Wind deals are becoming even more popular with corporate renewables buyers

Wind energy always has been a source of cheap, utility-scale clean energy. Yet, with giant turbines centrally located, it was a lesser choice than solar for corporations looking for distributed renewable options. 

Now, thanks to the development of additional procurement options and even lower costs, corporate renewables buyers are turning to wind energy to quickly ramp up their clean energy procurements.

AT&T is a company that has turned mainly to wind power to meet its clean energy goals. Of its 1,500 megawatts of renewable energy procured, a little over two-thirds comes from wind, making the company the leading procurer of wind energy in the telecommunications sector. 

“Everything we do has to be at scale,” explained Shannon Carroll, director of global environmental sustainability at AT&T. “For us, it’s about finding the right opportunity, the right size, the right geography. Between the load, the financials and geography, the wind industry has matured over the last several years to give the best opportunities.”

According to “Wind Powers American Business,” a report from the wind advocacy group American Wind Energy Association (AWEA), the private sector has been a significant demand driver for wind energy, purchasing more 20 percent of all new wind installations in the United States for five years running.

Of course, corporations’ appetite for renewables is increasing across the board. Corporations are a similar driver behind solar, according to the Solar Energy Industries Association (SEIA). They collectively accounted for 22 percent of 2018 power purchase agreements (PPAs) for solar and wind in the United States. 

Still, the increase in wind projects, I wondered: What trends are driving corporations to pick more wind deals? 

1. Wind makes cheap energy 

The cost of wind energy has fallen 70 percent since 2009. As the price of wind projects has fallen, the types of companies entering wind procurement deals have become more diverse. While tech companies accounted for about 70 percent of all corporate wind projects in 2015, last year they made up less than 25 percent. 

Other sectors — including food, retail and telecommunications — accounted for a growing percentage of the wind pie. Notably, renewable energy procurement newcomers Gap Inc., Ball Corporation and McDonald’s all selected wind for their first solo renewable contracts last year.

“The larger landscape has to be there in terms of the economics and opportunities,” Carroll said. “The right-sized deal has to be available for the right-sized company. This is a maturing market, and you’re seeing more and more of that.”

With cost being a huge factor in a company’s renewable procurement choices, wind power’s falling cost and unique attributes mean there are regions and incentives that make it more attractive in certain cases. Other tax incentives, including solar’s Investment Tax Credit and wind’s Production Tax Credit, can change how projects pencil. 

2. Wind makes a lot of energy

One major difference between wind and solar: Wind turbines are really big. 

While rooftop solar and on-site PPAs drove corporate solar uptake in the early years with systems under a megawatt circa 2008-2014), wind isn’t as well suited for distributed applications. Some companies have on-site turbines, although it is less common. 

Virtual PPAs (in which a corporate doesn’t directly take the electricity, but takes the revenue from the electricity sold on the open market) changed all that. It opened the possibility of buying utility-scale wind — one of the cheapest sources of energy — far away from operations. 

VPPAs for wind took flight in 2013 and today account for 85 percent of corporate wind purchases.

With more than 200 companies committing to procuring 100 percent of their electricity from renewable sources on an annual basis, the demand for larger capacity projects also has grown. Since 2013, the size of the average capacity contracted skyrocketed, too — from less than 10 MW to almost 150 MW

Additional contract structures have made renewable procurements more accessible to companies, too. 

Last week, construction completed on a 419 MW wind project in Texas with four customers — Ecolab, Lowe’s, Intuit and Brown University — joining forces in a long-term power purchase agreement. This type of aggregation of buyers allows the offtakers to share transactional costs, opening up procurement opportunities to smaller companies. 

“The aggregated power agreement is an innovative and cutting edge partnership across these industries for wind energy and allowed Intuit to meet our 100 percent renewable electricity goal 10 years early,” said Sean Kinghorn, global sustainability program leader at Intuit, in an email. “In the past, aggregated purchase power agreements like this would have been off-limits to a buyer of Intuit’s size and comparably smaller electricity needs.”

3. Wind makes energy in different regions 

Different energy markets and resource potential (read: places where it’s windier or sunnier) means grid-scale solar and wind energy cluster in different parts of the country. 

For wind, 61 percent of all corporate deals executed so far are tied to projects in Texas, Oklahoma and Kansas. Texas alone accounts for 39 percent of corporate wind contracts, as the state is deregulated with retail choice, meaning customers can buy electricity from alternative suppliers than their utility. 

While I don’t have the raw data, these two maps — one from SEIA of solar projects more than 1 MW, the other from AWEA of wind projects — show how the two resources complement each other geographically.

As companies work to better match their renewable resources with their load demands, this geographic diversification becomes more important. Some companies, such as Starbucks and Microsoft, also have taken to inking deals with multiple projects simultaneously to hedge their investments. 

Forecasts show corporates will continue to drive renewable growth over the next decade. Wood Mackenzie sees up to 85 gigawatts of renewable energy demand through 2030 from the largest U.S. corporate buyers alone. 

If the last 10 years are any indication, the increased demand also will bring increased offerings and contract structures. And, the more corporates that get involved, the more opportunities there will likely be. 

“When you’re talking about sustainability and the environment and renewable energy, you want collaboration,” Carroll said. “We encourage companies to look at [wind deals] as well. You can’t predict the future, but based on all indication, there will continue to be good wind deals available to companies.”

This article is adapted from GreenBiz’s newsletter Energy Weekly, running Thursdays. Subscribe here.