By - Jim Vess

Corporate renewable energy buys in 2018 already surpass all-time record

Energize Weekly, August 22, 2018

Corporate purchases of renewable energy worldwide in 2018 have reached 7.2 gigawatts (GW) and already surpass the all-time record set in 2017 by 33 percent.

Long-term contracts to purchase wind and solar resources have been signed in 28 markets as the number of industries seeking clean energy resources is growing, according to an analysis by Bloomberg New Energy Finance (BNEF).

While many companies have adopted sustainability goals that seek to reduce air emissions and broaden energy resources, BNEF said that the scale of activity is due to the prospects of long-term savings.

The cost of photovoltaic modules is down 84 percent since 2010, and wind turbine costs have dropped 32 percent, according to BNEF. “Taken together with efficiency improvements that have boosted running hours at renewable plants, these cost declines have made renewables cost-competitive with wholesale power prices and more traditional sources of electricity,” the analysis said.

This has led to companies locking in long-term renewable energy contracts as a hedge against volatile prices in the wholesale market. This approach—known as a virtual power purchase agreement (PPA)—has been the most common corporate procurement device.

Nearly 80 percent of the 2018 activity has been in the U.S. and Nordic countries. In the U.S., large companies have become “more comfortable” with the virtual PPA, and smaller companies are pooling their electricity demands to participate in bigger and more cost-effective wind and solar projects, the analysis said.

“In the Nordics—a market with a prevalence of corporations with high electricity demand and sustainability objectives—companies are attracted to strong wind resources and the Nordpool power market, which allows for electricity to be bought, delivered and sold between Sweden and Norway,” the BNEF analysis said.

Australia and Mexico, where wholesale power prices are high and the prospects for renewable energy development are strong, remain two nascent markets, BNEF said.

The biggest corporate purchaser so far this year has been Facebook which signed a wind PPA in Norway and is working with regulated U.S. utilities. Facebook’s total 2018 purchases are 1.1 GW.

The second largest purchaser of renewable energy was AT&T with 820 megawatts (MW) of wind power—its first renewable power purchase. T-Mobile also signed its second PPA in 2018, a 160-MW wind contract.

Contracts by Nordic-based aluminum plants for Norsk Hydro, 667 MW, and Alcoa Corp., 524 MW, accounted for the next largest PPAs.

There are 140 companies that have signed the RE100 pledge to offset 100 percent of their electricity demand with renewable generation. BNEF calculates they will need to purchase 197 terawatt-hours of clean energy in 2030 to hit their goals.

An additional 100 GW of renewable generation would be needed to meet this demand. “For context, this is slightly larger than California’s entire electricity grid today,” BNEF said.

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