Why are Corporate PPAs important for the Retail and Consumer sector?

With consumers increasingly demanding that luxury, fashion, hotel and food & beverage brands be more sustainable as opposed to simply claiming to be, the use of Corporate PPAs to obtain energy efficiency is particularly beneficial for brand enhancement. PPAs demonstrate a commitment to clean energy and sustainable practice to both attract environmentally conscious consumers and to differentiate brands from competitors.

In the Retail and Consumer sector, heating, lighting and refrigeration are significant energy demands both at site-level and in the supply chain, and there is a broader range of grid reliance and emissions across these businesses compared to other sectors such as technology and communications, or construction. PPAs accordingly provide a route to cost savings, a decarbonised grid and energy independence for the more energy-intensive consumers so PPAs are being increasingly utilised such as in the examples below.

The H&M Group for example has signed a PPA for a vast new Swedish solar park in order to help the company achieve its climate targets. Walmart provides its suppliers with access to collaborative PPAs in order to increase the share of renewable energy in its global supply chain through ‘Project Gigaton’, 4,500 of whom have joined this programme since 2017 and account for approximately 50% of Walmart’s revenue. In total, Walmart has signed PPAs for over 10 GW of renewable energy, making it the largest private purchaser of renewable energy in the USA.
The Fashion Pact is another example of a strong and shared commitment to clean energy within the sector, a non-profit organisation that brings together CEOs from across the fashion industry, including Burberry, Nike, Inc. and Ralph Lauren. Brands of all sizes are working collaboratively to bring about large-scale change and their ‘Collective Virtual PPA’ project aims to add 160,000 MWh of renewable electricity to the grid in Europe every year, enabling members to reach their individual sustainability targets.

Corporate PPAs are an increasingly valuable tool for global businesses and the clear environmental and economic advantages they present continue to fuel their uptake internationally. Corporate PPAs are particularly useful for businesses which are high consumers of energy - for example hotel chains, manufacturers and "big box" retailers. They allow such businesses to purchase power on a long-term basis, directly from renewable energy generators without having to be physically proximate. Consumers are demanding that luxury, fashion, hotel and food & beverage brands live up to their sustainability claims. Achieving net-zero or otherwise demonstrating a clear pathway to reducing carbon emissions is increasingly becoming a part of these companies' brand strategy. PPAs demonstrate a commitment to emissions reduction and sustainability and can attract environmentally conscious consumers while differentiating brands from their competitors. In the Retail and Consumer sector, heating, lighting and refrigeration are significant energy demands both at the site and supply chains levels. There is a broader range of grid reliance and carbon emissions across these businesses as compared to sectors such as technology and communications, or construction. PPAs accordingly provide a route to cost savings, a decarbonised grid and energy independence for the more energy-intensive consumers.

Below are some recent examples of Corporate PPA use in the Retail and Consumer sector.

• The Spanish division of Carrefour, the fifth-largest supermarket group in Europe by sales, signed a 10-year PPA with Engie under which the French utilities company will supply energy from four assets: two wind farms and two solar farms, representing circa 180 GWh per year. Carrefour Spain has a stated aim of switching to 100% renewable electricity by 2030 and of reaching net zero by 2040. This PPA will cover around 30% of the Supermarket's energy consumption for the next decade.
• Another large supermarket chain, Tesco, has recently secured 65% of the solar power generation at the UK's largest solar and battery storage project. In a sign that corporate PPA uptake continues to grow, this 15-year agreement represents the largest solar corporate PPA ever agreed in the UK. It is expected that the new solar park will provide up to 10% of Tesco's UK electricity demand and will generate enough clean energy to power the equivalent of 144 large stores for a year.
• H&M, the large Swedish fashion chain, has signed a PPA with Lightsource BP to facilitate the construction of a 125-MW solar park in Texas. It is estimated that the solar plant will help H&M offset some 155,000 tonnes of carbon dioxide emissions a year. H&M has committed to sourcing only renewable electricity in its operations by 2030, of which over 50% will be acquired via PPAs.

PPAs are an important tool for businesses in the Retail and Consumer sector in order to reduce energy costs, increase sustainability and attract and retain a growing number of environmentally-conscious consumers. The longer-term nature of these PPAs also provides more cost predictability and by securing an energy supply for an extended period, brands can plan for future growth and expansion more easily. Additionally, new carbon accounting rules in jurisdictions such as the EU and California and the increased scrutiny on businesses' net-zero ambitions are sure to contribute to the growth of Corporate PPAs in the Retail and Consumer sector for years to come.

If you would like to find out more, please visit our Corporate PPA Hub or get in contact with us.