Corporations purchased a record of 23.7 GW of clean energy in 2020, up from 20.1 GW in 2019 and 13.6 GW in 2018, according to new research published by BloombergNEF (BNEF). The increase came despite a year devastated by the Covid-19 pandemic, a global recession and uncertainty about U.S. energy policy ahead of the presidential election.
BNEF finds in its 1H 2021 Corporate Energy Market Outlook that clean energy contracts were signed by more than 130 companies in sectors ranging from oil & gas to big tech. Underpinning the market is surging stakeholder interest in corporate sustainability and expanding access to clean energy globally.
The U.S. was once again the largest market, but was less dominant than in previous years. Companies announced 11.9 GW of corporate PPAs in the U.S. in 2020, down from 14.1 GW in 2019 – the first year-on-year drop since 2016. The first half, coinciding with the start of the pandemic, was particularly subdued, with companies announcing just 4.3 GW of corporate PPAs in the U.S. in that period.
Latin America also had a down year, with PPA volumes dropping from 2 GW in 2019 to 1.5 GW in 2020. The region was hit hard by the Covid-19 pandemic and the economic downturn. Yet companies in Brazil signed a record 1,047 MW of corporate PPAs in 2020, as many continued to migrate to the country’s free market, where they can sign bilateral clean energy contracts directly with developers. Once the main draw for corporate procurement in the region, Mexico saw deal volumes all but dissipate, as the current administration continues to undermine the country’s clean energy sector.
While the U.S. and Latin America slipped back, other corporate procurement markets stepped up. Corporate PPA volumes in the Europe, Middle East and Africa (EMEA) region nearly tripled, from 2.6 GW in 2019 to a record 7.2 GW in 2020. In Spain, companies announced contracts to purchase no less than 4.2 GW of clean energy, up from 300MW the previous year. Solar and wind projects in Spain yield some of the cheapest and most competitive prices in Europe, thanks to strong natural resources and a large pool of experienced developers. Companies like 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.
Corporations also purchased record clean energy volumes in the Asia Pacific (APAC) region, announcing contracts for 2.9 GW of solar and wind. Taiwan established itself as a major corporate clean energy market in 2020, with companies signing PPAs totalling 1.25 GW. Taiwan’s market should be supported by a new policy that requires companies with an annual load above 5 MW to buy clean power. Also, the island has a high concentration of large manufacturers, many of which are feeling pressure from their customers to decarbonize.
South Korea is expected to be the next major corporate procurement market in Asia. Policymakers revised the country’s Electric Utility Act in the beginning of 2021, creating a PPA mechanism and a green tariff program with Korea Electric Power Corporation. The revision will also allow companies to purchase unbundled certificates and retire them against sustainability commitments. South Korean companies face similar supply chain pressures to those in Taiwan.
Amazon was the leading buyer of clean energy in 2020, announcing 35 separate clean energy PPAs in 2020, totalling 5.1 GW. The company has now purchased over 7.5 GW of clean energy to date, vaulting it ahead of Google (6.6 GW) and Facebook (5.9 GW) as the world’s largest clean energy buyer. French oil major Total (3 GW), TSMC (1.2 GW) and U.S. telecom Verizon (GW) were the next largest corporate buyers of clean energy in 2020.
The flow of new companies making clean energy commitments is another indicator of how much more the market can grow. Some 65 new companies joined the RE100 in 2020, pledging to offset 100% of their electricity consumption with clean energy. BNEF forecasts that the 285 RE100 members 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.