Flow Pakistan

Flow Pakistan
Renewable Energy

How Amazon Became the World’s Largest Purchaser of Renewable Energy

In 2016, Richard and Carson Harkrader learned that 696 acres of farmland in North Carolina were offered for sale. One aspect of the gently undulating terrain drew their eye in particular: the electricity lines that cut through it like someone had dog-eared its map. It was a beautiful location just on the Virginia border, beautiful enough for a house builder to eventually purchase a fifth of the acres for a lakeside community. The prettiest thing of all, however, were those heavy-duty transmission lines that arced to the northwest, lacing into the PJM Interconnection, the massive electric grid that rules the mid-Atlantic, according to the Harkraders, father and daughter owners of Carolina Solar Energy, an independent developer of solar energy projects.

The older Harkrader describes the period as being similar to a gold rush as he stands in the middle of the Hawtree Creek Solar Farm, a vast array of shimmering black panels that follow the contours of the hills and tower over us. By midday, the panels are producing 34 megawatts for the grid, which is equivalent to 10,000 backyard generators running simultaneously. By midday, the system can handle a maximum of 65 megawatts. I still believe it to be magic, says Harkrader. “Use sunshine, and… bang!” However, as tiny motors tilt the panels to follow the path of the sun across the Carolina sky, the only sound is the sporadic cracking of their steel frames.

