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Amazon Is Now Taking Renewable Energy Seriously

By Travis Hoium - Oct 5, 2019 at 6:34AM

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Its 100% commitment to it goes further than most companies have been willing to go.

 As corporate America began to invest in renewable energy over the last decade, tech companies were among the leaders. Apple is now powered 100% by renewable energy and is the largest corporate user of solar power in the U.S. Switch and Alphabet's Google have long been among the biggest renewable energy users in the country (AMZN -1.51%) had been behind the curve for a long time, but recently it's been catching up. It is now one of the biggest renewable energy users in the U.S. and is growing its commitment to meeting 100% of its energy needs with renewable sources as quickly as 2030. 

Amazon's wind farm in Texas.

One of the 15 wind and solar farms powering Amazon. Image source: Amazon.

How Amazon is buying renewable energy

Despite having lots of rooftop space at distribution centers, Amazon isn't investing most of its money on rooftop solar systems. It's getting most of its renewable energy from large wind and solar farms built across the country. 

The company signs power purchase agreements with developers to buy energy from a new project. Even if the energy from the wind or solar farm isn't sent directly to Amazon, the company gets credit for the power created because it's going into the grid. 

Amazon says that it now gets about 40% of its energy from renewable sources, most of it from 15 large wind and solar farms. By 2024, that number is expected to increase to 80%, with the 100% goal by 2030. 

What's most impressive about Amazon's current moves in renewable energy is that it's extending the commitment beyond warehouses and offices to the trucks delivering packages to millions of homes across the country. 

Taking the fleet electric

Amazon recently committed to buying 100,000 electric delivery vans from Rivian, an EV truck manufacturer that it also invested in earlier this year. The vehicles are expected to begin hitting streets next year, with the full order in service in 2024. 

As part of this commitment, it's going to buy renewable energy to power its EV fleet. That's where Amazon could really have an impact on both emissions and the move to cleaner energy. 

About 66% of crude oil consumed in the U.S. goes into vehicles, so that's the biggest opportunity to reduce oil consumption. And it's a huge potential market for EVs. If tailwinds like Amazon's order keep propelling the industry, it could overtake internal combustion engines for cost-effectiveness, and then there's no looking back. 

Amazon takes a lead in renewable energy

With a commitment to 100% use of renewable energy and the world's largest EV fleet in the pipeline, Amazon just became a leader in renewable energy. That's a big shift for the company and could be a seismic change for the economy given the company's massive scale in retail and technology. And if the Rivian order helps make EV delivery trucks more affordable, it could force competitors to follow the path Amazon is blazing. 

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Travis Hoium owns shares of Apple and has a family member who works at Amazon. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and Apple. The Motley Fool has the following options: short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool has a disclosure policy.

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