By Scott Smith and Marlene Motyka | 1.7.20
Renewable Energy World

For many electric power companies, leading the economy-wide transition to lower carbon, cleaner energy sources starts close to home. As capital markets and other stakeholders organize around climate change issues, many power companies are raising the bar on their own environmental, social, and governance (ESG) goals. In 2019, approximately 50 US electric power companies committed to significant carbon reduction goals. And the list continues to grow.

Why? In many cases, technological improvements, customer demand for cleaner energy sources, efforts to keep customer bills low and to respond to climate science are driving action. Pressure from capital markets, including investors, credit rating agencies, shareholders, and insurers is also driving ESG goals. The same pressures are impacting companies across other industries as well and causing them to focus more closely on ESG goals too, as discussed below.

Another trend we see in the power sector is the growing opportunity to create value through distributed energy resource (DER) strategies. DER can engage and benefit customers while providing flexibility to the grid. Resources such as distributed solar, electric vehicles, energy storage, and demand response can help utilities balance the variability of increasing wind and solar output on the grid. They can also help utilities meet renewable mandates, achieve decarbonization goals, shave growing peak demand, avoid costs of building new generation and transmission, and engage customers.