Led by Amazon, Corporates Bought 31.1 GW Clean Energy in 2021: BNEF

Corporations bought a record 31.1 gigawatts of clean energy through power purchase agreements, or PPAs, in 2021, up nearly 24% from the previous year’s record of 25.1GW, according to research firm BloombergNEF (BNEF).

Over two thirds of this purchasing (65%) occurred in the U.S. However, also underpinning the strong growth is a surge in activity from the largest technology companies, who collectively signed over half of the deals.

Clean energy contracts were publicly announced by more than 137 corporations in 32 different countries in 2021, according to BNEF’s 1H 2022 Corporate Energy Market Outlook. Total signed volumes were equivalent to more than 10% of all the renewable energy capacity added globally last year, showing the impact corporate sustainability pledges are having on clean energy build.

Kyle Harrison, Head of Sustainability Research at BNEF, commented: “It is no longer a matter of whether corporate clean energy procurement will grow each year, it’s a matter of how much. More corporations are making new sustainability commitments, costs for renewables are plummeting and regulators around the world are slowly coming around to the fact that clean energy might be a silver bullet in the decarbonization of the private sector.”

The Americas accounted for two thirds of the activity, with 20.3 gigawatts of PPAs announced, led by the U.S., at 17GW. The virtual PPA, which functions in a similar way to a financial hedge, continues to dominate the U.S. market, with 12GW of deals, but green tariffs with regulated utilities also experienced a record year, at 3.2GW.

Europe saw a record 8.7GW of deals announced, with big years from Spain and the Nordics. Across Asia, just 2GW of PPAs were announced, but there were a number of other developments. For example, legislation for a corporate PPA model in South Korea was introduced in October 2021, while both China and Japan both saw record clean energy certificate issuances.

Technology companies once again were the largest corporate clean energy buyers in 2021. For the second year in a row, Amazon was the biggest buyer globally, announcing 44 offsite PPAs in nine countries, totalling 6.2GW. This brings its total clean energy PPA capacity to 13.9GW, making its clean energy portfolio the 12th largest globally among all types of companies, just ahead of EDF. Microsoft and Meta have the next largest among corporations, at 8.9GW and 8GW, respectively. Previously, Google held the corporate clean energy crown, but has turned its attention more to sourcing 24/7 carbon-free power through methods outside of PPAs.

Helen Dewhurst, Senior Associate at BNEF, commented: “The clean energy portfolios of big tech companies now rival those of the world’s biggest utilities. Big tech faces mounting pressure from investors to decarbonize and this is reflected in the steep increase in clean energy volumes purchased. The PPAs inked in previous years pale in comparison to the portfolios announced in 2021.”

On the other side of the equation, AES sold more clean energy to corporations than any other developer globally, at just under 3GW, based on publicly available data. Two thirds of this took place in the U.S., but the AES portfolio of deals also extended to Brazil, Panama and Chile. Engie signed more than 2.1GW of PPAs, including a 350MW PPA with Amazon for the Dundee Offshore Wind Farm in the U.K. One of the secrets of success for both companies is that they have the backing of a large utility to support their development arms. This led to Orsted (1.3GW), Vattenfall (0.8GW) and NextEra (0.7GW), all utilities, also having big years in 2021. These companies sell clean energy to corporations through mechanisms other than PPAs as well.

Corporate sustainability commitments are still a driving force behind the record-breaking clean energy purchases. Some 67 companies set an RE100 target in 2021, pledging to offset 100% of their electricity demand with clean energy, bringing the campaign to 355 members across 25 countries. These companies collectively consume 363TWh of electricity annually based on their latest filings – exceeding the U.K.’s entire power generation for the same year.

BNEF estimates that these 355 RE100 companies will need to purchase an additional 246TWh of clean electricity in 2030 to meet their targets. This is lower than its previous forecast – largely due to the activity from incumbent RE100 members, who purchased a record 21TWh of clean electricity through PPAs in the second half of 2021 alone. Should this shortfall be met with offsite PPAs, it would catalyze an additional 94GW of new solar and wind build globally. This is on top of the 47GW of PPAs already signed by RE100 members.