The global expansion of clean energy access


When BloombergNEF (BNEF) began covering corporate clean energy procurement, most of the activity was taking place in the United States. At the time, private sector players were just beginning to explore clean energy buying at scale. Many were joining initiatives like the RE100, and pledging to offset 100% of their electricity consumption with clean energy. Others developed the blueprint for the virtual power purchase agreement (PPA) model – a financial transaction whereby a clean energy price is settled against a wholesale market price.

While these formative years were essential for the long-term sustainability of the market (the virtual PPA is still the dominant mechanism used by U.S. corporations), many at the time questioned whether this market could be scaled globally. In 2016, nearly 70% of the PPAs signed around the world were in the U.S. Buying clean energy in European markets was a far more cumbersome and expensive process. In some Asian markets, it wasn’t even possible – there was no certification mechanism to account for clean energy buying and PPAs weren’t allowed.

Fast-forward to 2021 and a corporation has far more flexibility to buy clean energy. BNEF has observed PPAs signed in over 40 markets globally, with that number growing rapidly. Outside PPAs, companies can sign a sleeved clean energy contract with a retailer, buy certificates, or install clean energy onsite in nearly every market they operate in. Companies with global footprints have invested considerable resources into opening up clean energy access, complimenting natural market transformations observed in the sector, like cost declines. While some stubborn markets remain where clean energy buying isn’t easily available, recent history suggests this won’t be the case for long.

Liberalized markets

Many markets where clean energy wasn’t widely available have amended their regulations to accommodate corporations. Most of these changes have been spurred by lobbying from multinational companies. Tech giants like Apple, Google, and Microsoft have led the charge, as they not only have operations globally, but also have a global supply chain presence. The combined pressure from companies has been the single biggest driver in opening up clean energy access.

Nowhere has this been felt more than in Asian markets like Taiwan and South Korea. Historically dormant for clean energy buying, recent regulatory changes have allowed for corporate procurement. In April 2020, brought on by years of lobbying from multinational corporations and domestic manufacturers, Taiwan Power Co., the island’s utility monopoly, was granted a clean electricity retail license, allowing corporations to buy clean energy from PV and wind projects for the first time. Shortly after this change, Taiwan Semiconductor Manufacturing Co., the island’s largest company, announced a 920 MW offshore wind PPA – the largest single deal ever signed by a corporation. Taiwan was ultimately the third-largest market for corporate procurement activity in 2020, with 1,245 MW of deals.

In November 2019, the Korean government launched a pilot program to certify the use of clean energy, creating a certificate market and a PPA mechanism. In January 2021, brought on by similar pressure from multinational companies and domestic manufacturers, these programs, along with a special retail tariff with utility Korea Electric Power, were put into legislation. The effects of this change were immediate: SK Holdings, its subsidiaries and some 10 Korean companies have now joined the RE100 and large-scale clean energy deals are expected soon.

Market transformation

As clean energy becomes more competitive with other forms of generation, natural market signals have also paved the way for more clean energy buying. This has been prevalent in European markets like Spain and Poland, where large-scale clean energy buying has technically been possible, but there hasn’t been any activity until recently.

In Spain, corporations collectively purchased just 374 MW of clean energy through PPAs by the end of 2019. That quickly changed in 2020. Companies announced over 4,200 MW of deals, vaulting it to the top of Europe’s corporate PPA leaderboard. Spain has the strongest solar resources in Europe, with costs dropping 85% since the first half of 2014. These cost declines mean PPAs signed in Spain can easily undercut wholesale prices, making them a competitive decarbonization option for corporations. This saw the advent of the “pan-European PPA,” where companies sign clean energy deals in Spain to offset electricity consumption across the entire region. The cost declines also spurred growth in Spain’s onsite commercial solar market, which grew 50% between 2018 and 2019 to 1,500 MW.

In Poland, where more than two-thirds of the installed power capacity comes from coal, power prices have risen due to increases in the cost of carbon. This has created a unique opportunity for clean energy to shine and corporations have taken advantage. A record 222 MW of corporate PPAs have been signed in Poland in the first half of 2021, surpassing the total volume of deals prior. The majority of activity has been for onshore wind – as costs fall further (it is already cheaper than coal on a new-build basis), more deals will be signed in Poland.

Work to be done

Despite momentum in Europe and Asia, corporate procurement activity in many markets is not commensurate with demand. Take Japan. despite having 55 RE100 members, trailing only the U.S., no PPA mechanism exists. The Japanese government has expanded the availability of clean energy certificates (five available types), but these don’t meet the demands of sophisticated corporate buyers.

A growing number of retailers offer special clean electricity tariffs, but uptake is slow as they’re not yet economic. In March 2021, over 50 corporations wrote an open letter to the Japanese government asking for more clean energy access. It’s likely Japan will be the next big market to open up clean energy access for corporations.

Corporate PPA volumes, by country (GW)
United States3.372.223.418.4814.0913.536.39
United Kingdom0.
Dominican Republic0.
South Africa0.
Burkina Faso0.
Source: BloombergNEF

About the author

Kyle Harrison leads BNEF’s sustainability research team, which publishes content on the private sector’s transition to the low-carbon economy. The team focuses on core areas like environmental, social and governance reporting, target-setting, low-carbon pathways, and sustainable finance. Harrison specializes in corporate clean energy procurement, net-zero targets, and voluntary carbon offsets.

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