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Jan 27, 2016

Salesforce Signs Second Major Renewable Energy Deal In As Many Months

 

Last year set a record for renewable energy purchases by corporations with 3.44 GW, nearly tripling 2014’s total, and this year is already off to a fast start. The first out of the gate is cloud-computing company Salesforce, which announced a 12-year virtual power purchase agreement (VPPA) for 24 MW of wind power from a Texas wind farm on January 14. The Bay Area heavyweight is a founding corporate member of RMI’s Business Renewables Center (BRC). 

The deal, concluded with BRC sponsor EDF Renewable Energy, is for a portion of the electricity generated by the 200-MW Salt Fork Wind Project in the Texas Panhandle. Salesforce has operations in the region, and electricity from the wind farm will feed into the region’s grid, though not to Salesforce’s facilities directly. This is the essence of a VPPA, much like a subscription to a community solar garden in which a homeowner is credited for the electricity generated at a solar array elsewhere in the community. Salesforce’s Salt Fork deal is expected to provide 102,000 megawatt-hours of wind energy per year once it comes online in December 2016. 

A Repeat Performance

When Salesforce announced its VPPA for 40 MW of wind power from a West Virginia wind farm in December, it entered the off-site renewable energy market for the first time. First-time entrants in fact proved a significant driving force for 2015’s record corporate numbers. Now Salesforce is back for more, which is exactly what the BRC works to achieve—to streamline and accelerate corporate renewable energy purchasing, including seeing more companies becoming first-time and repeat buyers. Stephen Abbott, a senior associate at RMI, says, “Salesforce committing to a second PPA after signing their first contract last December is an excellent example of how new companies can join the renewables club and build momentum quickly.”

Patrick Flynn, director of sustainability at Salesforce, says, “Having that experience with these two successful projects completed gives familiarity and confidence to all the parties involved,” including internal stakeholders. PPAs and, especially, VPPAs are complex deals that many corporations are not yet familiar with, which is why new entrants are important. Salesforce completed the deals with the help of transaction service provider Renewable Choice Energy, a founding sponsor of the BRC. 

The BRC formed in 2014 and hit the ground running in early 2015 to accelerate corporate renewable energy procurement with the goal of adding 60 GW of off-site wind and solar capacity in 10–20 years. When the BRC publicly launched in early 2015, just a handful of companies had done deals and the goal seemed far off. Salesforce and others have totally changed the dynamic. Lily Donge, a principal with RMI’s electricity practice and leader of the BRC, says, “Salesforce has gone from zero to 60 with two rounds of PPAs in two months. This is exactly what the market needs to see—companies entering the market for the first time, and following up with yet an additional deal in two months.”

Towards 100-Percent Renewable Energy

Salesforce’s Flynn says, “This is a doubling down on our renewable energy commitment.” The combined output of the VPPAs Salesforce signed for West Virginia and Texas power is expected to be 227,000 megawatt-hours per year, which is more electricity than Salesforce used during its 2015 fiscal year. This is important because Salesforce is not just a member of the BRC; it is also a member of the RE100, a forum where corporations make a pledge to transform to 100-percent renewable energy. 

However, Salesforce can’t rest on its laurels just yet. Flynn explains, “By the time these projects come online and have been operating for a full year, we will have grown beyond that fiscal year 2015 footprint. We think we’re still going to have to look for more great projects—like both of these—and other ways to keep moving forward towards our RE100 goal.” 

Making a Cleaner Cloud

More than 40 percent of Fortune 500 companies have clean energy or climate targets and the aim of BRC members like Salesforce is to help them move as quickly as they are. “Hopefully we can keep doing the sorts of projects that not only bring about additional renewable energy, but bring it about in a way, like this VPPA, that we can clear a path or provide a blueprint for other companies to follow,” says Flynn.

More than 1 GW of 2015’s corporate power purchases were by cloud-computing companies like Salesforce and other companies with huge data centers, such as Amazon. This trend makes sense to Flynn, who says, “Salesforce understands that it has an opportunity to define a cleaner cloud. Data centers power the Internet, and they consume a lot of electricity, so I think it’s a natural fit that cloud companies like ours try to find ways to innovate and bring about positive change.”

Bringing Everyone Into the Renewable Energy Space

And as BRC members, Salesforce, EDF Renewable Energy, and Renewable Choice Energy are truly helping others to create that cleaner cloud by sharing their hard-won knowledge. “The industry’s moving quickly,” says Flynn. “When we see other news come out, we’re excited about it. Regardless of what company did it, every step forward counts.”

Salesforce has an RE100 commitment to switch to 100-percent renewable energy and has pledged to achieve net-zero greenhouse gas emissions by 2050, and it is moving aggressively towards those goals. “If you can do that in a way that also provides a learning opportunity both for yourself and others, that’s something to feel really good about,” Flynn says, and it’s also the essence of the BRC. Flynn says, “Looking forward, we’ll want to share our thought process, what led us to the VPPA, why it was a great fit for us, and best practices that we’ve identified for getting deals like these accomplished with the other members of the BRC.”

Photo courtesy of Kool Cats Photography via Flickr, Creative Commons license (CC BY-NC-ND 2.0).

 
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