Farmer cooperative and producer Organic Valley on Tuesday announced that it will become the largest food company in the world to source all of its electricity from renewable sources.
To get there by 2019, the cooperative has committed to purchasing energy credits from solar panels that’ll be installed nearby to its La Farge, Wisconsin headquarters. Organic Valley says the project, a collaboration between a group of Wisconsin municipal utilities and developer OneEnergy Renewables, will increase the overall solar energy use in the state by 15 percent.
The “100 percent renewable” milestone doesn’t include the cooperative’s farms, though about 220 of its 2,000 farmer-members have installed solar panels independently. The numbers do include the company’s office buildings, a processing facility and distribution center in Cashton, Wisconsin, a creamery in Chaseburg, Wisconsin, and a plant in McMinnville, Oregon that makes butter and dried milk powder. “In 2016, we purchased 10 million kilowatt-hours of electricity. This project will meet all of that plus our increased load, which will be attributable to a couple of new facilities,” says Jonathan Reinbold, Organic Valley’s head of sustainability.
It may seem like a relatively small development: another big company in the crush of corporate do-gooders who have committed to renewable energy in recent years because the optics are good and it costs less than it used to. And in some ways, that’s exactly what it is. But there’s an argument to be made that without Organic Valley, these Wisconsin utilities never would have been able to attract the necessary capital investments to add solar to their grids.
Here’s how it works: A developer wants to build solar energy farms in Wisconsin. Once the farms are built, the operators will sell that electricity at a fixed rate (it’ll be cheaper than fossil fuels) to the local utility companies. The utilities will then combine that energy with the energy that comes from fossil fuels and use it to power the cities and towns they serve—a grid that also powers Organic Valley’s offices and creameries.
Organic Valley’s commitment is to support the whole system by purchasing some of the Renewable Energy Certificates (RECs) that are generated when the solar panels produce power. The system of purchasing RECs, which allows corporations to go “100 percent renewable” without having to build their own wind and solar farms, has mushroomed in popularity in recent years. According to Renewable Choice Energy, AB InBev bought almost 300 megawatts of wind power earlier this year. Other corporate leaders include Walmart, which has purchased wind and solar energy since 2010, most of the major tech companies, and Whole Foods, which purchased wind power RECs equivalent to the power consumption of all its stores back in 2006.
By purchasing the number of Renewable Energy Certificates equal to the amount of energy it uses, Organic Valley is essentially footing the “renewable” bill for the electricity it consumes without having to pay for the installation and maintenance of the solar farms themselves. Solar firms—who are in charge of building and maintaining the solar farms—like having guaranteed buyers for their RECs because it’s a guaranteed source of revenue. Without contracts like Organic Valley’s in place, they have to sell them on the open marketplace, which requires more heavy lifting on their part. Without an anchor REC buyer like Organic Valley, Wisconsinites may have had a hard time attracting a solar firm’s investment.
The finances, in theory, work out nicely for everyone. Organic Valley doesn’t actually have to foot the bill for solar panel installation and maintenance. And the price of energy may actually decrease for Wisconsinites who live in the utility network: since the utilities are paying less for the solar energy than fossil fuels (and these particular utilities aren’t allowed to pocket any extra money), the savings may be passed back to consumers.
Over time, everyone’s savings will only increase. Reinbold says that while Organic Valley won’t get any tax credits for its shift to 100 percent renewables, the solar project will pay for itself in two to three years. The cost of buying fossil fuels in Wisconsin has risen by about 3 percent a year for the last 25 years. He projects that if fossil fuel prices continue to move at their current rate, the RECs will pay for themselves in no time. And since the solar rates are set for the next 25 years, everyone on the grid sees the same benefits.
“We think it’s also a wise business investment. It’s a wise investment in the community,” Reinbold says. “We’re hoping to stabilize those costs for everybody, and we know that without our participation this wouldn’t’ve happened.”