Dive Brief:
- Five Walmart suppliers teamed up to purchase renewable energy from a Kansas wind farm, the retailer announced last Tuesday. The deal is part of the retailer’s plan to reduce 1 billion metric tons worth of emissions throughout its supply chain by 2030.
- Levi Strauss & Co., J.M. Smucker Co., Great Lakes Cheese, Valvoline and Amy’s Kitchen executed an aggregate purchase for renewable energy from a wind farm in Marion County, Kansas, operated by the Denmark-based energy company Ørsted. Financial terms were not disclosed and the agreement is expected to create 250,000 megawatt-hours annually of renewable energy.
- The 12-year power purchase agreement is the first under Walmart and Schneider Electric’s renewable energy accelerator Gigaton PPA. The program expands suppliers’ access to clean energy by allowing vendors to partner and enter into long-term contracts with renewable providers.
Dive Insight:
Power purchase agreements allow businesses to cut out the utility middleman and purchase energy directly from renewable providers, and they’ve become a popular way to meet sustainability goals while potentially keeping costs down.
In theory, the agreements give renewable providers a long-term funding source for new projects, while businesses get a consistent source of clean energy at a more consistent price. But many smaller businesses have traditionally had less access to PPAs as they don’t need the large amount of electricity required to support renewable projects.
Walmart’s Gigaton PPA aims to solve that problem by allowing its suppliers to team up on a PPA, splitting the costs and the renewable energy generated. The retailer set a target to be powered 50% by renewable energy by 2025 and 100% by 2035 according to the release.
“We developed Project Gigaton to help accelerate our suppliers’ zero-emissions efforts,” Jane Ewing, senior vice president of sustainability at Walmart, said in a statement, “and the Gigaton PPA program is a key example of how we are making progress by harnessing the collective to make renewable energy more accessible to more companies.”
Tech giants including Google were early adopters of PPAs, and more businesses have enacted their own initiatives over the last few years. The Hershey Co. announced Thursday it would enter into its second PPA with National Grid Renewables, which builds solar, wind, and energy storage projects around the U.S.
The growing demand, coupled with supply chain issues and transmission constraints, has pushed up PPA costs over the past two years. Prices spiked 9.6% in Q3 and 34% YoY, according to PPA marketplace LevelTen Energy.
