Published on 24 August 2018

CSR

The world’s largest companies are betting on renewable energy for long-term growth

Large companies have already purchased more renewable energy since the beginning of the year than all of 2017, according to the Bloomberg New Energy Finance (NEF) study, published in August. They purchased 7.2GW of renewable energy compared to 5.4GW in 2017 via long-term contracts. This is seen as a sustainable strategy and an alternative to current energy suppliers and internal production methods.

Solar panels on a Walmart's rooftop in California
@Walmart

As the United States back-pedals towards fossil fuels, companies are increasingly supplying themselves with renewable energy sources. To do this, they have several possibilities: contracting energy suppliers with green-certified energy, or producing electricity internally, via wind turbines or solar panels installed on-site. A new trend has also been to sign long-term contracts directly with energy producers through corporate power purchase agreements (PPA).

This new mechanism has a bright future ahead. Having seen a large volume increase since 2015, PPAs should break a new record in 2018. In the first seven months of 2018, large companies (excluding utilities), have already signed contracts to purchase 7.2GW of renewable energy compared to 5.4GW for the whole of 2017, according to the Bloomberg NEF (1).

Tech companies lead the market in clean energy

American companies are leading the market (accounting for 58%), particularly the technology sector, which initiated the trend. Facebook is the largest buyer, having purchased 1.1GW of clean energy, followed by AT&T (820 MW) as well as Microsoft and Google. "The clean-energy demands of these corporations proves that they are resilient to the impact of the Trump administration's policies," says Kyle Harrison[KH1] , an analyst at Bloomberg NEF.

In Northern Europe, aluminium manufacturers Norsk Hydro and Alcoa are driving growth, thanks to agreements signed in Norway and Sweden. They account for 75% of the 1.6GW purchased by European companies.

A good choice for the planet…and business

What will allow businesses to achieve their climate goals? Several RE100 companies, a coalition committed to providing exclusively renewable energy by 2030, are at the top of Bloomberg's ranking. Though significant, more is needed to achieve their goals: Ikea, HSBC, Axa and Apple, will have to buy 197 TWh of additional clean energy during this period, according to Bloomberg. The ripple effect of this growing movement could have "an increasing impact on the design of the energy market around the world, opening up new opportunities for businesses to buy clean energy," according to the report. So, what will drive the market for clean energy?

This is not just a sustainable development strategy, according the American firm. The move towards clean energy is also seen as a rational decision. "We're seeing corporations locking into fixed, long-term clean energy contracts, hedging against volatile prices in the wholesale market," according to Bloomberg. Today, renewable energies are extremely competitive and will be more so in the long-term with coming regulations. In certain markets, renewables are already the cheapest option. Since 2010, the cost of photovoltaic modules has decreased by 84% on average, and 32% for that of wind turbines.

Béatrice Héraud @beatriceheraud


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