In two months, the United Nations climate change conference is due to start in Paris.
This gives world leaders and others the chance to discuss global action on climate change and, in theory, commit to a binding global deal on cutting emissions. We can only hope.
If the 193 member states of the UN were able to reach such a deal then it would be a big boost for the wind sector and renewables generally. However, as we said in June, we take a similar view as French president Francois Hollande, who said that agreeing such a deal would take a “miracle”. Hardly the optimistic approach you would expect from the leader of a country hosting such momentous talks but, pragmatically, we think he is spot on.
However, wind developers and investors can still take hope that something worthwhile will come from these talks, even if there is no binding agreement. The focus on the Paris talks is encouraging blue-chip companies to make commitments to using renewable energy. That means it is a good time to start talking to those companies with a view to securing power purchase deals.
And we are not just talking small companies.
For instance, this week nine Fortune 500 firms — Goldman Sachs, Johnson & Johnson, Nike, Procter & Gamble, Salesforce, Starbucks, Steelcase, Voya Financial and Wal-Mart — pledged tosource 100% of their electricity needs from renewables. They did so to coincide with Climate Week NYC and the Paris talks.
This is part of the RE100 campaign led by not-for-profit body The Climate Group, which has now signed up 36 companies globally. Meanwhile, the likes of Apple and Coca-Cola have backed a $140bn US pledge to reduce greenhouse gas emissions.
We would expect more blue-chip companies to make similar commitments before Paris. This means that renewable energy is being discussed at board level, for a short time at least. And that makes it a perfect time for wind developers to start talking to these firms about renewables with a view to securing power purchase agreements at their projects. It is a good opportunity.
But wind farm developers cannot hang around. Renewable energy will be a big global talking point before, during and immediately after the Paris climate talks, but it will fade quickly afterwards. With it, current enthusiasm for ‘green’ energy will wane too.
Why so sceptical? Simply, because pledges made as part of RE100 are just words. They are not legally binding, which means a firm can turn away from them at a moment’s notice citing changes to corporate strategy. The only penalty is a short-term PR hit.
They also do not have deadlines or standard ways of measuring their energy use, although do have to provide progress reports.
There is now an opportunity for wind investors to get these ‘green’ converts to commit to something more tangible than a vague promise. If it leads to a power purchase agreement then it could make the difference between a development being viable or not.
Essentially, Paris has opened some doors for those looking to talk to these big firms. Now is the time to push on those doors.
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