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Corporate Renewables Market Looks To Continue Growth After Record 2018

May. 06 2019 —

Over 6,500 MW of corporate renewable capacity was secured in 2018 from over 40 companies through a combination of power purchase agreements, green tariffs or direct ownership of projects. This more than doubled the previous peak for annual corporate renewable capacity in 2015. This record capacity was buoyed by a large pipeline of renewable projects looking to secure long-term financing in order to acquire enough capital to begin construction in time to qualify for expiring federal tax credits.

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Facebook Inc. led all companies with over 20 deals for renewable capacity signed for projects around the world totaling over 1,700 MW. AT&T Inc. secured over 800 MW of renewable capacity in the U.S. in 2018 and Walmart Inc. had six deals for wind and solar projects reaching almost 600 MW. Exxon Mobil Corp. also signed two deals with Lincoln Clean Energy LLC for 500 MW worth of wind power across two projects in Texas. Apple Inc.Kaiser Permanente Inc.T-Mobile US Inc. and Iron Mountain Inc. round out the leading companies in 2018 in terms of signed renewable capacity.

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This trend should continue in 2019 and beyond because although the tax credits expire, corporate demand will remain one of several key drivers in the renewables market. That said, without the financial backing of an investment or production tax credit, the near-term outlook for corporate renewables in the U.S. was somewhat murky. However in March, 2019, over 300 companies, including Facebook Inc.Google LLCWalmart Inc. and General Motors Co., officially launched the Renewable Energy Buyers Alliance, or REBA.

This organization formed to improve the systems in place for large-scale renewable energy purchases by corporations. Additionally, REBA has set a target of bringing 60 gigawatts of corporate renewable energy online by 2025. This indicates that the corporate renewables market did not manifest by simply taking advantage of the favorable economics provided by the tax credits – there is a legitimate demand by corporations to be 100% renewable. To date, an estimated 16 GW of corporate renewable capacity has been contracted over the last five years meaning another 44 GW of corporate renewable capacity needs to come online by 2025. In order to reach this, annual corporate renewable capacity needs to match the 6.5 GW peak seen in 2018 every year for the next seven years.

2019 is off to a strong start. Amazon.com Inc.Starbucks Corp.Microsoft Corp. and many others have already signed deals this year. Some outlets project corporate capacity could reach 10 GW in 2019. Increasingly robust renewable contracts better tailored for corporate needs are helping to drive these strong projections along with lower costs of wind and solar and aggressive sustainability targets for hundreds of companies worldwide.

Corporate power purchase agreements accounted for over 20% of the total PPA capacity signed in the U.S. in 2018 affirming the corporate renewables market as a legitimate disruptor to the traditional energy model. If upcoming projections are accurate and the lofty renewable capacity targets are met, this disruption will turn into a permanent shift in the way renewable energy projects are planned.

Regulatory Research Associates is group within S&P Global Market Intelligence.

For a complete, searchable listing of RRA's in-depth research and analysis, please go to the S&P Global Market Intelligence Energy Research Library.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.

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