First-Time Buyers Are Dominating Corporate Renewable Purchasing
For years, just a handful of companies—especially Google—comprised the market for large-scale, off-site renewable energy procurement. In 2015, Google reigned again, announcing more MW of green energy than any other single company: 729 MW, including the single largest deal of the year, a 225-MW agreement to buy wind power from BRC-sponsor Invenergy. “Google continues to dominate the market,” says Lily Donge, a principal at RMI and head of its Business Renewables Center (BRC). “They continue to be juggernauts and we expect more to come from them.”
But the bigger story is about a changing of the guard: first-time corporate buyers are entering the market in droves and now account for the majority of both deal announcements and contracted MW of wind and solar energy. The deals announced in 2015 amounted to 3.44 GW of energy, nearly triple the total for 2014, which was double the total for 2013 (see figure). A whopping 2.29 GW of 2015’s year-end numbers, or slightly more than two-thirds of the total, was purchased by corporations new to utility-scale renewable energy.
2015 was the Year of the First-Time Corporate Buyer
More than 20 corporations announced major renewable energy deals in 2015; a whopping 15 of them were first-time buyers (see sidebar), accounting for 67 percent of the 2015 market. This is a tidal shift and the BRC—with its members, sponsors, and advisors—is proud to be playing a role. BRC-affiliated companies represented 85 percent of deals and 86 percent of contracted capacity.
Their ranks included Equinix, a BRC member that announced nearly one-third of a gigawatt of renewable power in 2015, entering the market emphatically. Donge says, “Equinix entered the market with a bang—they were able to do three deals in two months.” Equinix announced deals with several market players, including BRC sponsors NextEra Energy Resources and Invenergy.
Equinix also has the distinction of being among the largest corporate renewable power purchasers despite not being in the Fortune 500. Equinix is ranked 884 on the Fortune 500 list and shows that utility-scale renewables are not the exclusive domain of the largest companies. “Over the past two years, companies outside of the Fortune 500 have gotten more involved in the market,” explains Anthony Teixeira, a senior associate at RMI and part of the BRC team. “After accounting for only eight percent of corporate renewable purchases through 2013, companies outside the Fortune 500 signed 25 percent of the contracted volume in 2014–15.”
First-time buyers continued to dominate in 2016
Less than two months into the year, first-time buyers are again putting their stamp on the market. Four deals have already been announced. At the beginning of February, BRC member Steelcase announced its first deal—for 25 MW of wind. That same week, BRC member Lockheed Martin announced its first deal as well—for 30 MW of solar. And one week later, BRC sponsor Invenergy announced 120 MW of wind with 3M.
The fourth deal announced so far this year was from BRC member Saleforce—for 24 MW of wind. But Salesforce had just announced its first deal in December 2015, so the ink was barely dry before it announced a follow-on deal in early 2016. It’s essentially a first-time buyer, too.
This flood of first-time buyers is a powerful sign of the market maturing, with more first-time buyers to follow. The BRC’s Lily Donge explains: “The moment a first-time buyer walks into any marketplace, we know that all market participants are working hard to make a good first impression. The buyers may well go for another purchase—in this case a solar or wind project—but just as importantly, their first-time deal and then repeat deals will be strong signals telling other major corporations that this is the market to be in.”
If recent signs are any indication, corporations are getting the message. A recently released Deloitte report called “corporations buying renewables” one of eight trends shaping the grid of the future. The unanswered question for now remains, “Which companies will enter the renewables market for the first time over the course of 2016?” Time will soon tell.