Large corporations bought more than double the amount of renewable power from generators via power purchase agreements (PPAs) in 2018 than in 2017, according to data compiled by Bloomberg New Energy Finance (BNEF).
Its analysis suggests 13.4GW was bought by 121 corporates via PPAs in 2018 versus 6.1GW in 2017. That figure excludes some types of PPAs in some countries.
BNEF suggested PPA growth is set to continue markedly, especially where corporates have committed to procure clean power through initiatives such as RE100.
It estimates signatories to that initiative alone will need to fund around 102GW of new solar and wind projects globally to meet their 2030 commitments.
Rise of the mid-market
Growth of PPAs in the US, where corporates bought 8.5GW through PPAs, drove much of the increase. While Facebook was the standout company, buying 2.6GW of renewables globally, BNEF said the emergence of smaller, first time PPA corporate buyers marked a new trend.
Some 34 new companies signed their first clean energy PPAs, making up 31% of total activity in the US. Many used an aggregation model, partnering with larger buyers or ‘anchor tenants’ to benefit from economies of scale, stronger balance sheets and legal and financial expertise.
In a post-subsidy world, utilities and developers need PPAs in order to finance projects. Some are starting to look further down the food chain, offering shorter-term deals for smaller volumes of power in order to build onshore wind farms and solar parks.
Vattenfall recently touted PPAs as small as 1MW/3GWh per annum in a bid to finance its South Kyle Wind Farm in South West Scotland.
An increasing number of platforms to match buyers and sellers with suitable PPAs are beginning to emerge, with some touting 2019 as “the year of the PPA”.
However, offshore wind cannot survive on corporate PPAs alone and will require support for some time yet, according to one of the world’s largest renewables companies.