KPI of the Day – Sustainability: % Energy used from renewable sources
Definition
Measures the percentage of total direct energy consumption generated from renewable sources including solar, wind, and hydrological power, as well as renewable fuels such as wood, biogas, and coffee grounds. The electricity produced on-site from solar and wind sources are not included in this indicator.
Purpose
To indicate the sources of energy used by an organization, being an important indicator of how sustainable and environmentally oriented the company is, showing its contribution to combating climate change.
This KPI represents one of the most important metrics for measuring the environmental sustainability of an organization, as regular monitoring helps companies manage their environmental footprint.
Recommendations
While renewable energy sources are becoming more prevalent, with some companies striving towards a 100% renewable energy target (such as Google, Facebook, and Apple), often they are difficult to access due to being located in remote areas or due to intermittent availability – for example, cloudy days reduce solar energy production or droughts reduce water availability to produce hydroelectricity.
There are a few measures that companies can implement to increase the share of renewable energy they use while minimizing the impact on operational costs:
- Looking beyond electricity when considering alternative energy use, for instance concerning heating and cooling, you can install combined heat and power systems
- Opting for power purchase agreements, when possible, as they can secure a steady supply of renewable energy, allowing companies to set and maintain targets for this KPI
- Taking into account the availability of renewable energy sources when selecting the location of a new facility or when relocating
- Companies operating in the US have the option of offsetting their energy use by purchasing Renewable Energy Credits, which represent tradable, non-tangible energy commodities
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