&l;img class=&q; size-full wp-image-1740&q; src=&q;http://blogs-images.forbes.com/mikescott/files/2019/01/Global-Corporate-PPA-volumes-2018-e1548695810133.jpg?width=960&q; alt=&q;&q; data-height=&q;289&q; data-width=&q;493&q;&g;Business is becoming a major player in the renewable energy market, and it looks like it&a;rsquo;s here to stay.&l;/p&g;
New figures from BloombergNEF (BNEF) show that corporations bought a record amount of 13.4GW of clean energy through power purchase agreements (PPAs) in 2018, well over double the previous record of 6.1GW set in 2017.
The research firm&a;rsquo;s latest Corporate Energy Market Outlook, reveals that 121 companies in 21 different countries signed up to buy renewable energy last year. More than 60% of those purchases were in the US, where PPAs to buy 8.5GW of power were signed, almost three times 2017&a;rsquo;s figure. However, there are signs that the sector is ready to expand rapidly in other markets as well.
The amount of power bought by companies puts them alongside utilities as the biggest buyers of clean electricity. This is a major change in the structure of the market, said Jonas Rooze, head of corporate sustainability for BNEF: &a;ldquo;Corporations have signed contracts to purchase over 32GW of clean power since 2008, an amount comparable to the generation capacity of the Netherlands, with 86% of this activity coming since 2015 and more than 40% in 2018 alone.&a;rdquo;
Facebook was by far the biggest individual buyer, procuring 2.6GW of capacity, more than three times the amount purchased by the next biggest company, AT&a;amp;T. Tech companies use a huge amount of power to run their data centres, which is why they are the biggest purchasers of clean energy and have made the running in the corporate procurement sector.&l;/p&g;
For the first time, an oil major signed a clean energy PPA for its own operations, buying 575MW of solar and wind in Texas.
Another notable development has been the emergence of smaller energy buyers aggregating their energy demands to enable them to sign PPAs with large clean energy projects &a;ndash; these buyers made up 31% of US demand. These firms are aggregating their electricity demand to reap the economies of scale from larger solar and wind projects. In many cases, they benefit from partnering with a bigger, more experienced buyer &a;ndash; known as an anchor tenant &a;ndash; who can offer a stronger balance sheet and expertise on accounting and legal nuances when signing a PPA.
Kyle Harrison, a corporate sustainability analyst for BNEF and lead author of the report, said: &a;ldquo;The aggregation model has heralded in a new generation of corporate clean energy buyers. These companies no longer need to tackle the complexities of clean energy procurement alone. They can share risks associated with credit and energy market volatility with their peers.&a;rdquo;
There were also record volumes in the Europe, Middle East and Africa (EMEA) region, with corporations doubling their clean energy purchases from 2017&a;rsquo;s 1.1GW to 2.3GW. The Nordics were once again the hot spot for activity, with companies attracted to strong wind resources and credit support from government bodies, BNEF said. Aluminium producers Norsk Hydro and Alcoa were the biggest buyers in Europe in 2018, but the region also saw activity from the tech giants Facebook, Amazon and Google.
The first corporate PPAs were signed in Poland, while Finland and Denmark saw their second deals during the year, with activity also picking up in the UK after a lull caused by the demise of a national subsidy programme, as well as in Mexico and Brazil. Policy changes in Germany and France saw several requests for proposals that suggest these could be significant markets in 2019.
Asia Pacific is still a largely undeveloped market. Companies signed a record 2GW of PPAs but almost all of that came in India (1.3GW) and Australia (0.7GW) as these are the only markets that currently allow companies to buy power direct from generators.
However, there are signs of reform that suggest the region will join the party soon. Nine provinces in China now have offsite corporate PPA mechanisms and the imminent passing of a renewable portfolio standard will give over 30,000 large commercial and industrial companies renewable electricity targets. Meanwhile, Japanese companies bought 21TWh of power in the country&a;rsquo;s third non-fossil certificate auction, three times the amount of power bought in the first two auctions combined. Thirteen companies in Japan have also established 100% renewable electricity targets, more than the rest of the region put together.
It is targets such as these, through initiatives such as RE100, that are driving the market. Almost 160 of the world&a;rsquo;s largest companies, in 23 different countries, have signed commitments through RE100 to procure 100% of their electricity from renewable sources. BNEF calculates that for these companies to meet their targets, they will have to buy 190TWh of electricity in 2030, requiring more than 100GW of new solar and wind capacity.
Rooze said: &q;For companies that think seriously about sustainable growth, establishing clean energy and decarbonization targets lines up naturally with overall corporate strategies. At the same time, these initiatives have created an entire new universe of opportunity for utilities, clean energy developers and investors.&a;rdquo;