Commercial, Industrial, Sourcing Renewables  -  August 12, 2019

Corporates on track for biggest year in global PPAs

Corporations signed contracts to purchase 8.6GW of clean energy in 2019 through July. This is up from 7.2GW at the same time last year. Overall, 2019 is on pace to be bigger than 2018 for corporate PPAs globally. The U.S. made up 69% of this activity, making it by far the biggest market globally.

According to BloombergNEF’s 2H 2019 Corporate Energy Market Outlook, published on August 12, U.S. corporations bought 5.95GW of clean energy in 2019, closing in on the 2018 total. Texas– historically the largest corporate procurement market in the country – accounts for 40% of the activity posted to date this year, as companies sign solar PPAs in ERCOT territory to take advantage of peak pricing during the hot summer months, which greatly improves the economics on a deal.

Just 1GW of deals in the U.S. have come from green tariffs with regulated utilities; therefore, BloombergNEF projects, it is likely the industry won't reach the 2.6GW seen in all of 2018. This may be a result of buyer apprehension, as several companies have been involved in highly publicized legal battles with regulated utilities over clean energy buying. Companies are instead favoring the virtual PPA model, which has made up 82% of all U.S. deals in 2019.

The Outlook noted that RE100 members will need to buy an extra 189TWh of clean power in 2030 to hit targets. Despite 33 new companies joining the RE100 in 2019 through July, for a total of 191 signatories, we forecast the group collectively facing a shortfall of 189TWh in 2030 – 1TWh less than the previous forecast. Existing RE100 members signed deals for an estimated 7.8TWh of clean electricity, outpacing the demand from new signatories overall. Should these companies meet their 189TWh shortfall through solar and wind PPAs, BloombergNEF estimates it would catalyze an additional 94GW of renewables build, leading to $97 billion of new investment.

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