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article imageCorporate renewable energy deals smash records in 2018

By Karen Graham     Oct 19, 2018 in Business
Non-fossil fuel sources of power are proving increasingly popular among businesses in the U.S., with corporate renewable energy deals set to reach a single-year record of five gigawatts by December.
A lot of the growth has centered around a diversifying market, according to the Business Renewables Center (BRC), a membership program at Rocky Mountain Institute (RMI).
According to figures provided by BRC, as of August 2018, non-utility buyers had contracted for more than 3.5 gigawatts of renewable energy projects, exceeding the previous 3.12-gigawatt record set in 2015 and the 2.89 gigawatts contracted for in 2017.
Another record has also been broken this year with 70 companies signing contracts for renewable energy, including 20 of those being first-time buyers – another single-year record for 2018.
The RBI Deal Tracker was updated this week at the Renewable Energy Buyers Alliance conference in Oak...
The RBI Deal Tracker was updated this week at the Renewable Energy Buyers Alliance conference in Oakland, California.
RMI deal tracker
BNE Program Director Kevin Haley said: “A strong number of new first-time buyers are continuing to enter into the market – and a lot of this growth is being driven by companies that may not have done a deal yet."
The numbers of renewable energy deals will actually be higher when the year ends. This is because RMI's numbers only account for contracts for large, off-site renewable energy projects. Rooftop solar projects under construction by the likes of Ikea and Target are not included in the RMI deal tracker.
The market has not achieved escape velocity
Major tech companies like Facebook and AT&T, for instance, have been the backbone of the support for renewables, along with large deals from Microsoft, Apple, and Walmart. However, it is the first-time buyers that are beginning to get their feet wet in the non-fossil fuel pond that makes it exciting.
And the small to medium sized corporations and businesses are needed. The biggest issue that has been holding this group back has been the assumption that long-term renewable contracts emerging in the market are still too risky and too complicated for some companies to tackle.
Apple is helping partners around the world reduce their energy use and build high-quality renewable ...
Apple is helping partners around the world reduce their energy use and build high-quality renewable energy projects, like this floating solar photovoltaic facility outside Nagoya, Japan. Photo taken March 8, 2017.
Apple / Newsroom
Additional rules at the federal level have also slowed down procurement timelines, with solar PV tariffs and corporate tax rates changing. So the risk that deals could turn upside down over the long term, prevents many companies from entering the market.
So, as RMI puts it — Even though the signs are undoubtedly positive, the market has not achieved escape velocity — the point at which deal risk is low enough to attract other businesses.
Making renewables less risky
In an effort to make renewable energy deals less risky and more appealing for big businesses, technology company Microsoft this week announced its volume firming agreement (VFA) system.
Microsoft collaborated with the tech firm REsurety and its partners Nephila Climate and Allianz Global to come up with the VFA system that will make power-purchase agreements less complicated.
JP Morgan Chase announces its commitment to 100 percent renewables by 2020.
JP Morgan Chase announces its commitment to 100 percent renewables by 2020.
Joe Mabel (CC BY-SA 3.0)
In a blog post on its site, Microsoft wrote: “VFAs are intended to be a simple fix to a big challenge with renewable energy PPAs, namely, that these deals expose the buyer to all the weather-related risks of power production, and the inherent intermittent nature of wind and solar means there are hourly issues to be addressed.”
At the same time, Michael Terrell, Google’s head of energy markets, wrote in a blog post. “Ultimately, we aspire to source carbon-free energy for our operations in all places, at all times.”
"Going carbon-free “will be no easy feat,” Terrell added, “but the urgency of climate change demands bold solutions.” Google published a discussion paper that identifies several key actions it and other actors can take to achieve 24x7 carbon-free energy.
More about Renewables, energy deals, Energy policy, Risk, corporate deals