How Amazon bought more renewable energy than any other company in 2022

by The Insights

Shown here is Timber Road, a wind farm in Ohio, which is part of Amazon’s clean energy portfolio.

Photo courtesy of Amazon.

Big tech companies dominate the purchase of clean energy. Among the group of favorites, Amazon straddles all Big Tech companies repeatedly.

In 2022, Amazon purchased 10.9 gigawatts of clean energy, making it the world’s largest buyer of renewable energy, according to data from market research firm BloombergNEF. That’s enough energy to power the entire country of Ecuador.

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It’s also more than four times the amount of clean energy than the second-largest clean energy buyer, Facebook’s parent company. Metabought in 2022. Google, Microsoftand Codelco, a Chilean state-owned copper mining company, round out the top five.

In 2019, Amazon announced The Climate Pledge, publicly committing the entire company to be net zero carbon by 2040. Around this time, Amazon accelerated its commitment to power its operations with 100% renewable energy from 2030 to 2025.

“When we announced The Pledge in 2019, we got very serious and I would say rigorous and mechanized in our approach to renewable energy,” said Charley Daitch, director of energy and water infrastructure at Amazon Web Services, the cloud business computing from Amazon.

Daitch oversees the majority of Amazon’s renewable energy – which includes purchasing renewable energy projects for Amazon’s distribution warehouse network and Whole Foods Markets and recharging the fleet of Rivian electric vans that perform deliveries – but it sits within AWS because AWS and all of the associated IT consumes the majority of Amazon’s electrical footprint.

Since 2019, Amazon has grown from one gigawatt of renewable energy to more than 20 gigawatts of publicly announced renewable energy.

Amazon has accelerated its purchases of renewable energy because right now it’s a technology that’s already available at a scale with which Amazon can significantly decarbonize its business, Daitch told CNBC.

“We know this is a place where we can have a very large-scale impact today,” he said. Low-carbon aviation fuel technology, for example, is not yet at scale. Amazon funds innovation in areas of decarbonization that need more work and are particularly challenging right now through its multi-billion dollar venture capital fund, The Climate Pledge Fund.

As of January, Amazon had 401 renewable energy projects in 22 countries, including 164 utility-scale wind and solar farms and 237 onsite rooftop solar installations in fulfillment centers, AWS data centers, offices and stores. physical. A solar system on the roof of a distribution center in North America can produce up to 80% of that distribution center’s energy, depending on the time of year and other variables.

A solar farm in Prince George’s County, Virginia, called the Fort Powhatan Solar Facility, which is part of Amazon’s portfolio.

Photo courtesy of Amazon

Planning ahead is essential due to transportation congestion in the United States

For Amazon to meet these kinds of aggressive renewable energy goals, it will use Renewable Energy Credits, or RECs. The electrical grid carries energy from all kinds of sources, some clean and some dirty. RECs are legally accepted ways for a company to account for its own energy consumption and document that it is purchasing clean energy.

While Amazon will buy RECs, they are not central to its renewable energy vision. Amazon is focused on building new wind and solar projects, Daitch told CNBC.

“If we have a project that will go live in 2025, we can buy credits in advance to signal our support for renewables in that market before the project goes live. But it’s really more of a transitional solution and not our core strategy, which is to enable new wind and solar projects,” Daitch said.

Additionally, Amazon does not purchase more CERs than it has invested in actual renewable projects and its goal is to reduce its reliance on CERs over time, Daitch said. “The lion’s share and the significant part of our portfolio is for new wind and solar projects that we activate around the world,” he said.

In the United States, connecting new wind and solar power to the power grid is a challenge in itself, as the transmission system is nearly exhausted. To connect a project to the grid, a new source of electricity generation, such as a wind or solar farm, must go through an approval process called an interconnection agreement which can take years to go through a long line of waiting.

“From a business strategy perspective, we’re fortunate to have signed many projects in 2020 and 2021. So a lot of our projects are actually ahead of that queue,” Daitch said. .

“A few years ago, the average wind or solar project in the United States had a development schedule of two and a half to three years. I think realistically now, in many grids that we’re looking at five years or more “, did he declare.

While Amazon benefits from its advance planning, Amazon knows that transmission congestion in the United States is an issue that will cause problems.

“Our 2025 target and the projects we have planned for it are not as impacted by this long transmission queue as others may be if you plan to run projects now or in the next six months, but we’re still trying to resolve because we know it’s an important part of our long-term strategy,” Daitch said.

Amazon met with the Federal Energy Regulatory Commission, the main regulator in the United States responsible for overseeing energy transmission and electricity wholesale, he said. “We have advocated for policies that allow transport operators to make forward-looking investments. Right now, transport planning is very reactive,” he said.

This wind farm in Sweden, called Bäckhammar, is part of Amazon’s clean energy portfolio.

Photo credit: Daniel Larsson/Eolus.

Build clean energy projects around the world

Amazon has started building wind and solar projects in the United States and Europe because that’s where the majority of Amazon’s business operates and also because that’s where the ground has already been travelled.

“The United States and Europe have a regulatory framework and policies that allow corporate buyers like Amazon to invest directly in projects. So I’m not saying it was easier, but there was a way to do it on a very large scale in the United States and in European countries,” Daitch told CNBC. “That’s not true all over the world.”

In some countries, especially where the energy infrastructure is state-owned, Amazon must work with governments and regulators to build wind and solar power sources. Amazon has the advantage of a highly recognizable brand and that entices “senior utility executives and senior government officials to sit down with us,” he said.

The company’s reputation as a clean energy giant also helps. “Our track record of successfully deploying renewable energy around the world really gives us that credibility,” he said.

For example, Amazon had to put in place new regulations to be able to run a corporate solar deal in South Africa. In Indonesia, Amazon is partnering with PLN, a utility, to be able to invest in solar projects there.

Amazon hopes other companies will take advantage of the avenues it is opening up.

“When we create these different tariffs and structures for building renewable energy projects, they are not limited to Amazon. Any company can come to South Africa now and take advantage of the tariff and structure that we have put in place. place to build around wind and solar projects,” says Daitch. “And we hope other companies will take advantage of it.”

Another challenge relates to nascent supply chains in many countries.

Although there are hurdles to setting up renewable energy projects in places like South Africa and Indonesia, the upside is that they have a greater effect on reducing carbon emissions because these countries have more coal-fired power plants.

When Amazon looks to expand AWS to a new region, access to renewable energy sources is a key part of those conversations, Daitch said, but so far Amazon has found a way to establish renewable sources. in any country where he plans to settle.

“We want to be clearheaded and with our eyes wide open to the challenges we might face, but if we just say, ‘Okay, we’re only going to scale our business where we know we can reach 100 %% renewables with out-of-the-box tools and no changes to the legislative or regulatory structure”, we would not have had the opportunity to have some of the impacts that we have in these new countries and opened the door to the renewable energy industry in the way we have,” said Daitch.

In addition to regulatory innovation, Amazon is also innovating from a technological perspective. For example, in India, where the grid is still mostly powered by highly polluting energy sources, Amazon is placing solar panels and wind turbines in the same project, he said. “The more renewable energy we can put on that grid, the more carbon we can reduce. Combining wind and solar is a really exciting way to do that,” he said.

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