Following recent news that Amazon AMZN -1% had become the world’s largest purchaser of renewable electricity, growing focus on the need for sustainable operations continues to drive the market in corporate power purchase agreements (PPAs). In 2020 corporations bought nearly 24GW of clean energy.
Research published by BloombergNEF (BNEF) showed that corporations purchased a record of 23.7GW of clean energy in 2020, up from 20.1GW in 2019 and 13.6GW in 2018. According to its 1H 2021 Corporate Energy Market Outlook, clean energy contracts were signed by more than 130 companies in sectors ranging from oil & gas to big tech. Amazon was the leading buyer of clean energy in 2020, announcing 35 separate clean energy PPAs in 2020, totalling 5.1GW.
List of top ten corporate purchasers of clean energy.
Kyle Harrison, BNEF senior associate and the lead author of the report, said: “Corporations faced a wave of adversity in 2020 – internal corporate functions were disrupted on the outset of the pandemic, and many companies saw revenues plummet as global economies buckled. Question marks before – and after – the U.S. election further complicated long-term decision-making for companies. To not only maintain, but grow, the clean energy procurement market under these conditions is a testament to how high sustainability is on many corporations’ agendas.”
While the US has dominated the market for some time, the need to implement sustainability strategies across operations is seeing an expansion in other markets. While companies announced 11.9GW of corporate PPAs in the U.S. in 2020, corporate PPA volumes in the Europe, Middle East and Africa (EMEA) region nearly tripled, from 2.6GW in 2019 to a record 7.2GW in 2020.
In Spain, companies announced contracts to purchase no less than 4.2GW of clean energy, up from 300MW the previous year. Solar and wind projects in Spain yield some of the cheapest and most competitive prices in Europe, thanks to strong natural resources and a large pool of experienced developers. Companies like Total and Anheuser Busch are orchestrating ‘cross-border virtual PPAs’ in Spain, buying clean energy in the country to offset their load elsewhere in Europe.
Corporations also purchased record clean energy volumes in the Asia Pacific (APAC) region, announcing contracts for 2.9GW of solar and wind. Taiwan established itself as a major corporate clean energy market in 2020, with companies signing PPAs totalling 1.25GW. Taiwan’s market should be supported by a new policy that requires companies with an annual load above 5MW to buy clean power. Also, the island has a high concentration of large manufacturers, many of which are feeling pressure from their customers to decarbonize.
South Korea is expected to be the next major corporate procurement market in Asia. Policymakers revised the country’s Electric Utility Act in the beginning of 2021, creating a PPA mechanism and a green tariff program with Korea Electric Power Corporation. The revision will also allow companies to purchase unbundled certificates and retire them against sustainability commitments. South Korean companies face similar supply chain pressures to those in Taiwan.
Jonas Rooze, lead sustainability analyst at BNEF, said: “More than ever before, corporations have access to affordable clean energy at a global scale. Companies no longer have an excuse for falling behind on setting and working towards a clean energy target.”
Amazon was the leading buyer of clean energy in 2020, announcing 35 separate clean energy PPAs in 2020, totalling 5.1GW. The company has now purchased over 7.5GW of clean energy to date, vaulting it ahead of Google GOOG -0.1% (6.6GW) and Facebook (5.9GW) as the world’s largest clean energy buyer. French oil major Total (3GW), TSMC (1.2GW) and U.S. telecom Verizon (1GW) were the next largest corporate buyers of clean energy in 2020.
The flow of new companies making clean energy commitments is another indicator of how much more the market can grow. Some 65 new companies joined the RE100 in 2020, pledging to offset 100% of their electricity consumption with clean energy.
BNEF forecasts that the 285 RE100 members will collectively need to purchase an additional 269TWh of clean electricity in 2030 to meet their RE100 goals. Should this shortfall be met exclusively with offsite PPAs, it would catalyze an estimated 93GW of new, incremental solar and wind build.
Harrison added: “Investor interest in sustainability is sky high, with inflows to sustainability-focused funds growing 300% between 2019 and 2020. Companies in all sectors, including hard-to-abate ones like oil & gas and mining, are feeling the pressure to purchase clean energy and decarbonize. This group is only just scratching the surface on the amount of clean energy build it can catalyze.”