International companies’ renewable strategy management
Leading international corporates in emerging economies and developed countries around the world have worked on developing their corporate renewable strategies plus energy transformations, in light of the serious climate change threats. Looking ahead, it is expected that a rising number of leading manufacturing companies globally will be accelerating their energy transformation from fossil fuel into clean renewable power supplies. These companies have set new corporate targets to become self-sufficient in power generation, for both strategic and economic reasons.
Good international business examples included Volkswagen and Ikea. Ikea has said publicly that its long-term corporate direction is for all Ikea Group buildings to be supplied with 100% renewable energy. In addition, Ikea is aiming to improve the Ikea Group’s overall energy efficiency performance globally by 25%, compared with its 2005 performances. Amongst other energy-savings initiatives, Ikea will be using energy-savings light bulbs in its stores, where possible, plus it will have the lights on only when warehouses arc open. Ikeahas also pledged to install extra insulation to save on energy for heating and cooling in its stores and warehouses. Ikea has also said that it is going to make sure that all Ikea Group stores, warehouses, distribution centres, factories and offices will be heated and cooled using renewable fuels such as wind, water, solar power, biofuels and geothermal energy in future (Ikea, Goes Renewables, Sweden, 2019).
Volkswagen (VW), the international auto manufacturer, had its corporate reputation severely damaged by its roles in enabling its diesel models to cheat laboratory emission tests in the USA and the EU in 2015. It has developed new corporate improvement strategies and is now aiming to become a leading provider of sustainable mobility for emerging economies and developed countries globally. VW has founded a new subsidiary called Elli Group GmbH, based in Berlin. The new unit will develop green auto products and services, relating to clean renewable energy and electric vehicle (EV) charging for its new EV products. VW has said that as one of the world’s largest automakers, it will going to force the pace of the urgently needed global transport and energy transitions to emission-neutral e-mobility. The new VW business unit is expected to contribute a renewables-based smart charging solution for electric cars. VW believed that it will be entering a strategically relevant and exciting business area that would offer considerable opportunities for strengthening ties with existing customers as well as accessing entirely new customer groups in the emerging economies and developed countries globally (PV Magazine, Volkswagen green energy supplier, 2019).
Looking ahead, it is expected that increasingly international companies will undertake energy transition away from fossil fuels into renewable energy. These have been driven by new government energy policy drives and requirements to reduce GHG emissions plus drives by companies to improve their environmental performances. These companies have, in order to secure their own clean power reliably, applied renewable power generation integrated with advanced distributed power storage and digital distributed power management technologies. They are applying advanced digital systems to manage their new renewable power supplies efficiently and reliably. At the same time, they must also improve their cyber security to guard against hacker or terrorist attacks to these systems, which could result in severe supply disruptions.
We shall discuss two good international digital company business case examples covering Google and Telefonica, in more detail below. Both have accelerated their clean energy and digital transformations to support the sustainable development of their key global businesses in light of the rising climate change threats.
Google has been active in pursuing its new corporate pledge of transforming its power supplies to 100% renewable energy. It has actively ramped up its acquisition of green power supplies from both emerging economics and developed countries. Google has said that its clean renewable energy transformations are currently on course to have all its data centres globally to be powered by renewable energy sources in future. It has pledged to purchase enough wind and solar power to support its global operations. Google has said that reaching its 100% renewable energy goal will be a multi-year effort. It will also be improving its datacentre energy savings and efficiency. Google engineers have undertaken digital and technical improvements on its data centres in many countries across the world. They have made these data centres to be 50% more energy efficient than the industrial average. Google has also applied advanced digital technologies, including the use of machine learning and artificial intelligence, in its datacentres. These have helped Google to improve its energy robustness and energy efficiency plus meet the rising climate challenges (Computer Weekly, Google datacentres, 2016).
Google has, in its drive to ensure that it will have sufficient renewable energy power supplies for its office as well as its fleet of datacentres, been buying directly additional wind- and solar-generated renewable electricity for its operations. It has been buying clean renewable power from projects funded by its own purchases globally. Electricity costs have been one of the largest components of Google’s operating expenses. A long-term stable supply of renewable power at pre-agreed costs will therefore help Google to provide good power security and protection against energy disruptions plus price swings. To date, Google’s purchasing commitments have resulted in infrastructure investments of more than USD3.5 billion globally, with around two-thirds of the investments in the USA. Google has estimated that these new renewable projects should generate tens of millions of dollars per year in revenues to local renewable plant owners, plus tens of millions more to local and national governments in tax revenues.
Telecom companies have also been accelerating their renewable digital transformation in light of climate change pressures. A good example is Telefonica, the international telecom company. Telefonica is the operator behind UK’s O2 mobile network. It has been actively pushing its energy transitions to renewable energy supplies as part of its corporate strategy to handle climate change risks. Telefonica has said that it is planning to speed up its commitments in fighting climate change and to achieve its Paris Agreement commitments. It is striving to source 50% of its electricity from renewable energy sources by 2020 and 100% by 2030. Its businesses have already been operating with an internal corporate renewable energy business plan. As of June 2017,44% of its electricity consumption has come from renewable energy sources. This is equivalent to the total average power consumption by over 203,000 homes (Computer Weekly, Telefonica, 2017).
Telefonica had also claimed it is already on 100% renewable power supply in Germany and the UK, plus 79% in Spain. It is planning to keep 1.5 million tons of carbon dioxide (CO2) emission from entering the atmosphere over the next 12.5 years. At its Madrid HQ, solar panels have already been generating more than 3 GWh per year. Telefonica has also now joined the RE100 alliance, which is a worldwide collaborative alliance for businesses which have committed to achieving the 100% clean renewable energy goal in future.
Telefonica believed that its new corporate renewable energy plans have helped it to improve competitiveness, reduce operational costs and make sustainable business growths which arc compatible with their corporate sustainability strategy. Its new corporate goal is to have the best digital network with excellent connectivity in technological terms, but also one that it is the most efficient and clean in the sector in terms of energy and carbon. Its renewable energy plan has four action areas which differ slightly depending on the local market regulations where it operates. These included acquisition of renewable energy with a guarantee of origin, long-term purchase power agreements (PPAs), shorter bilateral agreements and self-production.
In Latin America, Telefonica will be relying heavily on PPAs for clean renewable energy supplies to its operations in various Latin American emerging economies. In Mexico, it already has a power purchase agreement which will see two solar photovoltaic power plants coming online in the near future to supply 50% of its in-country electricity consumption for the next 15 years. It is hoping to sign similar PPA deals in Argentina, Chile and Colombia. Meanwhile, in Brazil, it is acquiring renewable energy through bilateral agreements and hopes to save €15m per annum. In Uruguay, it is installing 16 small solar plants in rural areas to generate 600 MWh of energy each year. In Colombia, it recently invested USD1.4 million in new solar photovoltaic generation to replace old equipment which has relied on diesel fuel. Its fossil to clean renewable energy shift has helped to eliminate CO2 GHG emissions of over 470 tons per annum.