Corporate demand for renewable electricity outpacing supply in key markets

Supply shortfalls hampering renewable electricity progress

While global businesses are making progress towards 100% renewable electricity, new research from RE100- a collective of businesses committed to 100% renewable electricity, warns that supply shortfalls are hampering adoption in many regions.

The initiative, which has over 440 members, ranging from household brands to manufacturing and materials suppliers, reports that collectively, RE100 companies now run on 59% renewable electricity globally, enough to power Spain for a year. In addition, they purchase 65% of this from facilities set up within the past 15 years, underlining how companies are adding brand-new, additional renewables capacity to grids[i]. At the time of publication, more than 70 RE100 members have achieved between 90% and 100% renewable electricity use. Companies verified at 100% recently include Asahi, Aviva, K-water, Lloyds, and Mitie.

Despite this progress, challenges persist. In RE100’s latest annual disclosure report, companies targeting 100% renewables state that limited supply and cost are the biggest barriers in key markets, followed by a lack of procurement options, and regulatory barriers.

Regional discrepancies are also present, with South Korea hosting the largest number of RE100 companies who say they’re facing procurement barriers, followed by other Asian markets, including Singapore and Japan.

In South Korea, renewables account for just 12% of RE100 members’ energy use, unchanged from last year, and the share of companies procuring 100% is just 5%. In Taiwan, RE100 companies met 6% of their energy needs with renewables and only 9% of members say that they procure 100% renewables. Further, in Singapore, renewables make up just 6% of members’ use, though this is up 1% from last year.

Helen Clarkson, CEO, Climate Group, comments: “The world’s leading companies are hungry for renewables, and their investments are shaping a smarter new energy future for all. But grid bottlenecks, regulatory constraints, and market inefficiencies are restricting what they can buy. Governments serious about shielding their economies from the devastating effects of fossil fuel instability need to urgently break down these barriers.”[ii]

‘Global consensus’: Business leaders overwhelmingly back electrification

Despite the barriers reported by RE100 members, a recent report found global consensus around electrification of business operations, with 90% of companies now saying that they support the shift. The findings suggest demand for renewable electricity continues to grow despite adoption constraints.

In a poll of business leaders across 18 countries, nine in ten businesses said they now expect to be largely electrified by 2035, with 73% expecting to reach this goal as early as 2030[iii]. The researchers say this highlights growing business demand for clean electrification as a strategy for energy security, competitiveness and tackling climate change.

The research, which was commissioned by E3G, We Mean Business Coalition, and the Global Renewables Alliance, was conducted in April amid geopolitical tensions in the Middle East, including the closure of the Strait of Hormuz. The study found overwhelming support for a rapid transition to electrified economies powered predominantly by renewables, with 78% of respondents saying that they believe their country would be better protected from shortages and price shocks if it used more electric systems.

With the current Middle East crisis marking the second major energy shock in just four years, businesses are focused on reducing exposure to volatile fossil fuel supplies, the researchers say. As a result, 91% of respondents expect electrification to improve their energy security. Similarly, almost eight in ten business leaders say geopolitical instability has made electrification more urgent. Further, 61% expect geopolitical instability to increase their own energy costs, with 88% saying that switching to a renewables-based electricity system would help stabilise energy prices during times of instability.

The study also found a strong perceived link between electrification and competitiveness. The vast majority (88%) of respondents say electrification is likely to make their business more competitive, with 84% saying it would reduce long-term operating costs.

Maria Mendiluce, CEO, We Mean Business Coalition suggests that the study points to a shift in the global economic landscape: “Businesses are increasingly seeing electrification as the foundation of future competitiveness, energy security and economic resilience. At a time of geopolitical instability and fossil fuel volatility, companies are not retreating from the transition – they are moving faster toward it.”[iv]