Corporate Purchasers of Wind Energy
Corporations and other non-utility purchasers are setting ambitious targets for renewable energy procurement, and are choosing wind energy more than any other energy source. Wind energy provides a stably priced, low-risk solution for these companies seeking to power their business facilities with clean, renewable energy.
A Growing Demand Market
60 percent of Fortune 100 companies, and 43 percent of Fortune 500 companies, currently have a renewable energy target, a greenhouse gas reduction target, an energy efficiency target, or some combination of the three. More than a dozen Fortune 500 companies, including Wal-Mart, Google, and General Motors have committed to 100% renewable energy targets, and these companies are increasingly procuring wind energy to both meet their sustainability goals and secure long-term electricity price stability.
The preferred investment option for corporate and other non-utility customers is to sign a power purchase agreement (PPA), either physical or virtual, for the energy produced by a specific wind project. 39% of the megawatts (MW) contracted through PPAs in 2016, or 1,574 MW, were signed by corporate and other non-utility customers, and more than 5,000 MW in PPAs have been signed to date. Early adopters included Wal-Mart, Harvard University, and Google between 2009-2010.
Alternatively, these customers may choose direct wind project ownership, with recent investments ranging from a 165 MW Illinois wind farm purchased by IKEA in 2014 to two utility-scale wind turbines installed onsite in Ohio by Whirlpool Corporation in 2015.
A "No-Regrets" Investment
As provided by AWEA's latest fact sheet, corporate and other non-utility customers recognize the economic value of wind energy. As detailed in Lazard's 2016 Levelized Cost of Energy Analysis, the cost of wind energy fell by two-thirds over the past seven years, with LBNL noting in the 2015 Wind Technologies Market Report "a clear downward trend in PPA prices since 2009 and 2010 ... After topping out at nearly $70/MWh for PPAs executed in 2009, the national averge levelized price of wind PPAs with the Berkeley Lab sample has dropped to around the $20/MWh level."
The following companies explain why wind is an increasingly competitive energy source:
- ”Wind in the US ... has tremendous economics. With cost parity to the fossil fuel alternative it makes sense.” Mars Statement on 211 MW Investment in Mesquite Creek Wind Project, 2/17/2015
- “The US has amazing wind and sun resources that will never run out. We are delighted to make this investment – it is great for jobs, great for energy security, and great for our business ... We invest in our own renewable energy sources so that we can control our exposure to fluctuating electricity costs.” IKEA Statement on 98 MW Investment in Hoopeston Wind Project, 4/10/2014
- “When looking at wind deals, cost savings are one attribute I can bring up when I talk to our finance and accounting department. Have you ever seen your electric bill go down for multiple years at a time?" Rob Threlkeld, General Motors, 5/27/2016
- “Dow is always looking for win-win solutions – good for the environment and good for business. By entering into this agreement, Dow is taking a serious approach to our future energy needs in Texas and cost-competitive wind energy is a great opportunity.” Dow Chemical Statement on 200 MW PPA with Javelina Wind Project, 3/13/2015
Corporate and other non-utility customers have signed PPAs for wind projects in 12 states to date. These states and others can attract jobs and economic development through pro-renewable energy policies. These policies not only encourage wind project development, but companies investing in wind prefer to site new data centers and other facilities near the wind projects where their energy is procured. The 58 signatories to the Corporate Renewable Energy Buyers' Principles confirm that “where possible, we would like to procure renewable energy from projects near our operations and / or on the regional energy grids that supply our facilities so our efforts benefit local economies and communities as well as enhance the resilience and security of the local grid.”