Corporations have an increasing appetite for clean energy


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By Anders Lorenzen

The number of companies buying clean energy was at a record high in 2018, reports clean energy analyst Bloomberg New Energy Finance (BNEF).

13.4 gigawatts (GW), a record amount of clean energy, was bought by corporations in 2018 through power purchase agreements (PPA). This shattered the previous record set in 2017.

The analysis found that interest among corporations is spreading fast, with 121 companies in 21 different countries responsible for buying the 13.4 GW of clean energy.

The US represented the biggest market where 60% of companies purchased 8.5 GW of clean energy. Amongst them, the social media giant Facebook stood out as the biggest customer, buying a total of 2.6GW of clean energy.

Even fossil fuel energy companies are entering the clean energy field, with ExxonMobil becoming the first oil major to sign a clean energy PPA for its own operations. They purchased 575 megawatts (MW) of solar and wind in Texas. Mexico and Brazil also saw growth in corporate procurement, rounding out the 9.1GW of clean energy purchased by companies in the Americas region in 2018.

Jonas Rooze, head of corporate sustainability for BNEF, said: “Corporations have signed contracts to purchase over 32GW of clean power since 2008, an amount comparable to the generation capacity of the Netherlands, with 86% of this activity coming since 2015 and more than 40% in 2018 alone.”

A new feature witnessed in the US was, that smaller companies are also getting interested in purchasing clean energy. In 2018, some 34 new companies signed their first clean energy PPAs, making up 31% of total activity in the U.S. These firms are aggregating their electricity demand to reap the economies of scale from larger solar and wind projects.

In Europe, the Middle East and Africa (EMEA) region, corporations also purchased record volumes of clean energy, with deals for 2.3GW and doubling the 1.1GW signed in 2017. The Nordics were once again the hot spot for activity, with companies attracted to strong wind resources and credit support from government bodies. Aluminium producers Norsk Hydro and Alcoa Corp purchased most clean energy in Europe in 2018. But the region also saw activity from multinational technology companies such as Facebook, Amazon and Alphabet subsidiary Google. Such tech giants are building a host of new data centres in the Scandinavian countries, which they have pledged will be supplied by clean energy sources.

There is less corporate clean energy appetite in the Asia-Pacific (APAC) region which is still a nascent market for corporate procurement. But even so, companies signed a record 2GW of clean energy PPAs, more than the previous two years combined. Nearly all of this activity occurred in India and Australia, with roughly 1.3GW and 0.7GW purchased, respectively. Both markets allow companies to buy clean energy on a large scale through offsite PPAs, making them rarities for the region.

BNEF says that of the rest of the APAC region demand still far outstrips supply, although recent changes in several markets suggest a major spike in activity is on the horizon. Offsite corporate PPA mechanisms are now available in nine provinces in China, and the imminent passing of a renewable portfolio standard will give over 30,000 large commercial and industrial companies renewable electricity targets. In Japan, the country’s third non-fossil certificate auction saw corporations purchase 21TWh, tripling the combined activity in the first two auctions. Thirteen companies in Japan have also established 100 renewable electricity targets, more than the rest of APAC combined.

The analysts explained, that the healthiest signal of continued growth in the global corporate procurement space is the growing alliance of companies establishing joint clean energy and sustainability commitments. One such campaign, known as the RE100, consists of nearly 160 signatories who at the end of 2018 have established 100% renewable electricity targets. These companies are domiciled in 23 different markets. Cumulatively, these companies consumed an estimated 189TWh of electricity in 2017, equivalent to Egypt’s electricity consumption.

BNEF estimates that these companies will need to purchase an additional 190TWh of clean electricity in 2030 to meet their RE100 targets. Should this shortfall be met with offsite solar and wind PPAs, it would comprise an estimated 102GW of new solar and wind build globally.

Rooze concluded: “For companies that think seriously about sustainable growth, establishing clean energy and decarbonization targets lines up naturally with overall corporate strategies. At the same time, these initiatives have created an entirely new universe of opportunity for utilities, clean energy developers and investors.”


Categories: energy, finance

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