Companies looking to decarbonise their operations and improve green credentials have helped to give a push to the rollout of new wind and solar capacity by sealing power purchase agreements (PPAs) for green energy. Corporate buyers acquired a record 25GW of wind, solar photovoltaic (PV) and other renewable energy via PPAs in 2020, data from BloombergNEF (BNEF) shows. That figure should be easily surpassed in 2021, with 21GW in green energy PPAs already announced in the year to August.
The number of businesses signalling their interest in buying clean power is growing. The RE100 group of companies, which is committed to sourcing 100% of their electricity from renewable energy, has more than doubled its membership over the past few years, from 155 in January 2019 to more than 330 in September 2021.
Just as sustainability is moving up the corporate agenda, the competitiveness of wind and solar has been boosted by cost declines and technological improvements, making renewable PPAs more attractive for companies. As a result, these offtake agreements have become the main mechanism to guaranteeing a stable revenue stream for a project in some markets, such as those for wind energy in Sweden and Finland. Rising gas prices this year are further helping to highlight the business case for renewables versus the riskiness of relying on fossil fuels.
It is not surprising then that consumer-facing companies — including tech giants such as Google, Facebook, Microsoft and Amazon, which are looking to decarbonise data centres — have been at the forefront in securing PPAs for renewable energy. Increasingly, however, a diversified range of corporations are getting into the game, from consumer goods groups to retailers, telecommunications firms, chemical producers and car manufacturers.
Recent deals include Google signing a 12-year corporate PPA with Ørsted for a 50MW portion of the900MW Borkum Riffgrund 3 project in the German North Sea, while Amazon has expanded its December 2020 offtake agreement for the same project by 100MW to 350MW.
You could read more about the top buyers of green energy here