October 23, 2023
How a Global Corporate Pioneer Led a 111 Megawatt (MW) Aggregated Wind Transaction & a 100 MW Solar Aggregation to Drive to 100% Renewable Energy
Discover how a global science and technology company engaged with SR Inc’s Net Zero Consortium for Buyers (NZCB) in pioneering a new renewables procurement strategy: buyer aggregated Virtual Power Purchasing Agreements (VPPA 2.0s). Guided by a commitment to sustainability, Merck KGaA, Darmstadt, Germany utilized the NZCB’s platform to cause utility scale renewable energy by engaging in aggregated procurements of solar and wind. The company led in offtaking 68MW of NZCB’s contracted 111W in the Azure Sky Wind project in ERCOT, followed by offtaking 40MW of the 100MW Liberty County Solar project in MISO. Dive into the driving forces behind this groundbreaking shift in sustainability strategy, where bold leadership, collaborative action, and an innovative renewables procurement solution are converging to redefine the future of Net Zero.
Merck KGaA, Darmstadt, Germany’s Corporate Sustainability & Renewable Energy Procurement: A Core Commitment
Merck KGaA, Darmstadt, Germany is a global science and technology company working across healthcare, life sciences, and technology. The company is known as Merck KGaA, Darmstadt, Germany internationally, except for in the United States and Canada, where it operates as EMD Serono in the biopharmaceutical business, MilliporeSigma in the life sciences business, and EMD Electronics in the high tech materials business. Merck KGaA, Darmstadt, Germany has been a Sustainability Roundtable, Inc. (SR Inc) Member-Client since 2019.
In May 2022, the independent Science Based Targets initiative (SBTi) confirmed that Merck KGaA, Darmstadt, Germany’s near-term targets were aligned with the prevailing climate science. In striving towards climate neutrality by 2040, the company committed to lowering Scope 1 and Scope 2 GHG emissions by 50% by 2030 while reducing value chain emissions (Scope 3) by 52% per euro value added by 2030 from a 2020 base year. Merck KGaA, Darmstadt, Germany has documented its progress towards these goals in its yearly sustainability reports. A key element of Merck KGaA, Darmstadt, Germany’s decarbonization strategy is their renewable energy portfolio, helping the company drive towards its goal of covering 80% of its purchased electricity with renewables by 2030.
Executive Leadership: Decarbonization through Renewable Energy Procurement
As part of a cross-functional Sustainability Taskforce, Merck KGaA, Darmstadt, Germany’s Head of Sourcing – Site Operations and Logistics, Bob Hoffman, engaged SR Inc’s Net Consortium for Buyers (NZCB) to drive Merck KGaA, Darmstadt, Germany’s U.S. renewable energy strategy in alignment with their Scope 2 GHG emissions targets. Bob is responsible for managing all global spend related to Site Services, Energy/Utilities, MRO (Maintenance, Repair, and Operations), and Logistics for all three of the company’s business sectors (Life Science, Healthcare, and Electronics). Internally, Bob is supported by Chris Famolare, Head of Sustainable Operations at MilliporeSigma, and Joanna Raleigh, Sourcing Manager for Energy and Utilities at MilliporeSigma, in executing on a utility-scale renewable energy strategy.
The Sustainability Taskforce utilizes an innovative, diversified renewable energy portfolio approach while embracing the opportunity to cause potentially cost-positive, utility-scale renewable energy through buyer-aggregated virtual power purchasing agreements (VPPAs). Bob and his team, with the support and expertise of SR Inc’s NZCB, recognize VPPAs as a central solution for Scope 2 mitigation in North America.
Net Zero Consortium for Buyers (NZCB) Background
SR Inc’s NZCB is a confidential consortium for buyers only that helps participants develop global renewable energy and emissions reduction strategies. NZCB is the leading platform for Buyer-Aggregated Virtual Power Purchase Agreements (VPPAs).
Timely Procurement Success: Anchoring VPPA Deployments
MilliporeSigma and EMD Electronics, the life sciences and high tech materials businesses of Merck KGaA, Darmstadt, Germany in the U.S. and Canada, demonstrated strong sustainability leadership in alignment with prevailing climate science by engaging in two separate VPPAs over the course of several years in partnership with SR Inc’s NZCB.
Azure Sky Wind VPPA Aggregation
MilliporeSigma has more than 23,000 employees and 59 manufacturing sites worldwide. The Sustainability Taskforce discovered that, by transacting in a VPPA, they could mitigate 100% of their life science business emissions in driving towards Merck KGaA, Darmstadt, Germany’s overarching goal of climate neutrality by 2040. In March, 2020, MilliporeSigma announced a 12-year, off-site, buyer-aggregated virtual power purchase agreement with Enel Green Power for the construction of the Azure Sky wind and storage project in Texas.
