Corporate Clean Energy Purchases Hit Record

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The coronavirus pandemic and resulting global economic slowdown curtailed some energy projects in 2020, but corporations worldwide still bought a record 23.7 GW of clean power through long-term purchase agreements.

That's according to research published Jan. 26 by BloombergNEF (BNEF). The group in its 1H 2021 Corporate Energy Market Outlook" said more than 130 companies, across industries ranging from the technology sector to oil and gas exploration, signed clean energy contracts.

Tuesday's report comes one day after a group of 36 U.S. companies representing the nation's largest buyers of renewable energy released a joint statement asking the federal government to make the transition to a zero-carbon power generation sector a national priority. The companies include General Motors, Target, Walmart, Amazon, Facebook, Google, Microsoft, and PepsiCo, among others.

Clean energy presents an unprecedented opportunity to recover after the triple whammy of 2020: pandemic-induced recession, climate calamities, and racial reckoning," said Miranda Ballentine, CEO of the Renewable Energy Buyers Alliance (REBA), in a statement. REBA is a member-based organization that represents and advocates on behalf of many of America's largest energy buyers.

Policies like those outlined today can revitalize the economy, grow high-wage jobs and create the electricity system of the future," said Ballentine. As the newly inaugurated Biden administration looks to take immediate steps to rebuild the economy and tackle the climate crisis, these iconic businesses stand ready to work together to make a zero-carbon power vision a reality."

Carbon Negative in 2021

The REBA announcement came the same day as EY, the global organization of multinational accounting firm Ernst & Young, said it wants its operations to be carbon negative this year. The company Monday-one month after it said it achieved carbon neutrality in December 2020-announced it has set targets to remove and offset more carbon than it emits in 2021. The company said among other things it will reduce business travel, help clients profitably decarbonize" their businesses, and change the structure of electricity supply agreements.

We believe that combating climate change is a vital element of building a better working world," Carmine Di Sibio, EY global chairman and CEO, said in a statement. While this challenge is unique and different for each organization, we are inspired by those that are setting ambitious targets despite the difficulties they face. EY people are passionate about tackling big challenges and, with the power of 300,000 of them, we will not only transform EY to become a leader in sustainability but also help EY clients do the same."

EY's commitment echoes that of many other companies moving to embrace environmental, social, and governance (ESG) objectives, as part of achieving sustainability in their business practices.

Corporate Sustainability'

BNEF said the 2020 record for corporate clean energy power purchase agreements (PPAs, Figure 1) topped the 20.1-GW level of 2019, and was nearly 75% higher than the 13.6 GW bought in 2018. The group said the increase was supported by surging stakeholder interest in corporate sustainability and expanding access to clean energy globally."

1. Worldwide corporate purchases of clean energy reached a record 23.7 GW in 2020. Source: BloombergNEF

Corporations faced a wave of adversity in 2020-internal corporate functions were disrupted on the outset of the pandemic, and many companies saw revenues plummet as global economies buckled," said Kyle Harrison, BNEF senior associate and lead author of Tuesday's report. Question marks before-and after-the U.S. election further complicated long-term decision-making for companies. To not only maintain, but grow, the clean energy procurement market under these conditions is a testament to how high sustainability is on many corporations' agendas."

BNEF said the U.S. once again was the largest market for corporate power purchases, though the 11.9 GW of PPAs announced in 2020 was down from 14.1 GW in 2019, the first year-over-year decline since 2016. The group said most of that drop could be attributed to the pandemic, particularly a steep decline in the first half of 2020.

PPA volumes in Latin America also saw a year-over-year decline, dropping from 2 GW in 2019 to 1.5 GW in 2020, primarily due to the pandemic, according to BNEF. However, companies in Brazil signed a record 1,047 MW of corporate PPAs in 2020; BNEF said the country's free market, which allows for bilateral clean energy contracts directly with developers, is driving the market in that country.

The BNEF report said corporate PPA volumes in the region known as EMEA-Europe, the Middle East, and Africa-almost tripled, from 2.6 GW in 2019 to a record 7.2 GW in 2020. The group said companies in Spain announced PPAs for at least 4.2 GW of clean energy, far above the 300 MW purchased in 2019. The group said companies such as Total and Anheuser Busch are orchestrating cross-border virtual PPAs' in Spain, buying clean energy in the country to offset their load elsewhere in Europe."

The Asia Pacific region also had record PPA volumes, with contracts announced for 2.9 GW of solar and wind. Companies in Taiwan signed agreements to purchase 1.25 GW of clean power; the country has a new policy that requires companies with an annual load above 5 MW to buy clean energy.

Jonas Rooze, lead sustainability analyst at BNEF, said, More than ever before, corporations have access to affordable clean energy at a global scale. Companies no longer have an excuse for falling behind on setting and working towards a clean energy target."

Amazon Leads Clean Energy Buys

Amazon was the leading buyer of clean energy in 2020 among U.S. companies, announcing 35 separate clean energy PPAs totaling 5.1 GW (Figure 2). The company has now purchased more than 7.5 GW of clean energy to date, putting it ahead of Google (6.6 GW) and Facebook (5.9 GW) as the world's largest clean energy buyer.

2. Amazon was the leading buyer of clean energy last year among the world's companies. Source: BloombergNEF

The RE100, a global initiative of businesses committed to 100% renewable energy, increased its membership by 65 companies last year. BNEF said the market for clean energy has plenty of room to grow, noting that the 285 companies that are part of the initiative will collectively need to purchase an additional 269 TWh of clean electricity in 2030 to meet their RE100 goals. Should this shortfall be met exclusively with offsite PPAs, it would catalyze an estimated 93 GW of new, incremental solar and wind build."

Investor interest in sustainability is sky high, with inflows to sustainability-focused funds growing 300% between 2019 and 2020," Harrison said. Companies in all sectors, including hard-to-abate ones like oil and gas and mining, are feeling the pressure to purchase clean energy and decarbonize. This group is only just scratching the surface on the amount of clean energy build it can catalyze."

REBA's member companies represent more than $5.8 trillion in revenue and employ more than 13.5 million workers across several sectors of the U.S. economy. The group organized an Energy Buyer Federal Clean Energy Policy" statement, emphasizing the need for ambitious national policies that modernize the power grid and ensure it is resilient, affordable, customer-focused, and most importantly, carbon-free."

The group on Monday called on the federal government to, among other things:

• Leverage organized wholesale electricity markets for grid decarbonization by improving existing wholesale markets and expanding wholesale markets to achieve least-cost, efficient clean energy deployment.
• Decarbonize the grid for all through swift federal government action to harmonize and update the current patchwork of clean energy policies.
• Support innovation to advance a resilient, affordable, clean energy system by substantially increasing federal funding for clean energy technology research, development, and demonstration.

Walmart is on a path to become a regenerative company through our initiatives including targeting zero-carbon emissions across our operations without the use of carbon offsets by 2040," said Steve Chriss, director of Energy Services at Walmart. Clean energy resources are critical to reaching that goal, and we have set a goal to be powered 100 percent by renewable energy globally by 2035. The federal policies put forth by REBA will enable growth in renewable energy and progression to a decarbonized power grid while maintaining affordability and resilience for all American consumers."

Emma Cox, the Global Renewable Energy Lead at McDonald's and a REBA board member, said, It's imperative for McDonald's to use its scale to help democratize clean energy for all. Our work must be meaningful and impactful as we continue making progress toward our goal to reduce greenhouse gas emissions. This group of market leaders has the opportunity to advocate for key policies that will transform the future of energy markets for generations to come."

-Darrell Proctor is associate editor for POWER (@POWERmagazine).

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