Why GM Wants To Buy Wind Energy

Source: By Heather Clancy, Forbes • Posted: Wednesday, March 25, 2015

For those who love downplaying or discounting renewable energy as something on the fringe of mainstream economic interests, General Motors’ recent decision to back construction of a Mexican wind farm should come as a wake-up call.

About 75% of the energy generated by the project, which gets under way next quarter, will supply GM’s Toluca Complex manufacturing operation. The rest will go two other nearby facilities, the San Luis Potosi and Ramos Arizpe complexes.

 This is GM’s first wind procurement, but not the first time it has invested in power generated by renewable sources. It also relies on projects using solar, landfill-to-gas, and waste-to-energy technologies. Collectively, these installations will supply approximately 12% of GM’s total power needs after the wind project comes alone. That’s about 104 megawatts of capacity versus the automaker’s target of 125 megawatts by 2020.

The decision was motivated by economics, although there are obvious environmental benefits. Electricity prices in Mexico tied to traditional fossil fuels generation technologies are approximately one-third higher than those in the United States, said Rob Threlkeld, GM’s global manager of renewable energy. “Once online, we’ll evaluate the project to better understand how we can expand the use of wind power,” he said.

GM is one of the companies supporting the Business Renewables Center, an organization dedicated to helping accelerate corporate renewable energy procurement.

Right now, the process of doing so is relatively difficult. It will take proactive advocacy on the part of buyers, as well as regulatory changes to help this happen.

One example is the work that eBay did to develop legislation in Utah allowing companies to procure energy directly from developers, not utilities. There’s a similar move afoot in North Carolina, where the legislature is considering a bill called the Energy Freedom Act. The proposed law would allow businesses, universities and other property owners to buy power directly from developers. It is backed by companies including Walmart, Lowe’s, Target and Volvo.

Jim DeLuca, executive vice president of global manufacturing, addressed GM’s renewable energy strategy during the recent GreenBiz Forum. Generally speaking, procurement decisions are left up to individual plant managers. Every plant is judged on water consumption, energy efficiency, and waste management. But it’s up to each operation to figure out what works best for a given location.

“The worst thing you can do to an organization is act like a sailboat and tack every time the wind changes,” he said.

That’s why GM’s Mexico operation opted to buy wind and had the clearance to do so.

Probably the most notable corporate supporter of wind energy is Google, which just made another investment in January. I expect we’ll be adding other notable names to that list in the very near future.