Goldman Sachs has a RE100 goal to become 100% powered by renewable electricity by 2020. Kyung-Ah Park, Head of Environmental Markets Group, tells us more about what is driving the company to go renewable as part of RE100.
What are your motivations for becoming 100% renewable?
As a global financial institution, one of the key roles we can play in addressing climate change is to deploy capital to low-carbon solutions including renewable energy. Since 2006, we have deployed over $60bn in financing and investment for clean energy. Targeting 100% renewables across our operations not only provides our offices with cleaner forms of power, it ultimately helps further the deployment of clean energy as we can act as a creditworthy off-taker in addition to financing and investing through our businesses.
Why do you think RE100 is a good initiative to join?
We’re proud to be among the group of leading companies that have joined RE100 and support the deployment of renewable energy. RE100 can help by facilitating the sharing of best practices and raise awareness more broadly on the growing value proposition of renewable energy. This in turn can help encourage further adoption.
What process did you go through to decide on your 100% goal?
We have an ongoing focus toward continuous improvement and identifying innovative initiatives that connect our operational targets back to our business and clients. After reviewing our internal energy procurement strategy, we determined that pursuing 100% renewable energy was both economical and advantageous in securing reliable electricity over the long term. Additionally, our commitment to use 100% renewable energy by 2020 enables us to achieve carbon neutrality in our operations while supporting the expansion of renewable energy markets.
What are your achievements so far?
The core of what we do in clean energy is through our businesses in serving the capital and financial advisory needs of our clients. In 2012, we set a 10-year target to deploy $40 billion of capital in financing and investment to scale-up clean energy globally. Since then, we have mobilized more than $33 billion for solar, wind, smart grid and other clean technologies and have a dedicated Clean Technology and Renewables Investment Banking Team.
Through our Merchant Banking Division we are the lead equity investor in ReNew Power – a growing renewable energy company in India expected to achieve 1GW operating capacity later this year. We also entered into a power purchase agreement (PPA) to procure wind power for our Crystal Downs facility in Bengaluru with ReNew Power.
In addition, we have helped facilitate many “firsts” for clean energy financing. For example, following the first rated solar securitization in the world that aggregates solar projects into a high investment grade bond for institutional investors, we are targeting a $1 billion Japan Renewable Project Bond Trust to help fund the growth of renewable energy projects in Japan through the capital markets. We also underwrote the first U.S yieldco listing and subsequently have helped our clients with a number of additional yieldcos which have enabled them to free up balance sheet capacity for further investment in clean energy.
What opportunities and challenges have you encountered while working towards your 100% goal?
We announced the 100% renewable goal on July 27, 2015 as part of the American Business Act on Climate Pledge at the White House alongside several other commitments, so it’s a relatively new goal. We expect through our target that we can help play a role in facilitating clean energy deployment beyond what we are doing through our financing and investment activities.
Because we operate across 178 offices globally, inevitably one of the challenges we expect to face is that in certain locations, renewable energy is not available or economical.
What plans are there for increasing your use of renewable electricity, and what do you expect the benefits to be?
Our goal to achieve 100% renewable power by 2020 will first be met through direct renewable energy sourcing through long term power purchase agreements. In locations where this is not feasible, we will source high-quality, credible renewable energy certificates that enable the development of more renewable energy projects.
Why do you think it is important for companies to play a role in accelerating demand for renewable electricity?
Given electricity’s footprint on greenhouse gas emissions and expected long-term growth in energy demand, we think it’s important to pivot the energy system to one that is lower carbon based, more efficient and more resilient, and the private sector has an important role to play in this shift.
Last updated: September 2015
Update November 2015: Goldman Sachs to invest $150 billion in clean energy