In late 2017, Cummins Inc., a global power leader, announced the next step in its commitment to advancing renewable energy, entering into a 75 megawatt (MW) virtual power purchase agreement (VPPA) to expand a wind farm in its home state of Indiana. Once operational, the development will provide enough energy to power approximately 20,000 average homes in the Hoosier State, equivalent to the amount of electricity Cummins uses at its local facilities.
“At Cummins, our strategy is to provide clean, fuel-efficient and dependable power for our customers with the least environmental impact possible,” said Brian Mormino, Executive Director of Worldwide Environmental Strategy and Compliance at Cummins. “As we explored ways to further reduce greenhouse gas emissions, we learned we could add to the renewable energy market in our headquarters state.”
The first step in the process was to evaluate the options at hand to find the developer, site and financial vehicle that would provide the greatest return — both from a business and ecological perspective. Schneider Electric helped Cummins assess the opportunities, determine the right fit to meet the manufacturer’s goals and arrange the VPPA.
“There are more renewable energy options than ever, which is great for the market,” said Steve Wilhite, Senior Vice President of Energy and Sustainability Services for Schneider Electric. “It’s made participating in the clean energy economy possible and affordable for many organizations — but not always easy. The right opportunity varies from company to company. And finding it requires in-depth evaluation and diligence.”
Based on the assessment, Cummins signed on to support the Meadow Lake Wind Farm, owned and operated by EDP Renewables, in Chalmers, Ind. The agreement with EDP guarantees a fixed price for the electricity from the 75 MW of new wind capacity, which gives Cummins long-term price certainty. The company will also receive the renewable energy certificates (RECs) from the expansion to validate greenhouse gas reductions.
Cummins is one of the first companies in its industry to embrace renewables at this scale, marking a shift in the interest and adoption of clean energy. Traditionally the domain of large technology and consumer brands such as Apple and Walmart, renewable energy is gaining traction in new arenas — from manufacturing to pharmaceuticals — as businesses see the need to diversify their energy mix and take climate action. [Fig. 1]
Another differentiator for Cummins is the methodology it chose to sort through and vet the diverse spectrum of options. The company took a focused, local approach, visiting the site and surrounding areas where the wind farm is located. Each company that pursues a renewable energy project prioritizes what is important to them. Cummins top driver was environmental benefit, but it also wanted a deal to have positive economic and community impacts. After much deliberation, the company narrowed in on a VPPA because it would have the most favorable outcome for all stakeholders involved.
“With all of our environmental goals, we want to maximize our impact,” said Mark Dhennin, Director, Energy and Environment at Cummins. “For the latest phase of our sustainability work, it was important to us to choose a project that added real renewable energy capacity in the marketplace while providing tangible environmental and community benefits.”
The VPPA adds to Cummins’ history as an environmental leader. It has been actively pursuing energy efficiency and greenhouse gas (GHG) reduction in its facilities since 2006, when it set its first GHG reduction goal. And the company has 11 onsite solar arrays installed, the largest at facilities in Jamestown, N.Y., and Beijing.
To learn more about virtual PPAs for your company, we invite you to read this blog.