EDP BUSINESS SUMMIT '24

Energy transition: an opportunity for companies

Reaching carbon neutrality by 2050 will require, according to McKinsey, an investment of 500 billion euros in Portugal by 2045

The climate situation and the moment humanity is going through are unique: the transition from fossil fuels to renewable energy sources is therefore the greatest revolution of our time.

The ambitions are now well-known: Portugal aims to anticipate by five years the goal of achieving carbon neutrality by 2045. To achieve this, it must significantly increase the renewable energy produced within the national territory (85% by 2030) and reduce its primary energy consumption (-35%).

The timescales are short for such an ambitious task and, although advances in science and technology are fundamental to winding up the necessary innovation, a collaborative effort is needed between everyone - governments, companies and families. On this path towards decarbonizing the economy, there are challenges to face, but also unmissable opportunities.

Companies are a critical part of the economy, and their energy consumption must be more efficient and sustainable. Thus, more and more companies are opting for decentralized energy production, installing solar panels for self-consumption on their premises, rooftops, or parking lots. This new paradigm benefits the planet and companies economically, environmentally, and reputation-wise.

Agents of Change

After all, how can companies accelerate the transition to a better world? In addition to the crucial role of energy producers, who must replace the use of fossil fuels to generate electricity with renewable sources, energy retailers must also seek to provide energy transition solutions to their customers. Companies can make their operations more sustainable and cost-effective by implementing energy efficiency measures, signing long-term contracts, choosing renewable electricity, or installing solar panels.

The Power of Solar Energy

According to the International Energy Agency, in 2023, global renewable capacity grew by almost 50%, the fastest growth rate in the last two decades. Three-quarters of this growth came from solar energy, which is taking on an increasingly central role in the path to carbon neutrality.

Accelerating the development of solar solutions is necessary, as solar energy has significant growth potential on the rooftops and available land in the Iberian Peninsula, which, with approximately 300 days of sun per year, can make a significant contribution to the energy transition. Therefore, this is becoming an increasingly obvious choice for companies, not only because it is renewable and inexhaustible but also because it is synonymous with savings. The autonomy to manage their energy production and consumption allows companies to be less exposed to fluctuations in electricity prices in the market. By adopting solar energy, companies can achieve savings of up to 25% on their monthly electricity bills. With the decrease in the costs of solar installations, the return-on-investment rates have been decreasing, now ranging between four to six years for companies.

The multinational McDonald's embraced this path early on. “For over 10 years, we have been concerned with environmental management. We began certifying all restaurants to monitor energy consumption, waste, and equipment to detect how we could be more efficient,” says Inês Lima, the brand's general manager in Portugal. She also shares that the Pombal restaurant “is a unique example” in Europe and “aims to be a pilot for all the most energy-efficient solutions”. It is, in essence, a space for experimentation – and with results. “We have already seen a 10% reduction in equipment consumption, and also, during spring and summer, 60% of the energy already comes from solar panels,” she adds. While full building coverage with solar panels is important, the electric vehicle charging stations installed in dozens of the brand's restaurants are equally essential to support sustainable mobility. McDonald's Portugal aims to reach the milestone of 200 stations by 2025.

200 billion

Is the estimated investment in renewable energies and green industries in the Iberian Peninsula by 2030, according to McKinsey.

25%

Companies save up to 25% on their energy bill by joining the EDP solar system, with no initial investment.

50%

Percentage of new solar capacity added in the coming years that will originate from decentralized solar energy.

2030

Is the deadline set by EDP to reach 100% of the energy produced from renewable sources.

Creating or Joining a Solar Neighbourhood 

Although solar energy is readily available, many citizens and companies still cannot take advantage of it. In recent years, Portugal has accelerated legislation allowing the creation of Collective Self-Consumption Communities, where solar production in a specific location can be shared with neighbours. This is the case with EDP Solar Neighbourhoods, which are democratizing access to renewable energy for consumers who otherwise couldn't do so due to space or financing constraints.

These are energy communities where everyone wins and saves. In EDP Solar Neighbourhoods, solar panels are installed in buildings or companies with available space, and the energy produced is used by the occupants, resulting in financial savings. Additionally, neighbours in the community benefit from this solar energy without any cost to either party. For those who produce and provide space for the installation, savings from self-consumed energy can reach up to 60%. Community members who join EDP Solar Neighbourhoods can reduce their electricity bills by up to 35%.

This is precisely what CTT – Correios de Portugal, the Portuguese postal service, decided to do by installing EDP Solar Neighbourhoods in around 40 of its locations. This investment will allow sharing the benefits of these neighbourhoods with over eight thousand families and businesses, helping to avoid the emission of over 1,600 tons of CO2 per year. João Bento, CEO of CTT, considers this “a project of enormous importance” to strengthen the company's sustainability path, while also providing “access to clean and cheaper energy” to surrounding families and small businesses.

According to EDP, there are already over 2,600 energy communities contracted with condominiums, small businesses, and other companies, which, when all operational, will represent a potential renewable installed capacity of 70 MWp.

EDP's As-a-Service model allows business customers to start solar production without initial costs, covered entirely by EDP. The utility also ensures the operation and maintenance of the equipment throughout the contract, price predictability, absence of network costs, and energy efficiency with immediate savings.

Electrifying Fleets

Companies can also actively contribute to the transition and acceleration of electric mobility by equipping their spaces with public charging points to meet the needs of customers, partners, and employees who visit these spaces. This is already a regulatory requirement in Portugal: all commercial and service buildings with more than 20 parking spaces must install two charging points by the end of this year.

Simultaneously, gradually replacing a combustion fleet with electric vehicles is another way to take advantage of this transition to prepare each business for the future. Electrifying fleets should be a priority, as data indicates that although corporate vehicles represent only 20% of cars in circulation in Europe, they are responsible for 40% of the distances travelled. Electrifying these journeys would not only result in significant savings in energy and maintenance but also halve emissions from road transport. Recently, EDP launched EDP Charge Fleet, a solution designed for corporate fleets, allowing companies to allocate a direct allowance to each employee, to be used for charging on the street, at work, and home, simplifying and accelerating the adoption of electric mobility in the corporate environment.

EDP Business Summit 2024

EDP Business Summit 2024 will explore how companies and utilities can accelerate the energy transition on March 7th from Lisbon, broadcast online. The event will have the presence of national and international speakers and experts from the energy sector to discuss strategies for a successful energy transition. Registration is free and open at https://edpbusinesssummit.edp.com.

DECARBONIZATION OF HEAT IN THE INDUSTRIAL SECTOR

According to the International Energy Agency, the industrial sector is responsible for about 30% of global CO2 emissions. In this sense, decarbonizing the heat used in the production processes of the industrial sector will be crucial to achieving carbon neutrality. In 2022, heat was responsible for nearly half of total final energy consumption and 38% of CO2 emissions related to energy. Electrification of heat has been a challenge for the industry worldwide, but the future of heat is renewable: solar energy is already the most competitive form of electricity production in the market today. This energy needs to be stored. The emergence of simple heat storage solutions addresses the major challenge of the intermittency of solar and wind production, making electrification of industrial heat an actionable possibility immediately. Thermal storage is a technology that allows storing heat generated by renewable sources or industrial processes and using it when needed. In addition to reducing emissions, it is a solution with a very interesting economic cost, especially for industries that consume large amounts of energy. In order to achieve a carbon-neutral world, collaboration between energy companies, governments, public and private entities, and innovation leaders in the sector will be necessary to accelerate efforts towards innovation.

This article has been translated by EDP for reader convenience. You can read the original version in Jornal de Negócios.