Corporate investment in clean energy sets new record

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Corporations bought a record amount of clean energy through power purchase agreements, or PPAs, in 2019, up more than 40 percent from the previous year’s record, according to the latest BloombergNEF (BNEF) report, 1H 2020 Corporate Energy Market Outlook.

The report mentions that some 19.5 GW of clean energy contracts were signed by more than 100 corporations in 23 different countries in 2019. This was up from 13.6 GW in 2018, and more than triple the activity seen in 2017.

The majority of this purchasing occurred in the United States, but also underpinning the strong uptrend is a surge in corporate sustainability commitments around the world.

Put in context, the 2019 total was equivalent to more than 10 percent of all the renewable energy capacity added globally last year ” and the projects involved are likely to cost between $20b and $30b to develop and build.

Jonas Rooze, lead sustainability analyst at BNEF, said: “Corporations have purchased over 50 GW of clean energy since 2008. That is bigger than the power generation fleets of markets like Vietnam and Poland. These buyers are reshaping power markets and the business models of energy companies around the world.”

Global corporate PPA volumes

Technology companies once again dominated clean energy procurement. Google signed contracts to purchase over 2.7 GW of clean energy globally in 2019, more than any other corporation. In September 2019, the tech giant announced contracts to purchase 1.9 GW of clean energy in six countries ” the largest single announcement ever by a corporation. The company used a unique reverse auction process to sign these contracts, with developers taking part in a live, public bidding process. Facebook (1.1 GW), Amazon (0.9 GW) and Microsoft (0.8 GW) were the next largest buyers globally in 2019.

Though not as active as the technology sector, a growing number of oil and gas companies are signing clean energy deals. Occidental Petroleum, Chevron and Energy Transfer Partners all signed solar contracts in 2019, following in the steps of ExxonMobil, who kicked off the trend by signing two PPAs totalling 575 MW at the end of 2018.

Kyle Harrison, a sustainability analyst at BNEF and the lead author of the report, commented: “The clean energy portfolios of some of the largest corporate buyers rival those of the world’s biggest utilities. These companies are facing mounting pressure from investors to decarbonize ” clean energy contracts serve as a way to diversify energy spend and reduce susceptibility to the tangible risks associated with climate change.”

It was also a record year for corporate PPAs in the Europe, Middle East and Africa (EMEA) and Latin America, where companies purchased 2.6 GW and 2 GW of clean energy, respectively.

Notable in EMEA was the pivot to new European markets outside of the Nordics. Though nearly half of the activity still came from Sweden, Norway, Finland and Denmark, companies are now beginning also to sign long-term clean energy contracts in markets like Spain, Poland, France and Italy for the first time. Corporations signed two offshore wind contracts in Germany, indicative of future trends from buyers in the region. Those who cannot sign PPAs can turn to the region’s extensive certificates market.

While 2019 was a down year for corporate PPA activity in Asia Pacific (APAC), there is still plenty of buzz in the region. In Australia, onsite solar projects delivering power to corporations nearly doubled to 1 GW, and a growing number of retailers offer sleeved programs to deliver clean energy reliably to corporate buyers.

Corporate sustainability commitments also skyrocketed in 2019, and were a driving force behind the record-breaking year for PPAs in 2019. Nearly 400 companies around the world committed to setting a science-based target in 2019, more than doubling the total number of firms with these goals.

BNEF estimates these 221 RE100 companies will need to purchase an additional 210 TWh of clean electricity in 2030 to meet their emissions targets. Should this shortfall be met with offsite PPAs, it would catalyze an estimated 105 GW of new solar and wind build globally. Funding these new additions would be expected to require an additional $98b of investment (including allowance for capital cost reductions during the 2020s).

Harrison said: “Sustainability commitments will ensure that clean energy procurement from corporations continues to thrive. The ball is in the court of utilities, policymakers and investors. They will need to meet these buyers in the middle, especially in nascent markets for corporate procurement.”

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