2018 has the potential to be a momentous year for Europe’s clean energy transition. Last month, the European Parliament sent a strong signal on the promotion of the use of energy from renewable sources, voting through several amendments to the Commission’s proposal for an EU Renewable Energy Directive. This is an important step in the journey towards a greener Europe.
As policymakers from across the Parliament, Commission and Council prepare to begin interinstitutional negotiations, we encourage them to pay close attention to one issue in particular – the role that corporate sourcing of renewable energy could play to accelerate the energy transition.
We believe encouraging greater corporate involvement in the production, distribution and consumption of renewable energy should be the way forward. Microsoft has set ambitious renewable energy targets for our operations, including datacenters, and we’re well on our way to exceeding our 50 percent target. That progress towards our global target was enabled in part by new energy deals in Europe.
Last year we announced our first two renewable energy buys outside the U.S. In the Netherlands, we agreed to purchase the energy generated from a wind farm to power our adjacent datacenter with local, clean wind energy. Meanwhile with our new wind farm project in Ireland, we will help increase the amount of carbon-free energy on the Irish power grid.
These projects are good for our business, but they are also good for the local communities and countries in which we operate. Progress on our renewable targets, and our encouragement of other companies to follow our lead, supports the growth of a clean energy sector. It could also contribute to helping the EU realize its ambitious decarbonization targets.
However, to enable more of the same, Europe’s energy policies need to change to keep up with a continually evolving energy market and emerging market actors. Many companies are willing and able to be part of Europe’s energy transition – yet concerns over clarity and certainty of investments are holding them back. When we look for opportunities to source renewables, we are driven by competitive energy cost, the opportunity to use innovative technology for storage, and the ability to make transparent claims about the origin and type of energy.
When it comes to transparency, one area where we would like to see improvements relates to the renewable energy credit system; otherwise known as Guarantees of Origins (GOs). These prove the origin of electricity generated from renewable energy sources, demonstrating the value of a company’s investment. Expanding access to these GOs to corporate consumers would encourage wider participation in the energy market. Similarly, if the scheme was expanded to cover additional, onsite renewables generation – such as rooftop solar – this would encourage companies further.
The European Parliament’s amendment on corporate power purchase agreements (PPAs) recognizes this potential, noting the need for the GO framework to reflect corporate participation. We welcome this specification and hope it will be reflected in the final text.
There are other policy steps which would encourage greater corporate participation in Europe’s clean energy transition. Shifting from feed-in tariffs to an auction-based system where the market sets the price for energy would increase competition and help keep energy costs down. Meanwhile, expanding the electricity market design to encompass new technologies – such as the battery-based storage we are piloting on our Irish wind farm – and valuing the flexibility provided by these technologies could help ensure more predictable power, where the grid isn’t dependent on the sun shining or the wind blowing. This in turn, would give greater confidence to those looking for certainty from renewable energy.
Every one of us – whether policymaker, business leader, or citizen – has a stake and a role in tackling climate change. Regulatory frameworks need to reflect this new reality, by opening the door to new players to work alongside traditional energy producers. Together, we can find new solutions to the challenges that affect us all.