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Corporations purchased a record 31.1 GW of clean energy through Power Purchase Agreements (PPAs) in 2021, an increase of almost 24% over 2020's 25.1 GW, according to the BNEF (BloombergNEF).
The report 1H 2021 Corporate Energy Market Outlook pointed out that more than two-thirds of these purchases (65%) occurred in the United States. However, also underpinning the strong growth is an increase in activity from the biggest technology companies, which have collectively signed more than half of the deals.
PPAs were publicly announced by more than 137 corporations in 32 different countries last year. “Total volumes signed were equivalent to more than 10% of all renewable capacity added globally last year, showing the impact that corporate sustainability pledges are having on building clean electricity,” the research stated.
Kyle Harrison, head of sustainability research at BNEF, commented that it is no longer a question of whether corporate purchasing of clean energy will grow each year, it is a question of how much.
“More corporations are making new sustainability commitments, the costs of renewables are falling and regulators around the world are slowly waking up to the fact that clean energy can be a silver bullet in decarbonizing the private sector,” he highlighted.
Highlight across continents
According to the study, the Americas accounted for two-thirds of the activity, with 20.3 GW of PPAs announced, led by the USA, with 17 GW. The virtual PPA, which works in a similar way to a financial hedge, continues to dominate the North American market, with 12 GW of deals, but green tariffs with regulated utilities also had a record year, with 3.2 GW.
Europe saw a record 8.7 GW of deals announced, with emphasis on Spain and the Nordic countries. Across Asia, only 2 GW of PPAs have been announced, but there have been several other developments.
For example, legislation for a corporate PPA model in South Korea was introduced in October 2021, while China and Japan have seen record issuances of clean energy certificates.
Technology companies
Technology companies once again were the largest corporate buyers of clean energy in 2021. For the second year in a row, Amazon was the largest buyer, announcing 44 external PPAs in nine countries totaling 6.2 GW. This brings its total capacity to 13.9 GW, making its portfolio the 12th largest globally among all types of companies, just ahead of EDF.
Microsoft and Meta have the second largest among corporations, with 8.9 GW and 8 GW, respectively. Google previously held the corporate clean electricity crown, but has turned its attention more to delivering carbon-free energy through methods outside of PPAs.
“The renewable energy portfolios of big technology companies now rival those of the world’s largest utilities. Tech giants face increasing pressure from investors to decarbonize and this is reflected in the sharp increase in volumes of clean electricity purchased. PPAs signed in previous years pale in comparison to portfolios announced in 2021,” commented Helen Dewhurst, Senior Associate at BNEF.
On the other side of the equation, AES has sold more clean energy to corporations than any other developer globally, at just under 3 GW. Two-thirds of this happened in the US, but AES's business portfolio also extended to Brazil, Panama and Chile.
Engie has signed more than 2.1 GW of PPAs, including a 350 MW one with Amazon for the Dundee Offshore Wind Farm in the UK. This meant that Orsted (1.3 GW), Vattenfall (0.8 GW) and NextEra (0.7 GW) were also highlighted in 2021.
Sustainable 100% Commitment
Corporate sustainability commitments are still a driving force behind record clean energy purchases. Some 67 companies have set a RE100 target in 2021, committing to offset 100% of their electricity demand with renewables, bringing the campaign to 355 members in 25 countries.
These companies collectively consume 363 TWh of electricity annually based on their latest records – exceeding all UK power generation in the same year, according to BNEF.
BloombergNEF estimates that these 355 RE100 companies will need to purchase an additional 246 TWh of clean electricity in 2030 to meet their targets. This is lower than the previous forecast – largely due to activity from RE100 full members, who purchased a record 21 TWh through PPAs in the second half of last year alone.
If this shortfall is met with external PPAs, the report concluded that they would catalyze an additional 94 GW of new solar and wind construction globally. This is in addition to the 47 GW of PPAs already signed by RE100 members.
