Corporate renewable energy power purchase agreements (PPAs) increased 40% last year, compared with 2018, according to research by BloombergNEF (BNEF).
BNEF said in its ‘1H 2020 Corporate Energy Market Outlook’ that clean power PPAs totalling 19.5GW were signed by over 100 corporations in 23 different countries in 2019.
This was up from 13.6GW in 2018, and more than triple the activity seen in 2017, it added.
PPAs signed were the equivalent of more than 10% of all the renewable energy capacity added globally last year, with the projects involved likely to cost between $20bn and $30bn to develop and build.
BNEF lead sustainability analyst Jonas Rooze said: “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.”
Technology companies once again dominated clean energy procurement, BNEF said.
Google signed contracts to purchase over 2.7GW of clean energy globally in 2019, with Facebook 1.1GW, Amazon 900MW and Microsoft 800MW the next largest buyers last year.
BNEF said oil and gas companies are also signing clean energy deals. Occidental Petroleum, Chevron and Energy Transfer Partners all signed solar contracts in 2019, following in the steps of ExxonMobil, which kicked off the trend by signing two PPAs totalling 575MW at the end of 2018.
BNEF sustainability analyst and the lead author of the report 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 decarbonize – clean energy contracts serve as a way to diversify energy spend and reduce susceptibility to the tangible risks associated with climate change.”
PPAs in the Americas region totalled 15.7GW last year, with the bulk (13.6GW) in the US.
Over 80% of these contracts in the US (11.2GW) were virtual PPAs – synthetic contracts that can only be signed in deregulated markets, the analysts said.
The remaining 2.4GW was transacted under green tariffs, which are offered by utilities in regulated markets, BNEF said.
Europe, the Middle East and Africa (EMEA) and Latin America also experienced record years for PPAs, with 2.6GW and 2GW, respectively.
Nearly half of the activity in Europe came from Sweden, Norway, Finland and Denmark, but there were also deals in Spain, Poland, France and Italy for the first time.
Corporations signed two offshore wind contracts in Germany, indicative of future trends from buyers in the region, BNEF said.
Brazil and Chile were the top markets in Latin America.
Brazilian customers with annual demand over 3MW, known as wholesale consumers, negotiated contracts directly with clean energy developers.
In Chile, large mining companies, such as BHP Group and Antofagasta, facing similar investor pressure to oil and gas companies, are negotiating special clean energy supply agreements with retailers.
BNEF said Colombia is the next Latin American market to watch, following the successful roll-out of its first clean energy auctions.
In Asia-Pacific, however, corporate PPA activity declined to 1.2GW last year from 2.1GW in 2018.
Corporate sustainability commitments skyrocketed in 2019, and were a driving force behind the record-breaking year for PPAs.
Nearly 400 companies around the world committed to setting green targets in 2019, more than doubling the total number of organisations with these goals.
For example, 63 companies set an ‘RE100′ target, pledging to offset 100% of their electricity demand with clean energy, BNEF said.
The RE100 totalled 221 members through 2019, collectively consuming 233 terrawatt-hours of of electricity in 2018, based on its latest filings.
BNEF estimates these 221 RE100 companies will need to purchase an additional 210TWh of clean 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 of investment – including allowance for capital cost reductions during the 2020s.
Harrison said: “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.”