An obscure rule-change under carbon reporting standards could boost corporate demand for renewable electricity.

There are different ways companies can source 100% renewable electricity, whether through long-term power purchase agreements, on-site renewable energy, or selecting a green power tariff with their suppliers.

Given the purchasing power of the private sector, a trend towards corporate buying could be a big source of demand. In Britain, for example, commercial and industrial consumers account for 57% of electricity use.

Two changes could drive that demand. First, it seems carbon reporting rules are becoming more popular. Britain already requires top companies to report their carbon emissions, while the Financial Stability Board (FSB) last December said that it would develop a global rule that could become effectively mandatory, if most top companies adopted it.

Second, an obscure methodology change under the GHG Protocol Corporate Standard has allowed companies for the first time to reap the zero carbon benefit from sourcing renewable power, when reporting their emissions.

The Protocol is the industry standard for reporting emissions; companies can use it to report emissions directly from their facilities, or more broadly, also to include emissions from their purchased electricity. The latter are called “Scope 2” emissions, which until now were calculated as the electric grid average. The new rule change requires companies to calculate the emissions of specific power purchase agreements; if these are 100% renewable power, they will be zero carbon, making companies look better.

That has seen one supplier, SmartestEnergy, develop a specific renewable electricity product which helps companies meet the Protocol Standard, using renewable power.

For renewable power generators, there are potential financial benefits from higher corporate demand. Since 2004, European Union rules have required all electricity suppliers to hold a certificate of origin, called a Renewable Energy Guarantees of Origins, or REGO, for the renewable power that they sell, to assure customers that this is indeed what they are supplying.

In Britain, REGOs are priced at around 50 pence per megawatt hour (MWh), compared with commercial electricity supply prices of around £100/MWh. Some of the REGO premium goes to the generator; that may rise to most or all of it, if demand rises. But the bigger benefit for the renewable energy sector would be greater demand for renewables overall.

The RE100 project is one initiative trying to drive corporate buying of renewable power. It aims to showcase pioneering companies committed to sourcing 100% renewable electricity, and companies which have signed up include IKEA, Infosys, Goldman Sachs, BMW, Coca-Cola, Google, Microsoft, Swiss Re, UBS, Unilever and Walmart.

The Climate Group has calculated that if the world’s top 1,000 companies all switched to 100% renewable electricity, that would cut global carbon emissions by more than 3%. If the entire global private sector followed, that would cut global emissions by nearly 15%.

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