The mega technology firms like Amazon, Microsoft, and Google, who run enormous data centers crucial to our everyday lives, whether we’re ordering on Prime or storing up family photographs, are the eager purchasers of that electric gold, located around 200 miles north in Virginia. They have become more committed to running these data centers on renewable energy as result of demand from clients, staff, and shareholders as well as, potentially, their desire to cut emissions. The Harkraders leased the land to Engie, a French energy giant that constructs and manages more than 4,500 megawatts of solar power globally, after obtaining the preliminary permits and approvals for the new solar farm, making a plan to accommodate local deer, and joining the lengthy “interconnection queue” to connect to the grid. Then, before the solar panels could be installed on the property, Engie agreed to sell all of the facility’s energy to one company: Amazon.
The PPA (power purchase agreement), a type of financial and legal agreement, has played a significant role in the US’s shift to sustainable energy. Nearly a quarter (more than 52 gigawatts) of the roughly 235 gigawatts of wind and solar power already put on the country’s grid have been contracted by businesses, mostly over the previous ten years. This aggressive—and particularly voluntary—corporate effort has helped a network of wind and solar product innovators, operators, and manufacturers. It has lowered the cost of renewable energy sources and taught grid managers how to handle more variable systems.
The PPA has created the renewables business, just like the contemporary mortgage created the suburbs. It ties together the financial demands of those who create renewable energy with the environmental objectives of business leaders and shareholders. Since sunshine and fresh air are their only sources of fuel, solar panels and wind turbines are expensive to construct but inexpensive to run. A PPA offers banks the confidence to advance the money for construction by ensuring that the energy will be sold before it is generated—especially when there is a sizable firm backing the agreement. All of that electricity isn’t routed directly to these corporations’ facilities because of how power grids operate; instead, it boosts the energy in each region as a whole. However, because of the way PPAs operate, businesses may credibly claim that these massive renewable energy projects would not have been possible without them. PPAs connect investors like the Harkraders, energy managers like Engie, electric grids like PJM, and—most importantly—the big businesses eager to use renewable energy.
They also created the environment for the largest corporate power purchase ever made: Amazon used this ecosystem to go on the largest solar and wind buying spree ever, purchasing 15.7 gigawatts globally over the past three years, almost enough to meet the enormous energy needs of the $1.4 trillion company. Amazon’s enthusiasm has been felt across the sector like an early Black Friday shopper, while also providing a taste of the huge growth that will come with the advent of $369 billion in federal monies given by the Inflation Reduction Act (IRA). Understanding the main force behind the rise of solar and wind over the past ten years enables us to predict what is likely to occur next: a record-breaking surge in renewable energy that might play a crucial role in the larger campaign to cut carbon emissions and slow global warming.
These projects would not be completed if the market just waited until something was constructed before attempting to sell the power, according to Harkrader. “People stepping up and enabling this market include Amazon, Microsoft, Walmart, Target, and on and on. And it’s blowing up.
Amazon is currently ravenous of all. Although not the first to purchase renewable energy for its operations, the giant is now buying the most. The plans it has revealed are roughly equal to 250 more Hawtree Creeks on a worldwide scale and roughly equal to the whole quantity of solar power generated in the United States last year. The shopping binge is a part of Amazon’s larger drive to become “net-zero carbon” by 2040, which entails eliminating or offsetting all of the company’s carbon emissions, including those from factories, vehicles, and airplanes. This won’t be simple. It is practically difficult to use the internet without connecting to an Amazon data center; an estimated two-thirds of American households are Amazon Prime subscribers. Amazon’s emissions have increased by 40% since it declared its climate target in 2019 while its revenues have increased by more than 50%. Kara Hurst, who is in charge of Amazon’s sustainability initiatives, concedes that “the route to reaching some of our targets will be long and complicated.” But Amazon’s contribution to climate change is clean power. By prioritizing the harsh realities of glass and steel over planting trees or tricky accounting, the company has almost eliminated its use of dirty energy with the help of modern technology—and a fat checkbook. As a result, it is now constructed on a scale that rivals that of many nations. With contracts worth more than twice as much as Microsoft, Amazon has propelled itself to the top of the corporate purchaser list.
PPAs have served the purpose for the previous ten years in the absence of significant climate legislation and in the face of a confusing patchwork of rules that restricted utility companies’ capacity to develop renewable electricity. However, the IRA—the largest piece of climate-related legislation the United States has ever seen—takes that advancement and multiplies it by billions of dollars in federal incentives. Brynn Baker, senior director at the Clean Energy Buyers Association, believes it boosts both the role and possibility for customers to push even more of this.  The most recent projections are enormous. A study from the Solar Energy Industries Association and Wood Mackenzie predicts that solar developers would add more than 215 gigawatts of capacity over the following five years, which is 40% higher than was anticipated before by the IRA.
However, as energy only accounts for a small portion of carbon emissions, it will not be sufficient to achieve the Paris Agreement’s climate targets on its own. The goal is that the pathways created by renewable energy can be extended to industries that are more difficult to decarbonize, including manufacturing and electric automobiles. For instance, Amazon has declared aims to have 100,000 electric delivery cars operational by 2030. According to Bill Weihl, executive director of Climate Voice and a former director of sustainability at Facebook, “I think we may see even quicker development on mobility than we’ve seen with renewable energy on the grid.” We can see the small lane that has to be widened into a freeway over the next ten years in corporate renewable electricity purchases.
The Harkraders spent years paying close attention to Hawtree Creek’s development, attending county planning meetings, measuring wetlands, and investigating a historic cemetery that ultimately couldn’t be moved (the solar panels wrap around it). But Hawtree was just one row on a very long spreadsheet for Charlie Daitch, who is in charge of Amazon’s purchases of renewable energy. On his first trip to the location, Daitch says, “I have a fairly decent map in my brain of the portfolio—where are we scattered, maybe not each particular project.” Daitch is speaking from the passenger seat of a rental SUV as it speeds through North Carolina. It has grown beyond that.
Amazon declared its own goal to achieve net-zero carbon emissions by 2040, ten years before the Paris Agreement when it launched the “Climate Pledge” in 2019. That included a previous objective, which was to utilize only renewable energy by 2030. Eliminating emissions is a task that spans the whole firm for a corporation like Amazon, which has a vast infrastructure for shipping items across the globe. The widespread adoption of sustainable aviation fuel and heavy-duty electric vehicles is still years, if not decades, away. However, solar and wind energy are now ready. A mechanical engineer by training Daitch says, “We selected renewables as a sector where we could go rapidly to decarbonize our energy stack.
