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US corporate renewable procurement is surging, with more than 6
GW of direct, indirect, and financial power purchase agreements
announced in 2018, more than double that of the prior year. This
surge is being fueled by shareholder and consumer pressure, the
opportunity to hedge power costs, and corporate renewable targets,
and is leading IHS Markit to increase its outlook for wind and
solar deployment in the coming decade.
More than 130 companies accounting for 4% of total national
power demand are actively procuring renewable power in the US, 50
of which have committed to 100% renewable targets to date.
Importantly, there is a notable shift from procurement of unbundled
renewable energy certificates (RECs) to contracting for resources
from specific projects to meet targets.
Figure 1: Large electricity consumers' US total renewable
procurement as a percent of US electricity use, 2018
Information and technology companies, including Amazon, Apple,
Facebook, Google, and Microsoft, have led the way in procuring
renewables, driving half of all contracted corporate renewable
deals. However, an increasingly diverse pool of companies are
purchasing renewables. Oil and gas companies have recently jumped
into the market for project-specific renewable contracting, with
ExxonMobil and Shell inking three deals at the end of 2018 for a
cumulative 600 MW of wind and solar. With the large number of
energy-intensive oil and gas facilities in ERCOT, an attractive
market for corporate offtake owing to low prices and market access,
there is potential for this sector to take on increasing
importance.
IHS Markit expects further growth of renewable capacity driven
by large corporate procurements, with shifting trends between wind
and solar and expansion of activity in to other markets in the
future. To date, wind has accounted for the majority of corporate
procurement owing to the correlation between great wind resources
and favorable market structures (retail choice and organized
wholesale markets), but solar is gaining ground as costs decline,
the $25 per MWh Production Tax Credit available to wind reaches its
expiration date, and interest in matching load and generation
shapes increases.
IHS Markit expects large corporations' renewable targets to
drive about 60 GW of new capacity additions, through
project-specific contracting, from 2019 to 2040. The outlook was
derived through bottom-up analysis that incorporated company
renewables targets, the progression of corporate-driven additions,
the impact of state policy on geographic diversity, and the impact
of our technology cost and wholesale power price outlooks on
technology-choices. Learn more about our power
and renewables analysis.
Anna Shpitsberg is a director of global power and
renewables for IHS Markit.
Max Cohen is an Associate Director on the North American Power and
Renewables team at IHS Markit.
Emma Xie He is a senior research analyst on the North American
Power and Renewables team at IHS Markit.
Thomas Maslin is an associate director for renewable power at IHS
Markit.
