As politicians and interest groups debate the future of climate change policies and renewable energy mandates across the country, a big power in the world of energy is making its strategy well-known. The business community has made a big commitment to transform their businesses to renewable energy, which is now driving wind and solar investment around the world.
The latest to make a 100% renewable electricity commitment is Anheuser-Busch InBev (NYSE:BUD), the world's biggest beer maker, which said on Monday that it will make the transition by 2025. Make no mistake, AB-InBev isn't suddenly an environmentally focused company. They're making an economic decision to buy renewable energy. It's a trend the corporate world is taking very seriously.
AB-InBev's renewable play
Below is the infographic AB-InBev used to announce its renewable energy commitment. It highlights the move from 7% renewable energy to 100% by 2025 and shines a light on Mexico as a focus.
The Mexico announcement is interesting because the country held two renewable energy auctions in 2016 that got very favorable terms. A year ago, bids were announced at 5.07 cents per kilowatt-hour (kWh) of electricity and by October bids averaged 3.35 cents per kWh for clean energy. This compares to average retail electricity prices of about 12 cents per kWh, so renewable energy is very economical for big companies.
And these projects will be completed by the end of the decade, so the price AB-InBev will pay by 2025 will be lower than the contracts signed in 2016. In total, the announcement says some 6 terawatt-hours, or around 3 gigawatts (GW) of solar, will produce energy for AB-InBev.
Corporate America loves renewable energy
AB-InBev isn't the first company to take interest in renewable energy. In the U.S., Target (NYSE:TGT) and Wal-Mart (NYSE:WMT) are the two biggest corporate solar users, with 147.5 MW and 145.0 MW, respectively, according to SEIA's Solar Means Business 2016 report. Microsoft (NASDAQ:MSFT) says it has been 100% powered by renewable energy since 2014 and Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) Google says it will reach that level in 2017.
Companies aren't just looking at renewable energy as a PR move; they're looking at it as a way to save money. Target and Wal-Mart are primarily installing solar directly on their rooftops, reducing electricity bills from the utility. And data centers by Apple (NASDAQ:AAPL), Microsoft, and Alphabet are now installing renewable energy nearby so they can use renewable energy directly. Apple has co-located nearly 100 MW of solar at data centers in North Carolina and Nevada with another 100 MW in development. Microsoft recently signed a deal to buy energy from 237 MW of wind farms in Wyoming and Kansas to power a Wyoming data center. Alphabet has invested $2.5 billion in renewable energy projects to power its business. This is becoming big business for wind and solar companies.
Corporate buys are the new renewable driver
For over a decade, renewable energy has been driven by mandates and subsidies around the world, and in many places, it still is today. But costs have come down so far that corporations are now looking at it as a way to save money on their operations long-term. And that'll only drive more wind and solar installations as more companies join the renewable energy bandwagon.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Travis Hoium owns shares of Apple. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Anheuser-Busch InBev NV, and Apple. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool has a disclosure policy.