Google is just a small slice in the new corporate PPA boom
With HP and Amazon recently adding their weight to the market, long-term corporate purchase commitments for renewable power already have topped 1500 MW of installed capacity, exceeding last year’s record level of business support for green generation.
The growing appetite of corporate buyers for sourcing electricity from off-site solar and wind facilities marks a major shift in the market for large-scale renewable facilities. Until last year, utility company power purchase agreements (PPA), spurred mainly by state renewable portfolio standards, were responsible for underwriting the construction of the great majority of new wind and solar power developments.
But, according to data compiled by the American Clean Skies Foundation, the corporate PPAs announced in 2015 are equivalent to about 10 percent of all new non-residential wind and solar generation that the U.S. Energy Information Administration (EIA) forecasts to come online in 2016.
Moreover, wind and solar alone accounted for almost 55 percent of all new U.S. generating capacity in the first half of 2015, according to EIA data. (This data does not include smaller scale distributed solar photovoltaic installations, which are omitted from EIA’s reporting.)
Even the mainstream press is beginning to take note. The HP and Amazon announcements were featured in the New York Times which noted “a flurry of other recent agreements,” driven by a combination of falling power prices and rising pressure on the business sector to show greater leadership on climate issues.
This leadership was also in evidence recently when 13 of America’s largest companies visited the White House to endorse a strong outcome in the Paris climate negotiations. The companies also pledged “at least $140 billion in new low-carbon investment and more than 1,600 megawatts of new renewable energy.”
Schneider Electric’s Energy & Sustainability Services has been closely involved in some of the new private sector PPAs. Rex Zhang, a Schneider Electric sustainability advisor to corporate energy buyers, said that they are seeing “more and more companies, many of which are inspired by the amount of deals completed in 2014, put together strategies and start to execute on switching to cost-effective renewable energy.”
Schneider Electric expects to see several more corporate PPA announcements by year’s end, with the potential of adding 1 GW. Zhang also notes that renewable developers are under pressure to finance and construct wind and solar projects before the expiration of existing federal production and investment tax credits. That has given developers a further incentive to do businesses with more corporate buyers.