Any doubt that renewable energy has arrived should be weighed against a new analysis by S&P Global Market Intelligence, which finds that some of the world’s biggest technology companies are fast becoming the biggest backers of large-scale solar and wind energy development.
The report, published this week has revealed that five of America’s largest technology-focused companies have entered into power purchase agreements for nearly 3,100 MW from renewable resources.
To put this in some Australian perspective, this is nearly three times the amount contracted so far by one of the nation’s biggest gentailers, Origin Energy, while another, EnergyAustralia, had secured a total of 285MW in PPAs in February.
According to the S&P report, the five US companies – Microsoft, Alphabet (Google), Amazon, Apple and Facebook – had 3,083MW of capacity contracted in current and future power purchase agreements, made up of 16 wind plants totalling 2,608MW and 11 solar plants totalling 476MW across the US.
Amazon topped the charts with five wind plants and six solar plants totalling 1,135MW. The biggest single contract was with the 253-MW Dermott Wind Farm (Amazon Wind Farm Texas) in Scurry County, Texas.
Google ranked second, with 1,106MW contracted from seven wind projects across the US, the largest deal being with Southern Co.’s 276-MW Bethel Wind Energy Facility in Castro County, Texas., with 225 MW of the facility’s output contracted as of February.
Facebook last year announced a plan to locate a data center in New Mexico and meet all its needs (potentially 60MW) with solar power from local utility PNM Resources, via three 10MW plants, all scheduled to come online in the first half of 2018.
Microsoft has 285MW of contracted renewable capacity, with 175MW coming from EDF Renewable Energy’s Pilot Hill Wind Project (K4 Wind Farm) in Kankakee County, Illanois.
Apple has three projects under future PPAs, the report says, with 130MW from First Solar’s California Flats Solar 130 plant in California; a recently announced 201MW from Avangrid Renewables planned 404MW Montague Wind Facility in Oregon, and 56MW from the Gala Solar Plant, also in Oregon.
As a Moody’s report released in March concludes, these contracts have come about, not from state-mandated renewable portfolio standards, but based on “long-view business thinking” from some of the world’s biggest and most cutting edge tech companies.
“The companies leading the effort often have in common high credit ratings, significant financial flexibility and robust liquidity,” the Moody’s report said.
“Therefore, they can afford to take a longer view to managing their business objectives, which more easily allows them to invest in these renewable energy sources directly and help influence change in the architecture of the renewables industry.”
As the Rocky Mountain Institute’s Ian Kelly explains, in terms of long-term electricity off take deals – which, as we know only too well in Australia, are the foundation on which large-scale renewable energy projects are built – established big tech companies and wind and solar farms are a perfect match.
“The credit rating is one of the most important factors that financiers look at to understand risk,” said Kelly, who is a manager at the RMI’s Business Renewables Center, a membership program that helps large businesses procure energy from renewable resources.
“If you have an off-taker with a shiny credit rating, and you trust that over the 15-to-20 year life of the PPA that the company will be around to pay the fixed price, then your perception of the risk in the investment will be that much less.
“They are essentially trying to minimise the risk, and be able to offer capital at a lower cost because of the lower risk, which in turn allows the developer to offer a lower PPA price to the off-taker, and it all fits together in that way.”
Of course, company goals are also driving the trend, as more and more big corporates commit themselves to the global effort to curb global warming. Several also participate in the RE100 initiative, a commitment to obtain all of their electricity, powering both their offices and their energy-intensive data centers, from renewable resources.