2015 BRIEF
2015 was a Record-Setting Year for Renewables.
2016 Promises to Maintain the Momentum.
At the beginning of 2015, industry leaders—including Renewable Choice—predicted
it would be the tipping point for renewable energy in the United States. This
supposition came on the heels of an extraordinary 2014, when the momentum of
corporate renewable energy buying was only beginning to gain ground.
2015 exceeded our most ambitious expectations. At the
start of the year, there was nearly 66,000 megawatts
(MW) of wind power installed in the United States. By
November, utility scale wind projects surpassed the 70,000
MW threshold. There are now 50,000 wind turbines in
operation in the U.S., providing low cost, renewable energy
to the equivalent of 19 million American homes. Solar
power development also continued to boom; a new solar
installation went on the grid every two minutes in 2015, and
total projected capacity for the year was expected to exceed
28,000 MW.
This incredible rate of growth in renewables was felt most
keenly in the commercial sector. Together, institutional
buyers of long-term renewables secured more than 3,000
MW of new wind and solar through Power Purchase
Agreements (PPAs). These buyers were racing the clock: by
completing PPAs before the expiration of the Production Tax
Credit (PTC) and Investment Tax Credit (ITC), they were able
to save millions of dollars versus the projected price of grid
power while also making strides towards accomplishing
their sustainability goals. Chief among these buyers was
Google, who committed to an astonishing 824 MW in total
wind and solar commitments in 2015. But other leaders in
the data space—including Amazon Web Services, Equinix,
and Salesforce, among others—signed major PPAs, and
companies from a wide cross-section of industries are
following suit.
To improve its energy portfolio and meet its
sustainability goals, Amazon Web Services made
a commitment to 100% renewables in 2014. The
company invested in its first long-term PPA in early
2015, and has since completed three additional deals
for a total of 538 MW of new wind and solar energy to
power its data centers around the U.S.
The massive upswing in corporate buying was bolstered
by favorable renewable energy economics and increasing
pressure from NGOs for businesses to act on climate change.
2015 brought growth in both the RE100 list, which went from
only a handful of highly visible members to a cadre of more
than 50 multinational corporations, and WWF’s Corporate
Buyers Principles. The Rocky Mountain Institute’s Business
Renewables Center rapidly expanded from its initial
founding body, and the White House launched the American
Business Act on Climate Pledge to correspond with President
Obama’s Climate Action Plan. To date, 154 businesses have
signed the pledge.
Perhaps most important, however, was the triumvirate of
the Clean Power Plan, the U.N.’s COP21, and the so-called
Tax Extenders Omnibus Spending Bill. Both the Clean Power
Plan and COP21 resolution are poised to radically change
energy generation in the U.S., while the passage of the Tax
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Extenders legislation will guarantee the PTC and the ITC
remain in place over the next five years, with an associated
projection of 37 GW of new wind and solar during that time.
The bipartisan bill will continue the solar industry’s existing
30% investment tax credit through 2019, at which time it
will begin to scale back until it reaches 10% in 2022. The PTC
will step down over the five year period until it expires in
2020, under the assumption that continued high demand and
rapidly falling cost of wind energy production will allow the
industry to compete with fossil fuels on a level playing field
by that time.
Georgetown, Texas made a splash in 2015 when
the town of 50,000 signed a 25-year PPA with
solar developer SunEdison. Together with the 145
MW wind deal it brokered with EDF Renewable
Energy in 2014, the town is on track to source 100%
of its energy from renewables. Its reasons? The
town cites rapidly falling wind and solar prices,
combined with the water it will save from avoiding
coal-fired power, as its primary motives.
These combined factors mean that there has never been
a better time to buy renewables.
As we enter 2016, the wind and solar industries are poised
for yet another record-breaking year. Projects that were
due to lose tax incentives at the end of 2015 will now receive
the full PTC/ITC subsidy, and new projects that were waiting
for the legislature’s decision can begin redeploying capital
into the next set of wind and solar projects. This is ready
news for commercial buyers, who have proven themselves
to be an emerging and sophisticated customer class.
The primary buying tool of choice for large-scale, long-term
buyers is the PPA, a form of direct contracting that allows
organizations ranging from corporations to universities to
work with project developers to purchase renewables. In
a PPA, organizations have the freedom to select from a
variety of projects that match their financial, environmental,
and situational goals and constraints. Successful deals
generally involve a third-party buyer’s agent, such as
Renewable Choice Energy, who can help a new buyer
navigate this unique contract structure.
However, 2016 points to a variety of up-and-coming
technologies and contracting structures in addition to
PPAs that could prove promising for large and small buyers.
Chief among these are aggregation arrangements, such as
virtual net metering and solar gardens, which allow buyers
of various sizes to combine their purchasing power and
participate in smaller portions of large-scale renewable
projects. There is also increasing interest in international
markets such as India and Mexico, where demand for
renewables is on the rise, and in other developing countries,
where projects are bypassing fossil fuels entirely in favor of
wind and solar.
Since the University of Oklahoma completed the
first commercial PPA in 2008 for 101.2 MW, more than
25 other institutional buyers have executed PPAs, for
a total of nearly 6,000 MW of new wind and solar.
The momentum in commercial renewables that has been
building for the past few years will continue, and accelerate,
in 2016. That means that now is the opportune time to begin
developing an energy strategy that incorporates carbon
reductions and renewable generation. With such a strategy,
it’s possible for organizations to reach their sustainability
goals, and, potentially, save thousands—even millions—of
dollars in energy costs over time.
Renewable Choice has been helping companies buy renewable energy for more than 14 years.
We’ve been recognized for our efforts by the Environmental Protection Agency as the Green
Power Supplier of the Year three of the past four years, and we’ve advised companies on more
than one GW of wind and solar power PPAs. Whether you’re just getting started, thinking about
increasing your commitment, or ready to look at a large-scale buying strategy, our team of
renewable energy experts can help you find the right products and services to meet your needs
and accomplish your goals. Contact us today for more information.
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