6 Key Indicators for Benchmarking Renewable Energy Procurement

Transitioning to renewable energy isn’t just about choosing the cheapest option. For corporations, it’s about balancing costs, reliability, sustainability, and long-term business goals. In this blog, we’ll explore six critical indicators that every procurement and sustainability manager should consider when evaluating renewable energy sources.

1. Levelized Cost of Electricity (LCOE):
LCOE represents the cost per megawatt-hour (MWh) of electricity over a power source’s lifetime, accounting for capital, operating, and fuel expenses.

• Why It Matters: LCOE helps companies evaluate short-term cost savings and predictability.
• Limitations: It doesn’t capture infrastructure upgrades or broader economic impacts. For example, integrating renewables often requires investments in grid upgrades, which LCOE may overlook.

2. Total Electricity Technology Lifecycle Cost (TCOE):
TCOE provides a comprehensive view of all costs associated with a power source, including plant construction, financing, operations, and maintenance.

• Why It Matters: TCOE allows companies to assess long-term energy strategies, ensuring reliability and cost predictability over decades.

3. Carbon Emissions Impact:
With rising stakeholder demands for transparency in emissions reporting ,understanding the carbon footprint of different energy sources is critical. Tools like the EPA’s eGRID database offer valuable insights into emissions from electricity grids.

• Why It Matters: Companies can align energy sourcing with sustainability goals by benchmarking and reducing Scope 2 emissions.

4. Capacity Factor:
This metric measures the reliability of an energy source by evaluating how consistently it delivers its maximum potential output.

• Example: Geothermal and nuclear energy have higher capacity factors, offering consistent supply, while wind and solar depend on weather conditions.

5. Levelized Cost of Carbon Abatement (LCCA):
LCCA calculates the cost of reducing carbon emissions for each energy option. This helps decision-makers weigh economic goals against environmental objectives.

• Why It Matters: Balancing sustainability and cost efficiency is crucial for meeting long-term corporate commitments.

6. Land Surface Impact:
Renewable energy projects can have significant land requirements. Companies must evaluate the land use impact for mining, transportation, generation, and distribution.

• Why It Matters: Efficient land use is vital as population growth and energy demands increase.

Conclusion:
By considering these six indicators, corporations can make informeddecisions that align with both short-term cost objectives and long-termsustainability goals. Renewable energy procurement is not just aboutnumbers—it’s about strategy, innovation, and alignment with corporate values.