US corporate renewable procurement is surging, with more than 6 GW of direct, indirect, and financial power purchase agreements announced in 2018, more than double that of the prior year. This surge is being fueled by shareholder and consumer pressure, the opportunity to hedge power costs, and corporate renewable targets, and is leading IHS Markit to increase its outlook for wind and solar deployment in the coming decade.

More than 130 companies accounting for 4% of total national power demand are actively procuring renewable power in the US, 50 of which have committed to 100% renewable targets to date. Importantly, there is a notable shift from procurement of unbundled renewable energy certificates (RECs) to contracting for resources from specific projects to meet targets.

Figure 1: Large electricity consumers' US total renewable procurement as a percent of US electricity use, 2018

Information and technology companies, including Amazon, Apple, Facebook, Google, and Microsoft, have led the way in procuring renewables, driving half of all contracted corporate renewable deals. However, an increasingly diverse pool of companies are purchasing renewables. Oil and gas companies have recently jumped into the market for project-specific renewable contracting, with ExxonMobil and Shell inking three deals at the end of 2018 for a cumulative 600 MW of wind and solar. With the large number of energy-intensive oil and gas facilities in ERCOT, an attractive market for corporate offtake owing to low prices and market access, there is potential for this sector to take on increasing importance.

IHS Markit expects further growth of renewable capacity driven by large corporate procurements, with shifting trends between wind and solar and expansion of activity in to other markets in the future. To date, wind has accounted for the majority of corporate procurement owing to the correlation between great wind resources and favorable market structures (retail choice and organized wholesale markets), but solar is gaining ground as costs decline, the $25 per MWh Production Tax Credit available to wind reaches its expiration date, and interest in matching load and generation shapes increases.

IHS Markit expects large corporations' renewable targets to drive about 60 GW of new capacity additions, through project-specific contracting, from 2019 to 2040. The outlook was derived through bottom-up analysis that incorporated company renewables targets, the progression of corporate-driven additions, the impact of state policy on geographic diversity, and the impact of our technology cost and wholesale power price outlooks on technology-choices. Learn more about our power and renewables analysis.

Anna Shpitsberg is a director of global power and renewables for IHS Markit.
Max Cohen is an Associate Director on the North American Power and Renewables team at IHS Markit.
Emma Xie He is a senior research analyst on the North American Power and Renewables team at IHS Markit.
Thomas Maslin is an associate director for renewable power at IHS Markit.

Posted 27 September 2019.

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.