PepsiCo Drops RECs in Favor of $30M in On-site Generation

by | Apr 12, 2010

solar pepsiPepsiCo, since 2007 one of the leading U.S. purchasers of renewable energy credits (RECs), is putting a virtual halt to that practice. Instead, the company will use its purchasing power toward on-site renewable energy projects.

PepsiCo’s renewable energy purchasing has stayed steady at near 1.226 billion kWh in recent years. The company has used renewable energy for 100 percent of its facility operations, earning it a coveted place near the top of the EPA’s Green Power Partnership.

Over the next three years, the firm will be investing in excess of $30 million dollars toward new renewable energy projects in the U.S., said Rob Schasel, Director of Energy and Resource Conservation at PepsiCo.

“Since we made the initial decision in 2007 to go with RECs, there has been a lot of dynamism in the industry,” Schasel said. “Technology has changed. Incentives have changed.”

“All of those things point us in the direction of doing what we know we can do to improve our focus on renewable energy at facilities,” Schasel said. “Those on-site projects will reduce our emissions now and into the future, no matter what the regulatory focus is.”

PepsiCo is no stranger to on-site renewable energy.In fact, it generates 159,000 megawatt hours of renewable energy a year, including electric and thermal resources.

The firm uses solar on the roof of its Arizona Service Center, and its Frito Lay division uses cogeneration to add extra energy from otherwise wasted energy sources.

PepsiCo is looking for innovative partners to help add renewable projects, he said, adding, “We haven’t made a complete list of projects. Some are in development already, and we’ll be putting some of those online later this year.”

One emerging project is at the Frito-Lay plant in Topeka, Ks. The facility, which just earned LEED Gold certification for existing buildings, is working on a biofuel boiler to turn yard waste and other biomass into steam, an effort that may cut the building’s natural gas use 80 percent, reports

Since the three-year REC contract ended with at the start of 2010, PepsiCo has dramatically scaled back its REC purchases, but it is not doing away with them altogether, Schasel said. For instance, some LEED certifications might require a certain amount of RECs.

And while the company intends for its operations outside the U.S. to move to on-site renewable generation, those operations are by no means excluded from purchasing RECs, he said.

To Blaine Collison, Director of EPA’s Green Power Partnership, Pepsi’s decision to move away from RECs is neither good nor bad.

“If they were leaving the renewable energy space, that would be a different story,” Collison said.

Whether a company uses RECs sometimes has more to do with philosophy than it does with dollars and cents, he said.

“Intel has said that purchasing RECs helps them affect renewable energy at a utility scale. Other smaller companies are more oriented toward on-site energy,” he said.

“Different organizations have different needs at different times. The Air Force continues doing a lot of RECs, but they also have a lot of land, and they’re in a position to do wind and solar on-site,” he said.

In all, the Air Force has grown its commitment to on-site generation during its participation in the Green Power Partnership.

Other major Green Power Partners such as Kohls, Staples and Wal-Mart also are increasing their proportion of renewable energy generated on-site, Collison said, adding, “On-site has really good optics. It’s easy to look at it and point to progress.”

That point is not lost on Schasel, who said that PepsiCo approaches the return on investment from renewable energy from a “holistic” standpoint.

For instance, he said that PepsiCo likes to consider non-productivity returns, such as the value of the potential publicity, including reputation and brand enhancement.

Schasel points to the Modesto, Calif., Sun Chips plant, where solar collectors themselves have been tied into brand of Sun Chips.

“It was a very good environmental project. It was a reasonable economic return project, but it’s been a great brand enhancement project,” he said. “There’s no reason you can’t combine all three of those.”

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