As renewables prices continue to drop, more companies are signing renewable-energy commitments, further motivating other companies to join the market as well, according to Kyle Harrison, a corporate energy procurement analyst at Bloomberg.
This is happening against the backdrop of a new analysis from Greentech Media Research that estimates solar bids will become as cheap as $14.07 per megawatt hour through 2022, assuming favorable financing and technology advances continue. Although that is an extremely low and aspirational price compared with today’s market, the report warns the rate of cost declines is beginning to slow, particularly in more mature markets. But rapid declines will still likely be seen in developing areas.
In 2010, Google completed a 20-year power purchase agreement that “created the blueprint” for virtual corporate agreements of that kind, according to Harrison. Utility Dive, an energy industry news site, notes such agreements picked up more steam around 2015, when renewables became cost competitive in certain wholesale markets.
Facebook was the largest corporate buyer this year, purchasing an additional 1.2 gigawatts of clean energy, bringing its total renewable capacity close to 2.0 gigawatts, making the social media company the second-largest corporate buyer of renewables in the world, according to Harrison.
“The trend of more companies making commitments and then also smaller companies pooling their demand together to take advantage of the economies of scale of a large solar wind project ... are two huge drivers that have really kept momentum going in this space,” says Harrison, referencing growth of the trend.
New industries entering the market and an increase in green tariffs, which utilities use to work with corporate customers in regulated markets, constitute other factors for this year’s surge, according to a report from Bloomberg.
Wind continues to dominate corporate purchases in the United States and in Europe because of its large capacity and record-breaking prices. Bloomberg projects wind and solar will account for 50 percent of total electricity globally by 2050.
Excerpted from reports by Bloomberg NEF and Utility Dive.