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US colleges, universities contract for renewables in sustainability push


Essential Energy Insights - February 2021


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Six trends shaping the industries and sectors we cover in 2021

Six trends shaping the industries and sectors we cover in 2021

US colleges, universities contract for renewables in sustainability push

SNL ImageThe University of Illinois at Urbana-Champaign obtains 8.6% of the output of EDP Renewables' Rail Splitter Wind Farm in Logan County, Ill.
Source: EDP Renewables North America LLC

Vanderbilt University and the College of William & Mary, in separate announcements in January, became two more of a steadily growing number of U.S. colleges and universities to obtain at least a portion of their campus energy needs through long-term power purchase agreements for electricity from renewable resources.

In some ways, colleges and universities are like any other corporate purchaser of energy looking for a stable, affordable supply that can contribute to the organization's sustainability goals. However, colleges and universities have additional constituencies and motivations to satisfy.

"The X factor is, obviously, the students," said Kyle Harrison, sustainability analyst at BloombergNEF.

"Students have been really excited about their universities going to 100% renewable electricity," said Bronte Payne, the "Go Solar" campaign director at advocacy group Environment America.

Students, for example, have pressured some colleges and universities in the U.S. and elsewhere to halt new investments in companies associated with fossil fuels and to divest existing holdings. The Association of Big Ten Students, representing students and alumni at the 14 Big Ten schools, in January passed a resolution calling on their schools to divest their fossil fuel interests. In September 2019, the University of California's investments office said it would divest fossil fuel holdings in both its endowment and pensions, calling fossil fuel assets a "financial risk."

In 2006, a group of a dozen U.S. college and university presidents joined an initiative now called the Presidents' Climate Leadership Commitment, through which they pledged to bring principles of sustainability into all aspects of higher education. The effort, overseen by the climate action advocacy group Second Nature, now has dozens of members of all sizes in all 50 states who can commit to reducing greenhouse gas emissions, improving resilience to climate impacts, or both.

More generally, colleges and universities see purchases of renewable energy as one way to help further their greenhouse gas emissions-reduction, carbon-neutrality or zero-carbon pledges. The Association for the Advancement of Sustainability in Higher Education said in a February 2018 publication that power purchase agreements for the output of offsite renewable resources, either for individual schools or for multiple purchasers aggregated together, is the most effective way for colleges and universities to meet greenhouse gas reduction targets.

In an April 2019 report, Environment America, citing U.S. Environmental Protection Agency data, said more than 40 U.S. colleges and universities get all of their electricity supply from renewable resources. Schools are also adding onsite generating sources, incorporating electric vehicles in their fleets and improving the efficiency of their buildings.

SNL Image

The Environment America report also cited a survey of college applicants in which nearly two-thirds of respondents indicated a school's environmental commitments would influence their decision on whether to attend.

Vanderbilt has pledged to make its campus in Nashville, Tenn., carbon-neutral by 2050. In January, it said it would team up with regional power supplier the Tennessee Valley Authority, local distribution utility Nashville Electric Service and private solar energy developer Silicon Ranch Corp. to build a 35-MW solar facility in Bedford County, Tenn., that will offset about 70% of the university's annual Scope 2 greenhouse gas emissions — emissions that result from the generation of electricity, heat or steam purchased from a utility provider — and help it meet a goal of supplying all its campus electricity needs with renewables.

"Our research shows that in many areas of the country, colleges and universities, civic and cultural groups and businesses are playing a leading role in addressing climate change. The success of this effort sends a clear message that the move to renewable power does not need to wait for governments to act," Mike Vandenbergh, David Daniels Allen Distinguished Chair in Law and director of the Vanderbilt Climate Change Research Network, said in announcing the university's deal. "It can be done in ways that are cost-effective and will make significant, near-term carbon emissions reductions."

Stephen Abbott, a research associate at the Rocky Mountain Institute, a nonprofit that promotes market-based approaches for consumers to shift away from fossil fuel use, said the lack of federal government action regarding climate has prompted colleges and universities to "focus on more local actions," such as contracting for electricity from resources within their state or regional power market.

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Colleges and universities contracting for electricity is not new. A review of select power purchase agreements of 10 MW or more by S&P Global Market Intelligence finds deals going back more than a decade. The University of Oklahoma has been buying credits for the output of the 101-MW OU Spirit (Keenan I) wind farm since 2010 from OGE Energy Corp. subsidiary Oklahoma Gas and Electric Co.

In some cases, utilities have contracted for the output of a renewable energy facility and then have resold a portion to a nearby educational institution. Evergy Inc., for example, is buying the entire 300-MW output of the Soldier Creek Wind Energy Center now under development in Nemaha County, Kan., but has already agreed to resell portions in separate agreements to Kansas State University and the University of Kansas.

Colleges and universities also band together to purchase renewables, though corporate customers do this as well. Washington, D.C., schools American University and George Washington University, along with George Washington University Hospital, in 2014 committed to buying 52 MW from solar facilities developed by Duke Energy Corp. subsidiary Duke Energy Renewables Inc. in North Carolina. Both the buyers and the solar plants are in the PJM Interconnection market.

Meanwhile, Boston University in 2018 agreed to buy a portion of the output of a wind farm now under construction in South Dakota. It will then resell the energy in the Midwest, a region it said is more dependent on fossil fuels than New England, to displace those resources.

"Local projects on the New England grid would displace less CO2 because the New England grid is already pretty green," Anthony Janetos, chair of the University's Climate Action Plan Task Force, said in announcing the deal.

Not just supplying power

ENGIE North America Inc., a division of France-headquartered energy services provider Engie SA, approaches colleges and universities in several ways. It is developing the Triple H Wind Project from which Boston University will buy power, but PPAs are "not the end solution" for colleges and universities, said Gwenaëlle Avice-Huet, CEO of Engie's North American business unit. "They want more on sustainability. It's more and more comprehensive — a set of solutions."

In December 2019, Engie and a partner, French infrastructure investor Meridiam Infrastructure Finance S.a.r.l., were awarded a 50-year concession to operate the University of Iowa's utility system. Engie and a different partner, Axium Infrastructure, in 2017 were awarded a similar concession to operate utility systems at The Ohio State University.

While many colleges and universities own power plants — the University of Iowa owns 33 MW at three facilities — as well as district energy systems that may provide heating, cooling and water to their buildings, Avice-Huet said energy provision is not a core business for them. The duration of the concessions Engie and its partners have received, each valued at $1.165 billion, gives the companies the chance to try out the newest technologies to optimize energy production, she said.