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A recent report by a US-based research firm has added evidence of corporations taking a prominent role in the growth of the renewables market.

The report by Wood Mackenzie Power and Renewables highlights a 22% share of renewables power-purchase agreements in the USA being made by corporates.

The report’s conclusions affirm findings that accredit large corporations with driving both the solar and wind industries forward in 2018, and has similar findings to a recent report by Schneider Electric, tracking adoption on a global scale.

Similar findings from the Business Renewables Center at the Rocky Mountain Institute, the American Wind Energy Association, and Bloomberg New Energy Finance have also published findings confirming that 2018 was a record year for solar and wind power purchases in the corporate sector.

The significant increase in corporate agreements means the sector is on par with solar purchases by renewable portfolio standard policies, said Colin Smith, senior solar analyst at the firm.

“On the solar side, 2018 was a banner year in part driven by pent-up demand caused by the tariffs,” said Smith. “Commercial and industrial procurement was a large percentage of solar PPAs signed in 2018.”

According to the report, the United States presently has over 8.8 gigawatts of wind and solar capacity dedicated to corporate and industrial customers.

The research firm forecast the current pipeline of projects at over 6.8GW and foresees that projects in development could exceed 10GW by the end of 2019.

Procurements grew by 109% between 2017 and 2018, a rise attributed to increasing solar power procurement, though commercial and industrial (C&I) purchases have traditionally favoured wind power. There is a noted increase in appetite for solar power, given their increasingly favourable economic appeal.

Compared to 2015 and the years prior, 4332 mWh of wind and a considerably lower 985 mWh of solar capacity were brought into operation. 2018 saw the emphasis switch to 3,360MW of wind and 2,455MW of solar capacity brought online.

Analysts expect continued growth in corporate procurements, assisted by increasingly favourable contract terms and sustainability goals.

According to Smith, the lure of more attractive contracts such as load-tailored PPA’s and insurance products are indicative of the market striving to meet consumer needs.

Innovative deal models aid the trappings of more favorable contracts, like insurance products and load-tailored PPAs are an indication that the market is working to meet consumer needs. Innovative deal models, such as aggregation, have expanded the market beyond major players to include smaller organisations.

“Developers are trying to make it easier for “C&I” (Commercial and Industrial sic) off-takers to sign PPAs by making them easier to understand, getting corporations comfortable with the risks, and also engineering new ways to make the contracts less risky,” said Smith. “As developers innovate more ways to sign PPAs, we will see the C&I market continue to grow.”

Flexibility key to growing ease of adoption

A slew of new buyers have been bought into the market, driven by increased flexibility in agreements, leading to steady growth in the last three years. The report, however, cautions against the decline of federal Investment Tax Credit, indicating that this may negatively affect the accelerating pace of corporate procurement.

“Companies often buy when they believe they can get the best deal. Right now, corporations see low cost of capital and see that they have a year left to sign a PPA that can take advantage of the ITC before the stepdown,” said Smith. “After that, we will see relatively fewer C&I PPAs announced.”