MilliporeSigma was the anchor buyer, transacting alongside SR Inc Member-Clients Akamai Technologies, Synopsys, and Uber within the NZCB. The life science business’s offtake was 68 megawatts (MW) of the 350 MW project capacity, roughly equivalent to 14 wind turbines. The project is delivering Renewable Energy Certificates (RECs) attributed to purchaser-caused renewable energy that will match 100% of MilliporeSigma’s U.S. electricity consumption, equivalent to 65% of the U.S. electricity consumption of all the businesses of Merck KGaA, Darmstadt, Germany.
Liberty Solar VPPA Aggregation
Following the Azure Sky wind and storage VPPA, the team continued to demonstrate a commitment to causing new renewable energy, this time in the semiconductor industry through EMD Electronics, the U.S. and Canada electronics business of Merck KGaA, Darmstadt, Germany. EMD Electronics, as an anchor buyer in the NZCB alongside SR Inc Member-Clients Biogen Inc., Wayfair Inc., Autodesk, Inc. and a large healthcare company, signed a 16-year VPPA renewable energy contract for the Liberty County Solar project in Texas, which should become operational in 2024.
EMD Electronics contracted for 40 MW of the 100 MW project capacity. By engaging in this transaction in addition to MilliporeSigma’s wind VPPA, Merck KGaA, Darmstadt, Germany is expected to match 90% of the company’s U.S. purchased electricity consumption from renewable energies. Globally, Merck KGaA, Darmstadt, Germany is expected to match 55% of purchased electricity consumption from renewable energies, a percentage it aims to increase to 80% by 2030.
NZCB: Democratizing Utility-Scale Renewable Energy to Drive the Energy Transition
As the MilliporeSigma and EMD Electronics VPPAs demonstrate, SR Inc NZCB buyers are taking a key role in democratizing the financial and environmental benefits of utility-scale renewable energy. The NZCB opens the market of cost-positive, utility-scale renewable energy well beyond the world’s 100 to 200 largest firms to thousands of high-credit corporations with a need to mitigate emissions stemming from the annual consumption of at least 25,000 MWh in North America and/or the E.U. High-credit companies are invited to participate in the NZCB to receive expert assistance at no necessary cost to develop and drive world-class decarbonization strategies.
The NZCB provides customized carbon reduction plans and in-depth, 100% independent analysis of competitive markets, developers, projects, transaction structures, and financial modeling, and is financed by consortium participants who decide to transact. The NZCB is a breakthrough platform that is confidential, mission-driven, and exclusively designed for buyers.
In addition, the NZCB offers a pathway for businesses that lack geographically concentrated energy demand to procure renewable energy in a cost-effective way. Most SR Inc Member-Clients, like many companies in the U.S. and European software and services growth economy, lack a geographically concentrated, super-intense load. A majority of Member-Clients operate in leased space, without manufacturing facilities, and many have outsourced their data centers. Consequently, these companies must aggregate their internal demand for electricity across dozens of states to create the procurement power they need to demand the best terms and pricing.
SR Inc’s NZCB is delighted to help corporates aggregate across company boundaries, providing a proprietary, web-enabled, auditable procurement process culminating in the NZCB’s Reverse Auctions. The NZCB requires a large cohort of the world’s leading renewable energy developers to compete for the transaction. Potential developers are independently scored on NZCB’s 5-Level, 50-Indicator Risk Ranking, which include 10 ESG Impact Priorities, to compete to impress NZCB-participating Buyers on identical Buyer-Dictated Structuring and ESG Impact Terms. Through NZCB’s expert navigation of the VPPA process, companies can actively participate in driving the necessary transition from the industrial age electrical grid to a distributed and bi-directional grid anchored by renewable energies.
Achieving High-Impact Renewables Goals through Commercial Collaboration
With the help of Member-Clients like Merck KGaA, Darmstadt, Germany, the SR Inc NZCB team has pushed past the halfway mark to our goal of helping NZCB corporate buyers cause more than a Gigawatt of new renewable energy capacity before 2025. Reaching NZCB’s Gigawatt goal would generate enough energy to meet the annual average electricity needs of approximately 250,000 U.S. homes while helping mitigate commercial Scope 2 emissions across the business operations of our Member-Clients. More recently, SR Inc’s industry-leading Member-Clients are inviting their suppliers and customers to join the NZCB to learn how it can help them more credibly and profitably mitigate their Scope 2 emissions and achieve their global environmental goals, including Science-Based Targets, by causing utility-scale renewable energy. This process can also help mitigate Scope 3 emissions of value chain-aligned NZCB participants.
The NZCB offers a new model of practical and scalable commercial collaboration of utility-scale renewables and meaningful climate action. The collaborative approach outlined here empowers mission-driven companies to pursue more courageous, creative, and impactful climate solutions.
Anna Whitney is a Senior Program Associate at SR Inc with a focus on sustainability benchmarking and program management for Member-Clients. Anna develops and implements SR Inc’s communications and marketing strategy relating to renewable energy. Prior to joining SR Inc, Anna was an educator, teaching about environmental and climate science at Horace Mann School and Brunswick School, as well as a guest lecture at Columbia Climate School. Anna completed a Master’s degree focused on sustainability education at Teachers College, Columbia University and graduated with a B.A. in Environmental Studies from Dartmouth College.
