Data centers drive surge in clean energy procurement in 2024

Corporate clean energy procurement grew 29% in 2024, resulting in a record 68 GW of deals announced globally, according to the S&P Global Commodity Insights corporate renewables database.

Data centers led clean energy procurement efforts in 2024, according to Commodity Insights data, with over 17 GW of deals contracted predominantly through direct third-party power purchase agreements. The manufacturing sector came in as a far second with 9 GW of clean energy procurement, followed by the services sector with 6 GW.

The growth in data centers' clean energy procurement was primarily driven by US demand.

Microsoft, Amazon and Google led the offtakers list, with deals signed in Asia-Pacific, Europe and North America, collectively announcing 15 GW of capacities alongside Meta. This does not include the 10 GW energy framework agreement that Microsoft announced with Brookfield in May 2024.

Solar remains the major source of clean energy but nuclear is gaining popularity with offtakers, reflecting a strategic shift toward carbon-free, non-intermittent solutions that support their decarbonization and 24/7 energy-matching goals while securing large amounts of power.

It is worth noting that the investments in clean power procurement also involve the development of new technologies. Google and Amazon signed long-term PPAs to source power from small modular reactors, with the timing subject to uncertainty and most likely to be deployed in the 2030s.

Commodity Insights analysts expect data centers to continue to drive corporate clean energy procurement despite uncertainties around demand growth tied to artificial intelligence or AI, reaching 300 TWh/year of additional clean energy by 2030 from about 200 TWh/year contracted as of the end of 2024.

Regional developments

• Asia-Pacific secured a total of 27 GW of renewable capacity, up 60% year on year. India accounted for more than 69% of this capacity, surpassing the US to become the largest market globally at 18 GW. Last year, Vietnam approved a direct power purchase agreement framework, while Malaysia introduced the Guidelines for the Corporate Renewable Energy Supply Scheme. These policies are expected to facilitate the growth of off-site PPAs, with Malaysia likely to take the lead in 2025.
• Europe set a new record, with 19 GW of corporate deals contracted, reflecting a 17% year-on-year growth. Spain captured 26% of the market share, although growth had started to wane in the second half of the year.
• In North America, corporate procurement totaled 18 GW in 2024, marking an 18% increase, with solar representing over half of contracted capacities.

Energy attribute certificates show strong momentum

Global redemption for international renewable energy certificates, or I-RECs, expanded by 32% to 233 TWh year on year, according to the International Tracking Standard Foundation.

Annual issuance rose by only 2% to 290 TWh, primarily due to significant declines in China, which is phasing out I-RECs, and the UAE, which slowed down issuance after an oversupply in 2023.

On the other hand, Brazil led the growth in both issuance and redemption in 2024, while markets like Kazakhstan and South Africa emerged.

In India, a local issuer requested plants to provide additional evidence to prevent double counting against Renewable Purchase Obligations, which depressed hydropower issuance. Near-term hydropower issuance is expected to remain low.

Due to ample supply potential, downward price trends were observed throughout 2024 in most of the key markets, while prices were sustained in India, Malaysia, Mexico and Singapore.

In Europe, demand for European Guarantees of Origin rose 8% year on year to 784 TWh as the impact of the phaseout of EuGOs in the UK diminished. Meanwhile, exceptionally wet conditions in 2024 after a very dry 2023 contributed to a 13% year-on-year issuance increase, with wind, solar and hydro growing by 38 TWh, 26 TWh and 49 TWh, respectively.

Market oversupply depressed prices throughout the year, but normalization of hydro levels in the fourth quarter indicated signs of price recovery.

As for the US, Commodity Insights estimates that the voluntary renewables energy credit market reached over 320 TWh in 2024, growing by 11% year on year, of which the unbundled market accounted for 35%.

While corporates account for the vast majority of the voluntary REC market, public entities have reached nearly 10%, followed by Community Choice Aggregators at 7%. Despite a double-digit growth in demand, there was ample availability of projects outside of compliance markets. National Green-e REC prices saw a downtrend in 2024, moving below $2/MWh from mid-November. As demand continues to grow, voluntary REC prices will remain supported, as shown in next-year prices as of early January, which was trading at $2.8/MWh.

Further reading: Clean Energy Technology Market Insights