BNEF: US Corporations Led Clean Power Buying In 2023

• Announced corporate offtake agreements in 2023 totaled 46 GW, with a 12% annual increase 
• BNEF says the most growth was seen in the market of Europe where the contracts grew by 74% annually 
• More such agreements are expected to take off in the future as companies need to achieve their decarbonization goals 

Corporate appetite for solar and wind energy continues to grow as they announced contracts for 46 GW DC of this capacity in 2023, with Amazon retaining its hold as the world's largest corporate clean energy buyer for the 4th consecutive year. 

Bloomberg New Energy Finance (BNEF), in its 1H 2024 Corporate Energy Market Outlook, says this 46 GW DC represents an annual growth of 12% over the 41 GW DC announced in 2022. Previously, the analysts had pegged new renewables capacity contracted by corporates in 2022 at 36.7 GW DC (see Corporates Signed Up For 36.7 GW DC Clean Power In 2022). 

Regional contribution 

Analysts attribute this growth to improving economics in key regions like Europe and imminent clean energy goals of companies as the main drivers. 

The volume of such contracts signed in Europe represent a 74% annual jump to 15.4 GW DC, accounting for 33% of the total signed last year. European PPA market boomed as supply chain troubles eased and economics were much more attractive in Spain, Germany, the UK and the Netherlands. These 4 countries alone covered over half of the deals in the continent in 2023. 

What has also improved over a period of time is a variety of contracting structures to help companies decarbonize their energy consumption, explains BNEF's Head of Sustainability Research and Lead Author of the report, Kyle Harrison. 

According to Harrison, "These contracts are now the centerpiece in many companies' sustainability strategies, rather than a nice-to-have." 

Corporates in the Americas contributed 45% or 20.9 GW DC of the 46 GW DC. However, the US continued its run as the largest market for PPAs with 17.3 GW DC of announced deals, yet it was a decline of 16% on an annual basis, from 20.6 GW DC it reported in 2022.  

BNEF points out that the economics of signing PPAs were weaker in the US as compared to Europe. Developers were locked into expensive equipment contracts signed during supply chain bottlenecks. High interest rates compounded the problem, leading to a 4% increase in PPA prices H1/2023. 

"Power prices didn't rise at the same rates, resulting in buyers holding off on signing deals until the market recalibrates," the report points out for the US market.  

Top buyers 

Among corporates, Amazon maintained a huge lead over its peers as it announced 8.8 GW DC of PPAs across 16 nations, comprising 5.63 GW DC solar and 3.13 GW DC wind. Its clean energy portfolio of 33.6 GW DC is greater than the entire power generation fleet of Belgium and Chile, according to the report.  

Amazon was followed by Meta, which announced contracts for 3.05 GW DC solar last year, and LyondellBasell with 1.33 GW DC of wind and solar. 

Top suppliers 

French utility Engie toppled AEA from the top spot having sold 2.4 GW to corporations last year. The leader for last 2 years, AES, sold 1.9 GW in 2023. India's Tata Power is on the 3rd place having signed corporate contracts for 1.2 GW, followed by Lightsource bp's 1 GW and 900 MW by Eneco as the top 5 developers.  

More private companies across the globe are expected to enter more such contracts in the future. BNEF estimates that companies committed to 100% clean energy targets under RE100 will need an additional 105 GW solar and wind by 2030. 

Harrison added, "With the rise of artificial intelligence, electrification of transport and increased need for manufacturing, we expect power demand from the private sector to surge in the coming years. Clean energy, especially through PPAs, will likely be many companies' first, best option."