Who’s Buying Green Power? – 7/22/16

Green power has only recently started to get competitive with conventional power on a cost basis so why are so many major organizations buying in already? According to the Bloomberg New Energy Finance database of more than 600 corporate power-purchase agreements (PPA), buyers range from the Pentagon and Google to Wal-Mart and Procter & Gamble with more companies buying more clean power each year.

Part of the explanation is that renewable power costs have been falling at relative large and consistent rates, and really are reaching competitive price levels in some areas. As illustrated in the BNEF graph below, PPA prices are only a fraction of what they once were for wind and solar with solar in particular seeing massive declines in price.

Screenshot 2016-04-23 at 8.29.16 PM

Another BNEF graph shows that the trend is expected to continue thanks to the permanent technological improvements to solar cells that have brought down hard costs.

solar power

As a result of similar improvements in turbines, wind has already become competitive with conventional sources of energy in many places, particularly the Great Plains region. The Plains region includes part of Texas, a state where wind has done remarkably well even beating out natural gas for new electric generation capacity additions in 2015.

by state

Besides the underlying economics, there is a more subtle incentive driving adoption of clean power. A desire to appear “green” to an increasingly climate conscious society is tipping the scales in favor of investment in renewables; it is changing equations for decision making by adding in perceived goodwill to outweigh the added costs. The Pentagon is no exception to return on investment principles that ask it to get the most bang for its buck and clearly showing a progressive stance has some value to the Department of Defense, at least while a progressive president is in office.

Other big buyers of PPA contracts are the large companies you might expect. Google, Amazon, Microsoft, Apple and Facebook all make the list as the power hungry that can afford to pay a little extra for their power and need a lot of it, and it shouldn’t be surprising to see a lot of California ties on the list.

Screenshot 2016-07-28 at 1.45.51 PM

The Great Plains dominate in wind but California is certainly the sunshine state when it comes to solar development.

Screenshot 2016-07-27 at 3.03.05 PM

Record breaking investment in green power is happening at a time when the shale-gas revolution has sent conventional power prices plummeting. With short-term prices for natural gas so low and unlikely to rise much with the U.S. access to massive domestic deposits, decision makers must have a good reason for buying into alternative energy.

Screenshot 2016-07-27 at 3.03.53 PM

Print Friendly, PDF & Email

Comments are closed.