Corporate clean energy contracts grew by 40% in 2019
Corporate purchasing of clean energy contracts reached almost 20 gigawatts (GW) in 2019, an increase of more than 40% on the previous year's record, according to new analysis from BloombergNEF (BNEF).
BNEF’s 1H 2020 Corporate Energy Market Outlook found that corporates purchased 19.5GW of clean power through power purchase agreements (PPAs) last year, up from 13.6GW in 2018 and more than triple the levels recorded in 2017.
The 19.5GW of PPA contracts was equivalent to more than 10% of the renewable energy capacity that was added globally in 2019, with BNEF claiming that the projects cost between $20bn and $30bn to develop.
BNEF’s lead sustainability analyst Jonas Rooze said: “Corporations have purchased more than 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.”
BNEF’s analysis noted that the growth was driven by a large increase in new corporate sustainability commitments. Nearly 400 companies globally have committed to setting science-based targets in 2019, while an additional 63 firms agreed to join the RE100 initiative last year, pledging to procure 100% renewable electricity. The RE100 totalled 221 members through 2019, collectively consuming 233TWh of electricity in 2018.
According to BNEF, technology firms were the dominant source of clean energy procurement. Google, for example, purchased contracts worth more than 2.7GW in 2019 – including a 1.9GW deal. Facebook (1.1GW), Amazon (0.9GW) and Microsoft (0.8GW) were the next largest buyers globally in 2019, although the latter looks set to increase renewables procurement following the creation of its carbon-negative goal earlier this month.
Oil and gas firms are also venturing into the renewables sector by signing clean energy deals. Occidental Petroleum, Chevron and Energy Transfer Partners all signed solar contracts in 2019, while ExxonMobil signed two PPAs worth 575MW at the end of 2018. However, of the investments collectively made by the world's largest public, private and state-owned oil and gas giants in 2018, less than 1% went towards low-carbon activities such as building renewable energy infrastructure, according to analysis by the International Energy Agency.
In related news, data from the Renewable Energy Planning Database has revealed that 24.7GW of renewable energy and storage projects are “awaiting or under construction” in England, Scotland and Wales.
The pipeline of capacity features 15GW classed as awaiting construction, according to Cornwall Insight. The 15GW figure includes offshore wind projects looking to secure deals through the Contracts for Difference scheme.
Cornwall Insight’s analyst Lucy Dolton said: “There is little surprise that so much of the total pipeline is awaiting construction – due to the underlying political uncertainty coupled with the lack of available support schemes, dampening investors’ confidence.
“While large numbers of projects will need to seek subsidy-free routes to market, only a handful have publicly confirmed route to market plans. Presently, utility power purchase agreements (PPAs) remain the leading option, but this may change in 2020 as new business models emerge to meet the needs of subsidy-free generators.”