Investment in renewables sank last year but Australian companies are still backing the sector, as solar power delivered to corporations doubled.

Solar power generated and delivered to corporations via power purchase agreements (PPAs) hit 1 gigawatt (GW), a 100 per cent increase on 2018, according to Bloomberg New Energy Finance (BNEF), an industry consultant.

It said a growing number of power retailers began offering “sleeved” deals to deliver solar power to corporate buyers.

A sleeved system is when a corporate buyer relies on an intermediary to source and deliver the power, rather than going directly to the generator and dealing in the complicated wholesale energy market themselves.

Between 2016 and November 11, 2019, corporate PPAs have supported projects with a combined capacity of 4.2GW, according to industry consultant Energetic’s PPA Deal Tracker.

It says about 53 per cent of projects backed by corporate PPAs is solar, 8 per cent a mix of wind and solar, with the remainder wind. Victorian projects continue to dominate with 41 per cent of project capacity — about 1.7GW — supported by corporate PPAs.

Small cap power company ERM Power (ASX:EPW) — recently acquired by Shell Energy Australia — launched a PPA offer in August.


Corporate power drive

Globally, companies are driving demand for renewable energy. Until recently renewable energy projects needed a retail buyer in order to get built, but corporate PPAs are often now providing that contractual security.

Corporations bought a record amount of clean energy through power purchase agreements (PPAs), up 44 per cent from the previous year’s record.

The majority was in the United States, led by Google, Facebook and Amazon, but it’s a global trend backed by corporate sustainability commitments, BNEF said in its 1H 2020 Corporate Energy Market Outlook.

Some 19.5GW of clean energy contracts were signed by more than 100 corporations in 23 different countries in 2019. This was up from 13.6GW in 2018, and more than triple the activity seen in 2017.

“The 2019 total was equivalent to more than 10 per cent of all the renewable energy capacity added globally last year – and the projects involved are likely to cost between $20 billion and $30 billion to develop and build,” the report said.

Jonas Rooze, lead sustainability analyst at BNEF, said corporations had purchased over 50GW of clean energy since 2008, a figure that is bigger than the power generation fleets of markets like Vietnam and Poland.

“These buyers are reshaping power markets and the business models of energy companies around the world,” he said.

A growing number of oil and gas companies are signing clean energy deals. In the US Occidental Petroleum, Chevron and Energy Transfer Partners all signed solar contracts in 2019, following in the steps of ExxonMobil, who kicked off the trend by signing two PPAs totalling 575MW at the end of 2018.

In Australia, Viva Energy (ASX:VEA) secured a 100GWh per annum sleeved deal with Acciona to supply about a third of the needs of its Geelong oil refinery.