A recent collaboration between Shell Energy and Wells Fargo shows how the corporate world has responded to the evolving market — and how using renewable energy just makes good business sense.
The Coronavirus pandemic has provided companies an opportunity to pause and reflect, and to better understand what’s important to stakeholders. In acknowledging the need to put people first, many companies have promised to help build a better future as the world recovers.
Tackling climate change is a central tenet of many post-COVID corporate strategies. More than 1,500 companies have now set targets to reach net-zero greenhouse gas emissions — that’s triple the number that had done so by the end of 2019.
To get there, businesses will need to embrace renewable energy. The good news is that, as the latest Global Renewables Outlook suggests, renewable energy can fuel a more “equitable and resilient world.”
Renewable energy makes good business sense
Carbon dioxide emissions related to energy generation have continued to rise by 1 percent a year since 2010. The pandemic might have suppressed emissions in 2020, but a rebound may only restore the long-term trend. A transition to more renewable energy — coupled with greater electrification and better energy efficiency — will help drive sustainable development, boost well-being and create tens of millions of new jobs: 42 million of them by 2050, in fact, according to IRENA.
The transition is already well underway. Thanks to lower interest rates, and declining costs of technologies such as solar photovoltaics and offshore wind, renewable energy is booming. Today, 42 percent of Germany’s electricity demand is being met by wind and solar alone, for example.
A recent collaboration between Shell Energy North America (US), L.P.; its wholly-owned subsidiary and retail electric provider, MP2 Energy, LLC; and Wells Fargo provides a good example of how the corporate world has responded to the evolving market — and how using renewable energy just makes good business sense.
Delivering community benefits
Under an innovative arrangement, Wells Fargo made a long-term commitment to purchase approximately 150,000 megawatt hours annually of renewable energy from Shell Energy and MP2 Energy for 1,200 Wells Fargo properties.
Through its purchase, Wells Fargo supported Shell Energy’s transactions with solar facilities in Virginia and California. Those transactions enabled the construction and operation of four new solar facilities that provide renewable energy to the CAISO and PJM grids. Shell Energy is purchasing the renewable energy certificates (RECs) generated by the facilities, and Wells Fargo receives substitute national Green-e®-certified RECs from other facilities.
While 150,000 MWhs only represents 8 percent of its global electricity needs, the Shell transaction is an important one for Wells Fargo in meeting its renewable energy goals.
“We want to support the development of net-new renewable energy assets in a way that also delivers community benefits — like job creation, tax revenue, lower carbon emissions and grid resiliency. And we want to do it in locations where we have a business presence,” says Mary Wenzel, Executive Vice President, Head of Sustainability and Corporate Responsibility at Wells Fargo & Company.
The use of renewables is not new to the bank: It has been meeting 100 percent of its annual global electricity needs with renewable energy since 2017, largely through the purchase of RECs.
Now, Wells Fargo is keen to go further by transitioning to a higher mix of long-term renewable energy contracts and significantly increasing deployment of on-site generation. This will support the development of net-new sources of renewable energy by the end of 2020.
It is already making progress. Last year, Wells Fargo agreed to buy the equivalent of 100 percent of its power needs at 400 of its locations in Texas from a new solar plant in Texas. It also entered into a unique subscription agreement with the Salt River Project Agricultural Improvement and Power District to receive around 6 MW of a new 100-MW solar project in Arizona.
“We’re currently curating a network of location-based transactions and increasing deployment of on-site generation where we can. So, there will be more to come,” Wenzel adds.
Of course, as a lender, Wells Fargo also has a key role to play in supporting the growth in renewable energy. Since 2006, it has become one of the most prominent investors in the renewable energy space, providing more than $8 billion in tax equity financing, supporting more than 400 projects. By the close of 2019, its tax equity investments represented more than 10 percent of all solar and wind generation capacity in the US.
New consumer demands
As for Shell Energy, one of North America’s largest wholesale electricity providers, the collaboration with Wells Fargo is yet another example of how traditional energy businesses continue to diversify.
“More and more companies are interested in developing unique sustainable solutions,” says Troy Doughman, Vice President of Sustainability Solutions at Shell Energy North America. “With more than 1/3 of our managed power portfolio coming from renewable sources, we’re proud of our ability to be able to provide creative solutions to meet our customers’ needs.”
When you think about companies that need to implement renewable energy solutions, financial institutions such as Wells Fargo might not immediately spring to mind. But the very transactional nature of the finance sector demands significant energy consumption.
“Wells Fargo and Shell Energy working together,” Doughman says, “reinforces the proposition that our approach and services benefit highly transactional companies — and their sustainability goals.”
Finding new ways of working
Innovation in renewable energy is gathering pace. Despite the economic disruption caused by the pandemic, governments and businesses continue to back new technologies — as Fatih Birol, Executive Director of the International Energy Agency, has pointed out.
But the world’s decarbonisation agenda is less about technology and more about partnership, collaboration and cooperation. The agreement between Shell Energy and Wells Fargo is testament to a desire for new ways of working to meet shared objectives, and we will need many more such collaborations if the renewable energy revolution is to truly deliver in building the resilient and sustainable world we need.
The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this article, the expression “Shell” is sometimes used for convenience where references are made to those entities individually or collectively. Likewise, the words “we”, “us” and “our” are also used to refer to Shell companies in general or those who work for them. These expressions are also used where no useful purpose is served by identifying specific companies.
Shell Energy: Delivering Renewable Solutions
As the importance of the energy transition becomes more pronounced, corporations are taking significant steps to transform their business and adopt renewable energy to reduce their carbon footprint. Embracing a net-zero strategy cannot be done alone though and requires a collaborative effort between corporations and energy providers. Shell Energy has a variety of solutions to help all types of businesses, from small to large, across all industries meet this rising expectation, as well as takes a highly collaborative approach to ensure businesses have both the knowledge and solutions readily available to meet their sustainability goals.
END-TO-END SOLUTIONS AT A GLANCE
TALK TO AN EXPERT