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Google And Amazon At The Forefront Of U.S. Renewable Energy Investment

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Energy
Google And Amazon At The Forefront Of U.S. Renewable Energy Investment

More than 10 GW of solar and wind capacity was installed in the United States in 2017, according to S&P Global Market Intelligence estimates. Driven by state renewable portfolio standards and declining costs, wind and solar capacity has grown at an average annual rate of 13% and 63%, respectively, between 2010 and 2017.

While state policy initiatives are the main factor responsible for the growth of renewable capacity, clean energy investments from commercial, industrial, and institutional, or C&I, entities have also been increasing over the last decade. Motivated by profitability and green initiatives, these companies use renewables as an investment opportunity, a pledge to increase demand for clean energy, and a chance to reduce the company's carbon footprint.

Each organization has a different objective: deciding whether to offset a portion of the company's electrical usage, for example, or to be one of the 120+ companies on the RE100 list with the ultimate goal of operating on 100% renewable energy. Currently, C&I accounts for around 13% of all renewable power currently installed or planned within the U.S. Of that 13%, wind accounts for 84% of C&I capacity.

Utilizing existing or new renewable resources, the C&I sector participates in multiple ways, providing flexibility for accomplishing each corporate initiative. Purchasing and selling renewable energy certificates is a one of the main mechanisms for participation.

One REC is the equivalent of purchasing one megawatt-hour of electricity generated from a renewable energy source. Another option is signing a power purchase agreement, or PPA, for several years' worth of a facility’s output. Some companies believe the advantage of using a PPA is that it provides a constant revenue stream to renewable energy developers and enables capacity to be built closer to the company's own load centers.

As a result, the funding can be used to develop and build new renewable plants. It is not uncommon for C&I companies to utilize both of these approaches, buying RECs and electricity via PPA from renewable plants. C&I capacity development also takes place "behind the meter," consisting of solar and wind plants built on-site. Although the scale is typically smaller than wholesale renewable facilities, distributed generation can also be used to fulfill C&I objectives.

S&P Global Market Intelligence estimated the total development of wholesale renewable projects in the U.S. attributable to C&I sponsors. Sponsorship is distributed across many firms, with most firms having less than 500 MW under development. Google leads in U.S. C&I renewable energy capacity, with nearly double the megawatts of the next largest company, Amazon. Together, these two companies own 20% of all renewable C&I capacity. S&P Global Market Intelligence estimates that the top 10 C&I companies account for 41% of currently operating and planned projects.

This report was produced using S&P Global Market Intelligence power forecast data.

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