Corporate buyers are playing a decisive role in advancing clean energy projects in the US, according to a new report commissioned by the Clean Energy Buyers Association (CEBA).
The report stated that without voluntary commitments from companies to purchase renewable power, many projects would face financing challenges, threatening the ability to meet rising US electricity demand.
It also underscores the importance of virtual power purchase agreements (VPPAs), which allow companies to lock in long-term contract with renewable energy projects to buy the future electricity generated at a predetermined price.
Securing financing for a project is contingent upon the loan provider having clarity on who will purchase the electricity and at what price.
Without such contracts in place, projects are unlikely to obtain the necessary loans for development.
CEBA US strategy senior vice-president Misti Groves stated: “It confirms that corporate buyers are critical to ensuring the US can build enough clean energy at the pace and scale that's needed to meet skyrocketing power demand from the growth in artificial intelligence, electrification, and a resurgence in US manufacturing.”
Pine Gate Renewables executive vice-president David Groleau stated: “Corporate buyers are the backbone of clean energy deployment, anchoring project financing and shaping the future of reliable, cost-effective power.”
Pine Gate is a US-based company that develops, owns and operates utility scale solar and energy storage projects.
Completed by the renewable energy data firm REsurety, the study examined the economic performance of 251 wind and solar projects within three key power markets: the Electric Reliability Council of Texas (ERCOT), the Midcontinent Independent System Operator (MISO), and PJM Interconnection.
The findings revealed that the renewable power projects frequently encounter substantial financial challenges in generating revenue without the backing of corporate buyers.
VPPAs decrease the number of projects experiencing financial difficulties – by 90% in MISO and PJM, and by 80% in ERCOT.
Renewable energy certificates (RECs) play a significant role by decreasing the number of projects facing financial difficulties by 30% and offering a stable source of additional revenue.
Since 2016, corporate buyers have emerged as a stabilising influence in the US clean energy sector, contributing to more than 40% of the new clean energy capacity additions.
Solar energy company Primergy chief commercial officer Emily Cohen stated: "The acceleration of corporate purchases from clean energy projects transformed the US market over the past 10 years, providing developers and owners long-term, stable revenues on projects and a view on future demand to help maintain continued growth.
"As new markets evolve, we are excited to see more corporates buying energy across the country to bring the benefits of new energy resources."
CEBA is a business trade organisation dedicated to mobilising a network of energy consumers and partners to implement market and policy strategies aimed at achieving a carbon emissions-free energy system.
Its membership comprises 400 entities, encompassing one-fifth of the Fortune 500 and representing a market capitalisation exceeding $33tn.
It contains institutional energy consumers of all kinds and sizes: corporations, industrial companies, universities and municipalities.
