Boom times: Big corporations bought record clean power in 2022

Boom times are here for any developer who can sell clean power to tech companies — and particularly those who can guarantee a round-the-clock supply. 

The number of clean energy purchase agreements signed by large corporations hit record levels in 2022, BNEF found in a report published on Thursday.

Amazon and other tech companies led last year’s clean-electricity buying spree, in which large corporations committed to buying 36.7 gigawatts worldwide of new electric power — 18 percent above their 2021 levels.

The rise in power purchase agreements represents an important bright spot in sustainable investing, which has run into political and economic turmoil this year.

Developers who can guarantee a customer reliable clean electricity “have access to a wellspring of corporate clean energy demand and are poised to be the biggest winners in this market,” BNEF report author Kyle Harrison wrote in the report.

Tech companies — which depend on round-the-clock electricity to run data centers — have been particularly interested in renewable developments that offer “firming” services, which help fill in coverage gaps in a grid powered by renewable resources.

In particular, companies that can help guarantee a 24-hour supply of clean energy “are going to rise to the top,” Harrison said.

But Harrison expects the broader tide to boost clean energy of all kinds. “Look at how much clean energy Amazon bought this year —the equivalent of a small country’s power generation,” he said. “So there’s plenty of room for multiple developers to kind of sell power to Amazon or Google.”

For big companies facing turbulent oil and gas prices, Harrison added that signing a power purchase agreement — in which an electricity buyer helps finance a new energy project by agreeing to pay what it produces — can help avoid the risk of a sudden price surge.

The growth was a global phenomenon. Clean energy power purchase growth doubled to 4.6 gigawatts in Asia — where power purchase markets were a relative rarity just last year.  

But the record growth in the U.S. and Latin America helped drive global clean power purchase levels to new heights. 

Mining companies led that push in Latin America, seeking to decarbonize their operations with electric equipment. 

But in the U.S., that surge was mainly led by tech companies such as Amazon, Meta, Google and Microsoft.

Tech companies led the charge because of their dependence on electricity to run their data centers — and, increasingly, corporate fleets, like Amazon’s growing fleet of electric delivery vans. 

With that Amazon fleet slated to hit 100,000 vehicles by 2030, the e-commerce giant was the biggest buyer of power purchase agreements in 2022 — signing agreements for 11 gigawatts of power.

That brings Amazon’s total clean energy portfolio to 24.8 gigawatts of power purchase agreements — making it the seventh largest clean energy generator worldwide, including actual utility companies.

Meta, formerly Facebook, was the runner-up with 2.6 gigawatts, followed by Google with 1.6 gigawatts, and Microsoft with 1.3 gigawatts.

It’s not just tech companies. More companies are signing deals like the RE100, in which companies commit to secure 100 percent renewable energy by 2030. 

With 56 new signatories in 2022, the nearly-400 companies in RE100 have already signed deals to purchase 249 terawatts of clean energy.

But meeting their goals will require approximately 539 terawatts of power — or another 290 terawatts (116 percent) on top of what they have already installed.

Some companies, like Google and Microsoft, have committed to using renewable electricity 24 hours a day — an even higher bar, requiring even more power.

That’s because 100-percent agreements require a company to generate the same amount of clean electricity as it uses each year.

That allows the possibility that, in a pinch, operations can be met by fossil fuel power, which the company makes up for with increased renewable generation at another time.

Round-the-clock agreements offer no such leeway. In such a commitment, Harrison said,

 “Every hour, Google’s electricity consumption is fully offset by renewables. And something that they are seeking specifically is developers who can provide serving services because they can tailor a clean electricity structure that matches Google’s electricity demand over the course of the day.”

Harrison said that this is a particular opportunity for companies that can offer clean power despite the intermittency of wind and solar. “Developers who can provide that are much more valuable.”

The rise in power purchase agreements represents an important bright spot in sustainable investing, which has run into political and economic turmoil this year, the report found.

Money flowed out of sustainable finance in 2022 — from the worldwide fall in sustainable debt issuance and the shrinkage of carbon offset markets to investors’ turn away from sustainable exchange-traded funds.

But Harrison noted that despite that — and even as the Republican Party turns against the environment, social and governance (ESG) investment — the upheaval in global energy markets has helped turn the continued ramp-up of clean energy purchases by big corporations into a principal area of corporate consensus.

Without the conservative backlash, “I think volumes probably would have been a little bit higher,” Harrison said.

But even with those headwinds, the current 18 percent year-on-year growth is “a massive achievement. It shows that this segment of corporate sustainability makes economic sense for companies — it’s easy enough to do now at a large scale that companies will do it regardless of some of these macroeconomic and political factors.”

This story was updated at 2:30 p.m.