Corporate procurement will account for about 20% of utility-scale renewable power additions in the US in the next decade—far ahead of the rest of the world, according to a new study released by IHS Markit.
The US has a growing portion of new renewable energy projects being built to meet demand coming directly from corporations, according to the report, Corporate U.S. Renewable Procurement Outlook: Optimism Amid a Pessimistic Year.
Agreements by which corporations contract electricity from renewable power producers are expected to be responsible for 44-72GW of wind and solar additions in the US from 2021-2030.
These corporate-driven Power Purchasing Agreements (PPAs) would represent an average of 4.4 -7.2GW per year depending on the extent to which corporations expand and fulfill their renewable ambitions.
Corporate sector renewable demand had been miniscule as recently as 2017. However, corporate procurement more than doubled in 2018 and increased again in 2019, with almost 16GW announced between the two years.
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This growth in contracting is expected to contribute nearly 8GW of wind and solar installations in 2020, a 45% annual increase in installations stemming from corporate procurement.
Around 220 companies operating in the US are already procuring renewable power or plan to do so. And about 40% of these companies have targets that escalate through the early to mid-2020s.
The US currently is the world leader in this area by far, representing over 60% of the global market for corporate-driven procurement.
This is owing to factors such as the sheer number of large US-based corporations, tax incentives, a high concentration of power-intensive data centers and power market structures and accounting standards that are more conducive to corporate procurement.
Anna Shpitsberg, director, global power and renewables, IHS Markit, said: “We have now reached a tipping point for corporate sector demand for renewables.
“Fueled by shareholder and consumer activism, the opportunity to hedge power costs and corporate renewable targets, companies are increasingly making the connection between a specific project and a specific facility’s power demand.
“This type of corporate-driven renewables procurement is growing beyond its tech-based roots.
“Sectors such as manufacturing and telecommunications that have high consumption patterns, ambitious renewable targets and low-to-moderate renewable procurement to date are poised to expand in this area.”
Learn more about the report.