Pepsi Generation

by Richard T. Stuebi

Today, PepsiCo (NYSE: PEP) announced that it was buying from Sterling Planet about 1.1 billion kwh worth of renewable energy credits (RECs) per year for the next three years to offset 100% of its corporate electricity requirements in the U.S., thereby making Pepsi the largest buyer of green power in the U.S.

Press release

According to reportage in the USA Today (article), PepsiCo will spend about $2 million on this REC purchase. That seemed like a steal to me: Pepsi probably got $20 million worth of good PR just by showing up with good press on the front page of USA Today‘s Money section.

PepsiCo’s action will serve as a catalyst to expedite development of renewable energy projects in the U.S. Since wind is generally the most economic form of renewable energy, windfarms will likely constitute the lion’s share of the new capacity that is added to serve PepsiCo’s needs. By my calculations, using some generic assumptions, I estimate that the Pepsi REC purchase could trigger about 350 new megawatts of wind development.

Given the high visibility impact that Pepsi was able to achieve at relatively low cost with their green commitment, I suspect that many other large retail and consumer products companies will be following suit in the coming weeks and months. If so, we could see many more megawatts of new renewables — primarily new wind — being built in the U.S. to serve the large corporates, which are now in a race to appear more green than their peers.

Richard Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.

1 reply
  1. John
    John says:

    Richard,Great post and this is a cow bell for alternative energy in America. I hope you're right in that large companies will want to follow suit. I disagree with you on one small point in that this large purchase will probably be met with "biogas" sources which are generally less expensive because they are less marketable than the beautiful wind farms. None the less, renewable energy is renewable energy and this purchase will spur much more coming online over the next few years.

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