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Renewable Energy

Corporate America Goes All-In on Renewable Energy

The pandemic has forced a lot of industries to shut down between March 2020 and now. But this hasn’t been the case in the renewable energy sector.

In this industry, business is booming!

In the third quarter of 2020, residential solar installations jumped 14%.

Electric utilities were big buyers of solar as well. Utility-scale solar power purchase agreements (PPAs) totaled 9.5 gigawatts (GW) during the quarter. And in the first nine months of 2020, 6.3 GW of new wind capacity came online in the U.S.

There is now a record total of 69 GW worth of projects in the utility-scale solar pipeline. Over the next five years, the U.S. solar market is expected to install 107 GW of new projects.

There are now more than 60,000 wind turbines with a total capacity of 111.8 GW in operation in 41 states, Guam and Puerto Rico.

Installation costs are dropping for both wind and solar. Solar panels are becoming more efficient. Wind turbines are getting better, and offshore wind farms will soon dot most of the Eastern Seaboard. These will all continue to boost demand for installations.

And, besides residential and utility customers, there’s a third group that just can’t buy enough renewable energy: corporate America.

Corporations Go Green

By 2030, U.S. corporations could purchase up to 72 GW of renewable energy. The U.S. has more corporate renewable energy projects underway than any other country.

And demand for renewables in the corporate sector has reached a tipping point.

The main drivers are consumer and shareholder activism. Even without the Paris climate accord, many U.S. companies have big renewable energy targets and are buying renewable energy PPAs like never before.

In particular, companies in the technology sector are driving this increase in corporate PPAs. In 2020, about 8 GW of new wind and solar farms were corporate energy buys.

That’s a 45% increase year over year. And now there are about 220 U.S. companies either buying or planning to buy renewable energy. About 40% of them have renewable energy targets that rise through 2025. That is a great tailwind (pun intended) for renewables.

Overall, U.S. companies make up more than 60% of the global corporate renewable energy market. One of the reasons for this is the U.S. has more power-intensive data centers than any other country.

Besides tech companies, manufacturing and telecommunication companies also use a lot of energy.

In 2020, Verizon (NYSE: VZ) was the largest buyer. It signed seven PPAs for about 700 megawatts (MW).

The next-largest buyer was General Motors (NYSE: GM). Its three PPAs will provide the company with about 500 MW of renewable power.

Renewable energy is here to stay. And with the Biden administration in the White House, demand for clean energy sources will continue to soar.

Savvy investors will want to have plenty of exposure to it in their portfolios.

Good investing,

Dave

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