Amazon realized that insight much later than its rivals. In 2008, Walmart announced the first-ever “utility-scale” PPA with a Texas wind farm of 153 megawatts. It was a divisive action at the time. According to Miranda Ballentine, then-CEO of Walmart and current CEO of the Clean Energy Buyers Association, “Those early corporations that made these pledges did not do so because customers were clamoring for it.” Ballentine was in charge of Walmart’s sustainability initiatives at the time. In 2010, the corporate winds changed. Greenpeace criticized the IT industry’s energy use in March of that year. The arrival of the first iPad, a product that depended on the internet to power it, was just a few days away, thus their report arrived at the ideal time. The tech firms took a defensive stance. Facebook stated in a statement that “coal-powered data centers” don’t exist. Every data center connects to the grid that its utility or power supplier provides. In other words, dirty energy wasn’t their issue; it was a grid issue.
That dispute that ended with a half-shrug emoji was short-lived. The following year, Facebook declared a new “preference” for “clean and renewable” energy in a joint statement with Greenpeace. The other tech goliaths queued up to follow suit during the ensuing years. It was never going to be adequate to install solar panels on the roof or wind turbines in the parking lot because data centers demand too much electricity, sometimes hundreds of megawatts per unit. Large enterprises may use renewable energy without waiting for utilities thanks to power purchase agreements. According to Erin Decker, a consultant at Schneider Electric, one of the top clean-energy advisors, “large off-site power purchase agreements remain the instrument that allows you to move more swiftly.” Long-term agreements are welcome from big IT companies, especially if they can issue a press release. If a solar farm is constructed in the desert, it must produce noise, according to the logic of corporate climate action.
Nat Sahlstrom from Amazon says, “When we consider our renewable energy plan, we’re like, “Well, how can we deliver the most convincing story to our consumers about what we’re doing?” We wish to avoid greenwashing. We don’t want to go after investments that don’t make a difference.
The majority of Amazon’s rivals have already closed the arrangements that commit them to use renewable energy for at least ten years. Long ago, Facebook, now known as Meta, “unfriended coal,” and it currently has contracts for 7.5 gigawatts of renewable energy. With the purchase of over 7 gigawatts of renewable energy, Google achieved 100% renewable electricity in 2017. Its next goal is to ensure that its data centers operate carbon-free “24/7,” which means that all of the company’s energy is obtained from renewable sources continuously, as opposed to, for instance, purchasing extra solar energy during the day to offset the need for coal power at night. The following, far more difficult step is assisting its suppliers and manufacturers to do the same, a goal Apple has set for 2030. Apple reported that it procured 100% renewable energy for its operations in 2018, with 87% of that coming in the form of PPAs. Microsoft also possesses over 8 gigawatts, 5.8 of which it acquired in 2021.
Large organizations have more catching up to accomplish outside of technology. According to Tyler Espinoza of the climate change consultant 3Degrees, “It’s not just Big Tech businesses.” “You have a wide range of enormous businesses that are eager to invest in it.” Pfizer signed a 15-year agreement in 2021 to purchase 310 megawatts of electricity from a Texas wind farm, which would power all of its businesses in North America. This is a significant increase from the previous 6% of its worldwide energy needs that were covered by renewable sources. Ford stated in August that it had reached a deal with a Michigan-based utility for 650 megawatts of solar power.
Small and medium-sized enterprises, however, find it difficult to handle the degree of complexity and dedication that PPAs demand. According to Ballentine of the Renewable Energy Buyers Association, “the power purchase agreement is a tremendous mechanism for large, reasonably sophisticated, high-creditworthy organizations to be able to obtain clean energy.” Smaller businesses find the product to be less user-friendly. That hasn’t been a major worry as long as there are still big companies prepared to take on the available inventory of projects. Businesses in the U.S. agreed to purchase 9.8 gigawatts of renewable energy in the first half of 2022, with Amazon accounting for one-third of that total.
The issue, however, is realizing the magnitude of this renewable energy purchase’s potential influence on the overall campaign to combat climate change. Ballentine observes a single-mindedness in these business initiatives as someone who was directly affected by Walmart’s early decisions. The major “why” is, in her words, “quite easy.” The goal is to address the climate issue. There is no other justification for a corporation to set voluntary renewable energy or zero-carbon energy purchase goals.
Even globally, Amazon’s efforts are noteworthy. By 2030, the corporation was to use only renewable energy, according to its original Climate Pledge. However, early in the epidemic, Daitch and his colleagues recognized they could go considerably quicker than they already were, and that speed changed. However, other facets of Amazon’s operations, such as the numerous trucks and aircraft, were not going to decarbonize any time soon.
Amazon had acquired around 1 gigawatt of renewable energy at the time. Daitch, who began his career in distribution planning at a conventional electricity provider in the Pacific Northwest, intensified his team’s hunt. They used many criteria. In Kansas, wind could be more practical, but the sun was preferred in Ohio. Some areas had a high reliance on coal, which heightened the impact of any new renewable energy sources. Others, however, had clogged or broken procedures in place for integrating new projects with the grid. In general, Hawtree Creek serves as an example of how the process frequently unfolds: a local developer who is well-versed in the state’s geology, electric-transmission system, and county-level politics may answer Amazon’s request. But once things get going, they turn the project over to a significant energy operator, such as Engine.
Amazon announced a major acquisition at the end of 2021: 18 more projects throughout the globe, raising its total to 12 gigawatts and elevating Amazon to the position of the largest corporate purchaser of renewable energy globally. It installed 3.5 further gigawatts in April. The map is covered in Amazon projects. Two wind farms in Kansas will each have a final capacity of more than 500 megawatts by 2021. There are four further solar farms of comparable scale in Halifax County, Virginia, 65 miles west of Hawtree Creek, with a combined capacity of 261 megawatts. More than 134 utility-scale projects totaling more than 2,000 megawatts have been finished or will be shortly in 15 different nations, including Ohio. Daitch states that a flywheel is present. “ Developers then start ramping up the development of new projects as a result of our commitment and indicate to the market that we are moving at scale. It encourages solar industry players to expand their facilities and output. There is that feedback loop, then.
That assumption has been put to the test over the last year as the renewables sector battled rising costs and limited supply. To make matters worse, when the Commerce Department launched an inquiry into Chinese firms breaking tariffs in April 2022, the prospect of retroactive import taxes on even the modules that were already in the U.S. was raised. As a result, solar development came to a near-complete standstill. When the Biden Administration used the Defense Production Act to expand solar production in June, the situation then changed. Climate activists became giddy by the time industry experts had completed estimating the effect of the investment made possible by the IRA. By 2035, global investment in renewable energy will amount to $1.2 trillion, predict experts at Wood Mackenzie. Bloomberg-NEF calculated that by 2025, there would be enough worldwide capacity to produce 940 gigawatts of panels yearly, which is almost as much as the whole 971 gigawatts of solar that are now deployed around the world. Solar polysilicon is the main component in new panels.
All of this ultimately boils down to the general objective of lowering emissions enough to mitigate the consequences of climate change for both businesses and individuals. That entails, at the very least, achieving global net-zero emissions by 2050 on a route that is “narrow but yet doable,” according to a study by the International Energy Agency. That has, to be honest, seemed implausible for the previous ten years—at least at the rate at which businesses were moving. The IRA has given the United States a chance.
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News Desk



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