Renewable Energy Deals Inked by Fortune 500s Accelerating Towards Record Year in 2019
The third quarter of 2019 set another record for the number and size of renewable energy projects signed by companies of all sizes. Leading the charge were huge deals by Google (Ticker: GOOG) and AT&T (Ticker: ATT). The rapidly growing corporate demand for renewable energy is an important factor for why the sector is the fastest-growing segment of the energy industry. The demand picture for renewables is diversifying across company size, industry, the technology employed and the location and scale of projects. While many headlines tout the newest innovations or substantial cost decreases of renewables over the last few years, a more holistic view would be to evaluate the entire value chain – from producers to consumers.
The average size of the 10 largest renewable energy project deals was 411 MW in Q319, an increase of 73% from Q219 and a stunning 341% from the year-ago Q3 in2018, according to GreenBiz. Many of the largest deals, totaling 3.7 GW in contracts, were signed during the days surrounding the Climate Change NYC event in late September. These deals alone surpassed the total procurements of Q2, itself an all-time high.
Google (Ticker: GOOG) CEO Sundar Pichai announced in a blog post a package of 18 new energy deals totaling 1.6 GW increasing the company’s renewable energy portfolio by more than 40%. This deal alone represents $2B in investment, with the total company’s commitment of $7B in 52 projects.
As Google’s Pichai notes in his blog, “Up to now, most of our renewable energy purchases in the U.S. have been wind-driven, but the declining cost of solar (down more than 80 percent in the past decade) has made harnessing the sun increasingly cost-effective.”
According to the Renewable Energy Buyers Alliance (REBA), a community of over 200 large corporate buyers representing 95% of the large-scale corporate renewable energy procurements to date, 7.15 GW of renewable projects have been signed through September 2019 vs. 6.36 GW in all of 2018 and 2.78 GW in 2017. Retail companies are typically big purchasers with Ikea making its first U.S. direct investment in 197 MW total of solar projects in Utah and Texas and Gap (Ticker: GPS) signing its second large renewable contract of the year.
Telecoms are also making a huge push into renewables, with AT&T signing deals for 960 MW in Oklahoma and elsewhere, Sprint (Ticker: S) with a 182 MW wind deal in Texas and T-Mobile (Ticker: TMUS) with 5 contracts in wind and solar that it says will cover 95% of its energy requirements.
The frenzy is not over, however, as several companies including Apple (Ticker: AAPL), eBay (Ticker: EBAY) and others locked up a deal to be part of a 500 MW wind project in Texas on November 5th.
REBA notes that 50% of the unique renewable energy project buyers in 2019 were first-time buyers. In the 3rd quarter, in addition to the mega-deals, there was also a pronounced increase in mid and small company deals as well. A trend in many of the deals is the increased diversification of energy resources and locations across the U.S. and world.
For investors eager to capitalize on the demand side of renewable energy, the Pickens Morningstar® Renewable Energy Response ETF (ticker: RENW) is the only renewable energy ETF that tracks the entire value chain of the thematic. The ETF tracks solar, wind and other renewable producers, the major corporate consumers as highlighted in this post as well as green transportation companies.
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