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Corporate energy generation

Corporate energy generation – the next threat to our economy?

There is a green energy revolution taking place across the developed world… but it isn’t the one you were thinking of.  More or less quietly, the corporate world has given up hope of governments solving either the short-term energy crunch (caused by rising fossil fuel extraction costs combining with stunted demand) or the longer-term climate crisis.  Rather than waiting for their respective states to run out of power, corporations are increasingly seeking to generate their own energy.

In an article in Green Tech Media, Andrew Mulherkar documents just three of the more famous examples:

“Though Apple is the most recent tech company to establish an energy subsidiary, two of its competitors were there first. Google established Google Energy at the end of 2009, and Amazon established Amazon Energy in mid-2015. These subsidiaries were formed to “identify and develop opportunities to manage the cost of energy,” a complex endeavor for corporations with a global footprint.”

Mulherkar identifies four broad reasons for this move to corporate energy generation:

  • Cost management
  • Sustainability
  • Predictable costs
  • Resilience

In the UK too, large companies are moving into energy generation for similar reasons.  Increasing costs and an increasing risk of supply disruption makes the deployment of renewable energy technologies more viable today than ever before.

The problem, of course, is that the move to corporate energy generation only exacerbates the problems it seeks to solve.  This is because our existing, centralised energy generation and supply system cannot afford the loss of major industrial customers.  Without the income from the corporate sector – and often with the added cost of feed-in tariffs – the operators of the grid are obliged to increase the bills of remaining consumers.  But this only serves to incentivise even more business customers to generate their own.

This is the “death spiral” feared by energy insiders in which the profitability of the whole system depends upon the income taken from a shrinking customer base as businesses and wealthy households deploy renewable energy technologies in an attempt to cut their costs and secure their supplies.  The question is, can we continue to operate free market national electricity grids on the back of a shrinking customer base?  And if not, what kind of system will we be left with?

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