Corporations – including oil & gas supermajors – bought a record of almost 20GW of wind and solar production through power purchase agreements (PPAs) last year, a leap of 44% on 2018, as one of the key market-driving trends in the global energy transition shifted up several gears, according to latest figures from Bloomberg New Energy Finance (BNEF).
The analyst’s 1H 2020 Corporate Energy Market Outlook calculates 19.5GW of renewable energy contracts were signed by more than 100 corporations in 23 different countries in 2019, up from 13.6GW in 2018, and more than triple the activity seen in 2017.
The 2019 total was equal to more than 10% of all the renewable energy capacity added globally last year, said BNEF, with the projects covered expected to cost between $20-$30bn to build.
“Corporations have purchased over 50GW 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,” said Jonas Rooze, lead sustainability analyst at BNEF.
Technology sector giants continued to dominate the market for clean energy procurement, led by Google, which signed PPAs for over 2.7GW globally last year, including a September spree where it bought almost 2GW of renewable power in six countries – the largest single announcement ever by a corporation.
Facebook (1.1GW), Amazon (0.9GW) and Microsoft (0.8GW) rounded out the top for largest clean-energy PPA buyers in 2019.
A growing number of oil & gas companies have also started to cross-over to clean energy purchase – if not production, with Occidental Petroleum, Chevron and Energy Transfer Partners all signed solar contracts in 2019, following in the steps of ExxonMobil, which inked two PPAs totalling 575MW at the end of 2018.
BNEF sustainability analyst Kyle Harrison said: “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 decarbonise – clean energy contracts serve as a way to diversify energy spend and reduce susceptibility to the tangible risks associated with climate change.”
The US retained it primacy in the corporate renewables space, hosting 13.6GW of the market – more than all of global activity in 2018.
More than 80% of these PPAs finalised last year, or 11.2GW, were agreed using a virtual PPA model – synthetic contracts only possible in deregulated markets, with t he remaining 2.4GW purchased being transacted under green tariffs, offered by utilities in regulated markets.
But it was also a record-setting year for corporate PPAs in the Europe, Middle East and Africa (EMEA) and Latin America, where companies bought 2.6GW and 2GW 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,” said Rooze.
While corporate PPA activity dipped in 2019 in Asia Pacific (APAC), BNEF noted “there is still plenty of buzz” in the region. The report pointed to solar project in Australia delivering power to corporations nearly doubling to 1GW, while China’s newly-in-force renewable portfolio standards now mandating large power consumers meet a certain volumes of demand with clean energy.
BNEF underlined that global corporate sustainability commitments also shot up in 2019 to become a booster to the PPA market, with nearly 400 companies signing up “to setting a science-based target in 2019, more than doubling the total number of firms with these goals” and pledging to cut emissions in line with the Paris Agreement,
The analyst also highlight that 63 companies set out an ‘RE100’ plan in 2019, pledging to offset 100% of their electricity demand with clean energy, as set out by The Climate Group’s RE100 initiative. The RE100 now has 221 members, collectively consuming 233TWh of electricity in 2018, based on their latest filings.
BNEF calculates the RE100 membership will need to buy a further 210TWh of renewable-electricity in 2030 to meet their targets. “Should this shortfall be met with offsite PPAs, it would catalyse an estimated 105GW of new solar and wind build globally. Funding these new additions would be expected to require an additional $98bn,” said Harrison.
“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.”
BNEF updates its data on corporate procurement each month and publishes a market outlook on corporate energy strategy bi-annually.