5.4 GW of clean energy contracts signed by major corporations

Global corporate PPA volumes (Source-BNEF)

A total of 5.4 GW of clean energy contracts were signed by 43 corporations in 10 different countries in 2017, says a new report from Bloomberg New Energy Finance (BNEF). This was up from 4.3GW in 2016 and a previous record of 4.4GW in 2015.

The increase in activity was driven by sustainability initiatives and the increasing cost-competitiveness of renewables, the report said.

Corporations have signed contracts to purchase nearly 19GW of clean power since 2008, an amount comparable to the generation capacity of Portugal, with 76 percent of this activity coming since 2015.

Most of this activity in 2017 occurred in the United States, where 2.8GW of power purchase agreements were signed by corporations, up 19 percent from 2016. The most notable of these deals was Apple’s 200MW PPA with NV Energy to purchase electricity from the Techren Solar project, the largest agreement ever signed in the U.S. between a corporation and a utility.

Europe also experienced a near-record year, with over 1GW signed, some 95% of this volume coming from projects in the Netherlands, Norway and Sweden.

The largest deal was aluminum producer Norsk Hydro’s commitment to purchase most of the electricity from the 650 MW Markbygden Ett wind farm in Sweden, from 2021 to 2039.

Emerging markets also saw newfound activity, with the first onsite corporate PPAs being signed in Burkina Faso, Eritrea, Egypt, Ghana, Namibia, Panama and Thailand.

BNEF expects volumes to grow further in 2018, surpassing 2017’s record level of activity. Commitments on the part of companies to use renewable electricity, including those made via the RE100 campaign, remain the most promising source of demand.

RE100 electricity demand (Source- BNEF)Some 35 new companies signed onto the RE100 in 2017 – with several headquartered in markets less developed for corporate procurement, such as Japan and Singapore. RE100 brings together corporations pledging to source 100 percent of their electricity from renewables at some date in the future.

The total number of members of RE100 reached 119 at the end of last year. In 2016, these companies consumed 159TWh of electricity globally, nearly equivalent to the electricity consumption of Sweden.

Latin America and Asia are two historically sluggish corporate procurement markets that are expected to attract major activity in 2018 and the coming years.

In Mexico, private companies can now sign bilateral PPAs with developers, and major power buyers will also be expected to comply with clean energy mandates, once a new certificate market kicks off in 2018. Large consumers in Argentina are now eligible to purchase clean energy directly from developers, rather than just the national utility.

In Asia, most of the 3.2GW of offsite PPA contracts signed since 2008 have been in India. Cheap renewable energy resulting from competitive auctions, coupled with an unreliable grid, has prompted numerous Indian and multinational corporates to sign PPAs, despite only three Indian firms formally being a part of the RE100 campaign.

In Australia, where corporations signed power purchase agreements for over 400MW in 2017, expensive wholesale power and the availability of renewable energy certificates have increased the economic incentive for locking into relatively cheap renewable electricity prices long-term.

Japan and China, however, continue to have few corporate procurement opportunities due to regulatory barriers, though both are undergoing power market reforms that will change things rapidly.

In China, firms have built an estimated 7GW of solar projects for onsite self-consumption since 2010, taking advantage of low costs and generous net-metering subsidies. Most of these projects are owned by a third-party, and have a long-term power purchase agreement with an offtaker.

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