The State of Corporate Renewable Energy Purchasing: 2016 Mid-Year Update from Renewable Choice

Author: Bridget Cameron specializes in content & communications at Renewable Choice.

The corporate renewable energy market is far from being saturated.   C&I buyers currently have 5GW of contracted capacity, and there is room to increase that number to 60GW by 2030.  Domestic opportunities exist for offsite PPAs as small as 25MW and onsite distributed generation of 1-5MW.  Internationally, PPAs in India need only a 1MW threshold.

Corporate renewable energy has more than doubled every year since 2012.  In 2015, alone, corporate, institutional, and industrial buyers (C&I) contributed to 56% of all signed Power Purchase Agreements (PPAs) in the United States and Mexico, which added over 3,000MW of wind and solar energy to the grid.  

Compared to four years ago, when Google was the dominant player in the game, today’s market has become increasingly competitive.  Global entities with large energy footprints, such as Facebook, Philips Corporation, General Motors, and Digital Realty, have evolved their procurement strategies and are capitalizing on the economic and environmental benefits of corporate renewable energy.     

    

According to a recent survey by Pricewaterhouse Coopers, this rapid growth in corporate renewable energy has been motivated by sustainability and carbon-reduction goals (85%), attractive ROI opportunity (76%), and a desire to reduce exposure to energy price volatility (59%).  Corporate sustainability targets, in particular, have been a fundamental driver over the last 12-24 months.  To date, 68 organizations have joined the RE100 by committing to 100% renewable supply, and many leading companies are actively following suit with milestone commitments.  

Corporate buyers predominantly turned to wind to achieve their green energy targets between 2015 and mid-2016 with 2,778MW of contracted capacity.  ERCOT was the most active ISO, and Texas was the leading wind state.  California and Oklahoma saw significant growth, and Mexico added over 30MW of wind energy to local grids.  

Although wind remained the primary renewable energy source through mid-year, solar market share also substantially increased.  Solar capacity grew over 1,900% from 2008-2014 metrics, with a current total of 9 corporate buyers and 8 sellers for PPA deals.  CAISO led the ISO/utilities, and California was – and continues to be – the leading solar state.     

Internationally, solar market share is especially growing in India.  The Modi Government recently set aggressive renewable targets to achieve 100GW of solar by 2022.  Organizations with load in India will benefit from capitalizing on this opportunity, as certain states offer valuable subsidy exemptions through March 2018.  

What is projected going forward?  As prices drop and renewable technologies gain considerable economies of scale, corporate renewable energy purchases are expected to continue to grow.  72% of surveyed C&I buyers are currently pursuing renewables, and, to date, 17 of the Fortune 500 companies have signed PPA deals.  Public policy is also expanding, in tandem with corporate demand, as the United States, Canada, and Mexico each recently committed to 50% renewable energy by 2025.     

As encouraging as this increased demand is, the corporate renewable energy market is far from being saturated.   C&I buyers currently have 5GW of contracted capacity, and there is room to increase that number to 60GW by 2030.  Domestic opportunities exist for offsite PPAs as small as 25MW and onsite distributed generation of 1-5MW.  Internationally, PPAs in India need only a 1MW threshold.

Tax credit extensions and regulatory reform made at the turn of the year offer attractive incentive to get in the game now, both domestically and abroad.  In the United States, the Production Tax Credit for wind projects will receive maximum benefit throughout 2016, and the Investment Tax Credit will generously subsidize solar projects through 2019.  In neighboring international markets, Mexico’s newly deregulated market offers valuable benefits for PPA deals signed before December 31st this year.  Buyers who act now will have access to the best projects with the most favorable terms to achieve their sustainability goals.      

Interested in learning more from our team of industry experts?  We invite you to contact us today.  

 

Facts and figures used in this blog sourced via SEIA Corporate Renewables Procurement Webinar (2016, April 14)

While we strive to provide the best and most up-to-date information in our blog, we’re advisors, not lawyers.  None of the above is intended to be legal advice.  If you have questions that require legal advice, we encourage you to consult an attorney.

 

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