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Procurement of solar and wind projects by corporations is on the
rise globally. However, the United States continues to be the
largest market for corporate driven renewable power purchase
agreements (PPAs). IHS Markit's most recent estimate anticipates
the corporate sector accounting for about 20% of utility scale
renewable additions in the United States in the next decade
(including direct PPAs, virtual PPAs, and green tariffs/sleeved
PPAs).
Though the COVID-19 pandemic has delayed some construction
plans, the growth in corporate contracting over prior years is
expected to contribute to nearly 8 GW of wind and solar
installations in 2020, an annual increase of over 45%.
Furthermore, despite COVID-19 impacting 2020 contracting, an
increasing number of corporations are setting renewable targets and
aiming to take advantage of tax credit availability in the
short-term. There are about 220 companies operating in the US that
are already procuring renewables or plan to do so and about 40% of
these companies have targets that escalate through the early to
mid-2020s.
Activity to date has mostly occurred in states with organized
wholesale power markets and retail choice, such as ERCOT.
Though unbundled power markets continue to see high growth, the
increasing adoption of green tariff programs to meet corporate
demand for renewable projects closer to load, will create new hot
spots as well. Green-tariff programs typically have a megawatt cap
on participation, but are frequently expanded after becoming fully
subscribed, such as in Utah, Michigan, North Carolina, and
Virginia.
Analysis of existing procurement trends, company targets,
progress toward targets, power consumption patterns, potential
entrants, state policies, solar and wind economics, and timelines
for transitioning from contracting to installation provide insight
into IHS Markit's recently released outlook for corporate
procurement, which projects 44 GW of solar and wind additions from
2021 to 2030. The outlook reaches 72GW, in a case which has active
companies escalating existing procurement strategies and a greater
number of new corporations entering the segment.
To date, the technology sector has dominated corporate renewable
procurement, but there is significant growth potential in sectors
with high consumption patterns, ambitious targets, and low to
moderate renewable procurement to date, such as manufacturing and
telecommunication.
In addition to expanding sector participation, we expect to see
a shift in technology as well. Incremental cost improvements, the
rush to capture the ITC before its phaseout, and widespread
resource availability enable solar to capture 65% of the total
corporate renewable market in the next decade.
