By - Jim Vess

Corporate purchases of clean energy soar to a new record in 2018

Energize Weekly, February 6, 2019

Corporations bought a record 13.4 gigawatts (GW) of clean energy through power purchase agreements (PPAs) in 2018, more than double the record set in 2017.

Analyses by Bloomberg New Energy Finance (BNEF) and Wood Mackenzie Power & Renewables reported on the trend.

Facebook, Google and Amazon continued to be the largest customers, accounting for a combined share of 35 percent of the purchases, according to Wood Mackenzie.

But as more companies take the pledge to get 100 percent of their power from renewable sources, “the leading share could shift from the data and technology segment to the industrial segment,” Colin Smith, a Wood Mackenzie senior analyst, said in a statement.

About 160 companies have already taken the RE100 pledge to reach 100 percent clean energy. The RE100 is a global collaboration among large companies.

Under PPAs, a buyer, sometimes called an off-taker, commits to taking the electricity from a developer’s generation project in a long-term contract. The long-term contracts are often the key to financing projects.

Corporate PPAs drove a combined 22 percent of solar and wind PPAs in 2018 and were “a major driver of renewables in the U.S.,” Wood Mackenzie said.

After Facebook, Google and Amazon, Walmart, AT&T and Apple each contracted for 800 megawatts (MW) of clean power so that those six companies tallied 50 percent of the market in 2018.

Still one of the highlights of the year, according to BNEF, was “a wave of smaller corporate energy buyers aggregating their purchases.”

In 2018, about 34 new companies signed their first clean energy PPAs, making up 31 percent of total activity in the U.S., BNEF said.

“The aggregation model has heralded in a new generation of corporate clean energy buyers,” Kyle Harrison, a BNEF corporate sustainability analyst, said in a statement. “These companies no longer need to tackle the complexities of clean energy procurement alone. They can share risks associated with credit and energy market volatility with their peers.”

Since 2008, corporations have signed contracts to purchase more than 32 GW of clean power—with 40 percent of that coming in 2018.

That is an amount comparable to the generating capacity of the Netherlands, according to Jonas Rooze, head of corporate sustainability for BNEF.

Among the “firsts” for 2018 was the first corporate PPA in Poland and ExxonMobil becoming the first major oil company to sign a purchase agreement. Corporate PPAs were signed for just the second time in Denmark and Finland.

The ExxonMobil PPA will provide 575 MW of wind and solar to Texas facilities.

In the Asia-Pacific region, India and Australian companies signed a record 2 GW of clean energy PPAs, more than the previous two years combined, with Indian contracts accounting for 1.3 GW.

Both markets allow companies to buy clean energy at a large scale through offsite PPAs, which is rare in the region, BNEF said.

Going forward, Lucas Stavole, a Wood Mackenzie research analyst, said that companies will be looking to contract for increasingly larger projects and that PPA structures “will become more intricate and tailored to meet the needs of off-takers with wide ranging consumption levels and risk tolerances.”

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