You might think the election of President Trump, the reduction in corporate regulations, and recent solar tariffs may have corporate America turning a blind eye to renewable energy these days. But the momentum in corporate renewable energy deals doesn't appear to be slowing in 2018 -- and there's good reason to think it may be gaining speed.
So far in 2018 alone, Fifth Third Bank (FITB -1.53%) announced that it will get 100% of its power from renewable energy, T-Mobile (TMUS -0.02%) vowed to get 100% of its energy from renewables by 2021, and AT&T (T -0.92%) announced power purchase agreements from wind farms in Oklahoma and Texas. These recent announcements only scratch the surface of the renewable energy investment that corporations have made and announced in just the last few years. As part of the RE100 initiative, 128 companies around the world have committed to go "100% renewable" with their energy use.
To understand why companies are spending more and more on renewable energy as certain forces in Washington seems to care less and less about it, we have to take a step back and look at how managers are making energy decisions. And there are a few factors that override any governmental energy preferences.
Image source: SunPower.
Certainty tops all
When companies make decisions about their energy use, they're looking for certainty. Maybe natural gas is cheap today, but that could change next year or a decade from now, making it a risky source to bet on. Same goes for coal, oil, or any other commodity fuel.
Renewable energy is usually sold to companies with long-term contracts that guarantee the price they're paying. In 2018, both wind and solar are competitive with what companies would pay utilities for energy, so it's just good business to lock up low-cost energy while they can.
The next generation of consumers is watching
There's no question that public relations also plays a role in renewable energy's growth. A Pew Research Center study in early 2017 showed that 75% of adults ages 18 to 29 say wind and solar should be a "more important priority" than fossil fuels, versus 19% who say the opposite. In the 30-to-49 age category, renewable energy wins, 72% to 24%. For those 65 or older, renewables are more important to 50%, with 38% favoring fossil fuels.
For companies eyeing the preferences of the next generation of consumers, it's clear they favor renewable energy. Companies know that signing big renewable-energy contracts will be seen favorably by younger consumers -- the demographic most companies want to attract. Even a small boost in favorability among consumers for going green is well worth the effort.
Why not do it?
If companies can save money, lock up energy prices for years to come, and get a public-relations boost, there's no reason not to invest in renewable energy. That's why corporate America is still investing in wind, solar, energy storage, and other renewable projects in 2018, despite tariffs that may discourage it and fewer regulations for fossil fuels. If renewables can win with corporate customers in this political environment, it proves that the industry's staying power is very real indeed.
