3 reasons why universities are betting big on renewable energy

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Colleges and universities always have been focal points of change. The mixture of academic research, student activism and institutional clout has allowed campus communities to promote widespread technical and social transformations. During the last few years, a few of these institutions have begun to lead in an entirely new area — renewable energy. In September, the University of California system announced an 80 megawatt (MW) procurement contract for off-site solar photovoltaic (PV) electricity, enough to power nearly 13,000 homes.

While this is the largest power purchase agreement on record for a university, it was not the first. Back in 2008, the University of Oklahoma signed an agreement with Oklahoma Gas & Electric to purchase 100 percent renewable electricity, spurring the development of a 44-turbine wind farm. Then, in 2012, Ohio State University signed a 20-year power purchase agreement for 50 MW of wind power. This year, George Washington University and American University teamed up, along with George Washington University Hospital, to secure 52 MW of solar PV from Duke Energy Renewables. Meanwhile, many campuses have installed significant onsite resources. Three universities in particular — Arizona State, Rutgers and Mount Saint Mary’s — have installed more than 57 MW of solar PV combined, or enough to power more than 9,000 U.S. homes.
Three reasons why universities buy renewables

1. Renewables are a good deal

Recent transactions highlight just how competitive renewable power can be. Ohio State estimated its wind transaction would save the university $1 million in the first year alone. Similarly, American said that its renewable energy contract "provides fixed pricing for solar energy at a lower total price than current power solutions." When you start to look at the recent, all-time-low wind and solar prices per kilowatt-hour, it’s easy to see how these deals can be cost-effective.

In 2013, new wind projects in the U.S. had an average wholesale price of just $0.025/kWh (PDF). Meanwhile, recent wholesale solar power purchase agreements have reached $0.05/kWh or lower (PDF). Add in the fact that these deals allow buyers to lock in low prices for 20 years or more, and the savings really start to add up. Ultimately, you don’t need an Ivy League endowment to buy a lot of renewable energy — many leaders are public universities that have discovered it’s a sound economic investment.

2. Top-down leadership

Since 2007, the American Colleges and Universities Presidents’ Climate Commitment has encouraged nearly 700 institutions of higher education to commit to achieving carbon neutrality within a defined timeframe. These commitments to reach carbon neutrality, sometimes by 2025 or earlier, are frequently cited as key components of a university’s decision to purchase renewable energy. A few small colleges already have achieved carbon neutrality, most recently Colby College in Maine.

3. Bottom-up demand

Colleges and universities are also responding to a growing demand from their key stakeholders. Students and faculty around the country are already campaigning for increasing university sustainability programs, and these topics are also on the minds of prospective students. In a 2014 Princeton Review survey of student applicants, “61 percent said having information about a college’s commitment to the environment would impact their decision to apply to or attend a school.” Information about campuses’ sustainability track records, provided through programs such as AASHE's STARS initiative, have brought additional transparency to these efforts and allowed for holistic sustainability rankings. Moreover, for both faculty and students, these renewables projects open up research opportunities. This was particularly true for Ohio State, which employed more than 400 energy researchers in 2013.

Stephen Abbott

Senior associate
RMI

Category: Articles

Written by Hamed Bidel

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