Corporate Procurement of Renewable Energy as a Key Driver in the Decarbonization of the Power Industry

Abstract

Private companies, motivated by commitments to sustainability, have become important purchasers of utility-scale renewable energy, contracting for over 11 GWs of capacity in the past five years. This paper discusses the history and key drivers of growth in the corporate procurement of wind and solar energy. It provides a view on the potential for continued growth of corporate buyers. The paper identifies two barriers to accelerated growth - the industry’s current use of a complicated contracting structure and related limited access to capital markets financing alternatives. Other positive market fundamentals including lower wind and solar costs and structural innovations such as aggregated buyer consortiums are reviewed. A corporate underwriting model is offered as a potential catalyst to simplify contracting structure and financing access. Syndicated debt, commercial paper, green bonds, and securitization are analyzed as potential financing vehicles available in a corporate style underwriting. Google, as the early and consistent buyer in the space was used as a case study. The case study illuminates the challenges, opportunities and benefits Google has experienced in its eight-year journey. Google’s unique definition of additionality as a key catalyst to industry growth is discussed.