Thursday 28 Mar 2024
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KUALA LUMPUR (Feb 4): Clean energy through power purchase agreements, or PPAs, in 2021by corporations rose 24% year-on-year in 2021 to a record 31.1 gigawatts.

BloombergNEF (BNEF) — a strategic research provider covering global commodity markets and disruptive technologies — in its 1H 2022 Corporate Energy Market Outlook released on Monday (Jan 31) said over two thirds of this purchasing (65%) occurred in the U.S.

However, it said also underpinning the strong growth is a surge in activity from the largest technology companies, who collectively signed over half of the deals.

Clean energy contracts were publicly announced by more than 137 corporations in 32 different countries in 2021.

Total signed volumes were equivalent to more than 10% of all the renewable energy capacity added globally last year, showing the impact corporate sustainability pledges are having on clean energy build.

BNEF head of sustainability research Kyle Harrison said it is no longer a matter of whether corporate clean energy procurement will grow each year, it’s a matter of how much.

“More corporations are making new sustainability commitments, costs for renewables are plummeting and regulators around the world are slowly coming around to the fact that clean energy might be a silver bullet in the decarbonisation of the private sector,” he said.

BNEF said the Americas accounted for two thirds of the activity, with 20.3 gigawatts of PPAs announced, led by the U.S., at 17GW.

It said the virtual PPA, which functions in a similar way to a financial hedge, continues to dominate the U.S. market, with 12GW of deals, but green tariffs with regulated utilities also experienced a record year, at 3.2GW.

Europe saw a record 8.7GW of deals announced, with big years from Spain and the Nordics. Across Asia, just 2GW of PPAs were announced, but there were a number of other developments.

For example, it said legislation for a corporate PPA model in South Korea was introduced in October 2021, while both China and Japan both saw record clean energy certificate issuances.

Technology companies once again were the largest corporate clean energy buyers in 2021.

For the second year in a row, Amazon was the biggest buyer globally, announcing 44 offsite PPAs in nine countries, totalling 6.2GW.

This brings its total clean energy PPA capacity to 13.9GW, making its clean energy portfolio the 12th largest globally among all types of companies, just ahead of EDF.

Microsoft and Meta Platforms Inc have the next largest among corporations, at 8.9GW and 8GW, respectively.

Previously, Google held the corporate clean energy crown, but has turned its attention more to sourcing 24/7 carbon-free power through methods outside of PPAs.

BNEF senior associate Helen Dewhurst said the clean energy portfolios of big tech companies now rival those of the world’s biggest utilities.

“Big tech faces mounting pressure from investors to decarbonize and this is reflected in the steep increase in clean energy volumes purchased.

“The PPAs inked in previous years pale in comparison to the portfolios announced in 2021,” she said.

BNEF estimates that 355 RE100 companies will need to purchase an additional 246TWh of clean electricity in 2030 to meet their targets.

It said this is lower than its previous forecast – largely due to the activity from incumbent RE100 members, who purchased a record 21TWh of clean electricity through PPAs in the second half of 2021 alone.

Should this shortfall be met with offsite PPAs, it would catalyze an additional 94GW of new solar and wind build globally.

This is on top of the 47GW of PPAs already signed by RE100 members.

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