporate and industrial energy users can’t access direct green energy procurement. The capital needed to renewable energy development is restricted from reaching these projects.

The growth of renewable energy procurement via PPAs ...

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