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At Six-Plus Gigawatts, 2018 Corporate Renewable Power Purchases are Poised to Set a Record

U.S. corporations have been buying off-site, renewable power at a record-setting pace this year. Forty corporations, including 25 first-time buyers, had publicly contracted for 6.33 gigawatts (GW) or new wind and solar power capacity as of Dec. 14, according to the latest update to the Rocky Mountain Institute Business Renewables Center's (BRC) corporate-backed renewable energy procurement deal tracker.

Facebook, AT&T, Walmart, ExxonMobil and Microsoft, in that order, have signed the most power purchase agreements (PPA) for off-site renewable power, made green power purchases, taken advantage of green tariffs, or purchased renewable energy projects outright year to date.

Off-site, corporate, renewable energy deal volumes have nearly doubled since falling from their previous high in 2015. So has the number of corporations participating in the market, according to BRC. Cumulatively, corporate renewable energy purchases have grown to exceed 15GW since 2013, according to BRC's deal tracker.

“The record number of companies successfully pursuing renewable energy this year sends a clear signal that environmental sustainability is a serious priority for business leaders across the economy,” RMI CEO Jules Kortenhorst said for a press release. “These companies aren’t going to wait for public policy on climate issues to catch up—they are taking the initiative to accelerate toward a prosperous, low carbon economy.”

Enhancing sustainability, more renewable energy options and improving economics

Enhancing the sustainability of their operations and activities, and the improving economics associated with doing so, is driving the rise in corporate renewable energy purchases, according to BRC. "As we drive deeper into the 'why' behind renewable procurement and corporate sustainability pushes, there are multiple underlying motivations. Overall the message is clear - it is good business," RMI's Alexander Klonick, an associate at the BRC, said in an interview.

"Customers, governments, NGOs and investors are requesting more accountability every year. Companies that address their energy footprint proactively recognize significant opportunity and those that delay face both reputation and operational risk. Additionally, in some specific situations, for companies with a relatively large energy opex, these deals can be hedges against rising electricity prices in increasingly volatile markets."

Growth of corporate renewable energy purchases is broadening out geographically, as well. Corporate-backed renewable energy projects exist in nearly 30 states today as compared to seven in 2013, according to BRC. "The Texas wind market, with over 5GW announced to date, is the most mature due to favorable development and market conditions. It is very promising to see more utility engagement and options opening up in regulated markets," Klonick said.

Economies of scale, supportive policies and institutional frameworks

States with supportive renewable energy policies, programs and institutional frameworks in place stand a better chance of attracting investments, and reaping the benefits, Klonick continued.

"Corporate buyers look to take advantage of low cost renewables, both in terms of falling technology costs and in terms of favorable grid access. States with pro-renewables policies are better positioned to capture corporate investment than those who resist the transition to cleaner, more affordable power generation. The interconnection costs are modeled into system reliability planning that the ISOs/RTOs undertake. The BOS [balance of system] costs come down significantly as systems scale," Klonick said.

Those economies of scale are the reason growing numbers of corporations are interested in distributed, clean energy aggregation services and models, as well as why many developers are now offering comparatively small slices of larger projects, according to Klonick. "As utilities and state regulatory attitudes and policies evolve, we will see even faster growth. One of the reasons that corporations are doing these deals independent of their utilities is because progressive options with their utilities have not existed."

AT&T numbered among the 25 U.S. corporations contracting for off-site renewable power for the first time this year. The telecoms market leader acquired 820 megawatts (MW) of generation capacity. "Our investments are helping deliver clean energy, create jobs and support communities," Director of Global Environmental Sustainability Shannon Thomas Carroll was quoted. "They are just one way our company is working to address climate change and help create a better, more environmentally sustainable world."

“We are impressed with the growth and expansion in the corporate renewables marketplace, from a broadening sector diversity, and increasingly supportive policy conditions, to utilities and developers rising to meet customer demand and reducing their own generation emissions," said Miranda Ballentine, CEO of the Renewable Energy Buyers Alliance.

"At this pace, we anticipate a fourfold increase in corporate renewables procurement by 2025. There is a tremendous amount of good work yet to be done, and we are counting on the power of partnership to get there.”

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