Corporate renewable deals got off to a sleepy but respectable start in 2021, with the largest contracts from U.S. companies reaching more than 2 gigawatts of capacity.
This represents a cooling from the fourth quarter’s blockbuster 7.3 GW but a steady climb from the first quarter of previous years — Q1 2019 saw 757 megawatts (MW) of deals; Q1 2020 included 1.6 GW.
Notable Q1 deals included:
- Amazon inked the quarter’s largest contract, procuring 380 MW from an offshore wind project in the Netherlands (a little more than half of the massive 759 MW project). Amazon calls the deal its largest single-site renewable project to date.
- Food companies made a strong showing, with Kellogg Co. and PepsiCo each disclosing one contract, while Hormel Foods announced two. While food companies are completing transactions with more frequency (a number of food companies came onto the renewable energy procurement scene in 2019), the arrangements reflect how renewables are becoming accessible to more types of companies with thin profit margins.
- Industrial players made an appearance, with chemical company Celanese and steelmaker Nucor both procuring clean energy capacity, reflecting early steps to decarbonize their industrial processes. In the fourth quarter of 2020, steel manufacturers inked two deals.
From a trends standpoint, the first quarter brought more transactions that included energy storage and saw a number of utilities step up their offerings to corporate buyers. Here are three of my takeaways from the first three months of 2021.
Renewables + batteries are becoming more common
At least three contracts announced in the first quarter included something extra: energy storage.
Two deals came through the utility Tennessee Valley Authority (TVA). Facebook and General Motors are offtaking 173 MW of solar with a 30 MW battery system in one project, and Facebook is adding 150 MW of solar with 50 MW of energy storage to its renewables portfolio through the second project.
Food company Kellogg announced a virtual power purchase agreement (VPPA) to procure 100 MW of a new Enel Green Power North America project that includes 350 MW of wind paired with 137 MW of battery storage. Enel calls the project the first large-scale hybrid project to integrate wind and battery storage at a single site.
Combining energy storage with generation is a smart way to add value to renewable deployments, clean the grid and add resilience. It allows solar and wind projects to sell the energy to the grid when rates are higher or when the power makeup is especially dirty (conditions which often occur at the same times). Batteries are also a critical tool for ensuring energy resilience, especially as the grid becomes increasingly dependent on renewable power.
The deals indicate the cost of energy storage is falling enough to make it pencil in more instances. With battery prices expected to fall more, expect such contracts to become more common.
Utility programs are attracting corporate buyers
Utilities are signing more big corporate offtakers through long-term renewable energy deals.
The TVA procurements (mentioned above) were both through TVA’s program, Green Invest, which bills itself as a model that "offers business and industry an effective, timely and cost-competitive solution to aggressively meet their sustainability goals."
In Oregon, Intel inked a deal with Portland General Electric (PGE) through that utility’s Green Future Impact program.
While utility programs to procure clean energy are not new — utility green tariff programs that sell clean energy to corporations date back to at least 2017 — the three transactions announced in the first quarter stand out because they look more like corporate procurement agreements than traditional utility programs.
The procurements ensure additionality, meaning that the projects being built are in addition to the renewable resources on the grid. In the case with PGE, Intel identified and brought the renewable energy project to the utility, which then worked with the state and regulators to streamline the PPA process.
The new utility partnership programs reflect a feedback loop between corporations, which have been pioneering business models for deploying renewables, and utilities, many of which have decarbonization goals. Utilities are finding ways to offer companies the types of deals that corporate buyers have been signing through direct PPAs. If more utilities began offering options such as these, it would expand access to clean energy for companies in energy markets that limit third-party purchasing or retail choice.
Ørsted’s presence is growing
Ørsted, the Danish multinational energy company best known for offshore wind, made a strong showing as a developer for U.S. corporate procurements this quarter, participating in deals with Pepsi, steelmaker Nucor, Target and Hormel Foods.
The contracts include portions of two massive onshore wind projects: the 298 MW Haystack project in Nebraska and the 367 MW Western Trail project in Texas. Target, Hormel and Pepsi have procured portions of the Nebraska project; Pepsi and Nucor are offtakers of the Texas project.
(Ørsted is a sponsor of the event VERGE Electrify which I co-chair. This coverage is unrelated to that sponsorship.)
Ørsted has shown up as a developer on the GreenBiz Clean Energy Deal Tracker in the past. In Q4 2018, Lincoln Clean Energy — acquired by Ørsted — participated in two deals with ExxonMobil. The company also has supported international corporate procurements, including an offshore wind PPA with Nestle in the U.K. last year.
The Ørsted contracts help it stand out as an one example of an energy company, traditionally focused on fossil fuels, pivoting its offering to prioritize clean energy. As other oil companies work to diversify their offerings, the Ørsted story illuminates how an organization used to building huge infrastructure projects can apply that expertise to accelerate clean energy deployments.
Note: this article was updated on April 19 to include capacity in the Target/Hormel deal from March 5.