Clean Energy Procurement Solutions for the Technology Sector

In 2022, the American IT market was valued at US$ 1230.84 billion. It is also slated to grow at a compounded annual growth rate (CAGR) of 8.66% to reach a value of US$ 1864.50 billion by 2027. Against this backdrop, energy procurement solutions play a pivotal role in supporting the rapidly expanding IT sector, which serves as the backbone of the modern digital economy. Enterprises face rising energy demands as a result as they continue to expand. In this context, effective energy procurement strategies become imperative to ensure reliability, cost-effectiveness, and sustainability.

A Shift to Clean Energy Procurement Solutions

Spearheaded by Google and Meta, arguably the two titans of IT, looking for clean energy procurement solutions is on the rise. An innovative spirit paired with new mandates, volatile energy markets, incentives and climate change concerns drives IT companies to set new clean energy goals. Therefore, they are leading organizations to rethink their energy procurement solutions.

The corporate energy procurement landscape in the US is tending toward decreasing the carbon footprint aided by two levers: Renewable Energy Credits (RECs) and 24/7 Carbon-Free Energy (CFE).

Renewable Energy Credits and Their Impact

Renewable energy certificates, RECs, are market-based instruments that represent the property rights to the environmental, social, and other non-power attributes of renewable electricity generation.

They are issued when 1 megawatt-hour (MWh) of electricity is generated and delivered to the electricity grid from a renewable energy resource.

RECs work as incentives for renewable energy procurement and generation. The objective is to increase demand, and, as a result, increase supply and investment.

From a corporate standpoint, by buying RECs, companies indirectly support clean energy and level the playing field between non-renewable and renewable energy suppliers.

However, as an instrument, RECs still have some way to go in becoming 100% effective in reducing emissions. Studies show that they are beneficial for those corporations looking to begin their clean energy journey. However, the changing regulatory frame makes it so that emissions disclosures could become more intricate. In this sense, business energy consultants assume a pivotal role in helping companies navigate the new regulations and achieve their energy goals.

• Related content: Energy Supply Purchasing: The US Power Sector in 2024

Energy Procurement Solutions: 24/7 Carbon-Free Energy (CFE)

The United Nations explains that 24/7 Carbon-free Energy (CFE) “is a set of principles and actions that stakeholders across the energy ecosystem can commit to in order to drive systemic change.”

As of December 5, 2023, the United States joined the 24/7 Carbon-free Energy Compact at COP 28. As a consequence, they showed their commitment to match every hour of electricity consumption with carbon-free sources of electricity production. This is impactful on multiple levels. Especially given that there are more than 300,000 buildings and 600,000 vehicles in use by the U.S. Government.

Among the American signatories are Microsoft, Google, and the Sacramento Municipal Utility District. As more and more companies join them, their need for renewed energy procurement solutions increases.

What This Means within the Technology Sector

Admittedly, Google and the Federal Government are aiming high with their emissions goals. With huge data centers and thus, high energy demands, technology companies are looking for ways to lower their environmental impact. Therefore, IT corporations have started their transition, including Intel and Apple. This means a shift in their clean energy procurement solutions and an expansion of the market.

Instruments such as RECs and the 14/7 CEF have multifold benefits; they act as incentives for the green economy and they allow tech companies to compete at another level in terms of their costs as well.

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