As governments scale back subsidies for renewable energy, major corporations are stepping up to directly finance new wind and solar farms through long-term power purchase agreements (PPAs). According to BloombergNEF, the volume of renewable electricity sold under these agreements surged 35% in 2023, with the biggest increase seen in the United States, where tech companies are securing green energy for data centers.
Amazon emerged as the largest corporate buyer of renewable energy, but industries such as chemicals, mining, and raw materials—especially in developing countries—are also driving demand, said BloombergNEF analyst Nayel Brihi.
This shift is becoming essential for renewable developers. Markus Krebber, CEO of RWE, one of the world’s largest renewable energy firms, emphasized that securing long-term commitments is now a prerequisite for launching new offshore wind projects. Without them, he warned, financing costs spiral out of control.
The need for PPAs has grown more urgent as high interest rates and economic uncertainties slow renewable energy expansion. In Europe, new wind capacity additions declined for two consecutive years, and the pace of solar farm deployment slowed by 92% in 2023, according to SolarPower Europe.
Despite these challenges, demand from industries such as tech, food, and agriculture remains strong. Danish dairy giant Arla has committed to 100% renewable energy in Europe by the end of 2024, with two-thirds of its electricity sourced from newly built wind and solar farms supported by its PPAs. Similarly, Unilever is increasing its PPA commitments, citing benefits like stable power prices and risk mitigation for developers.
With more companies joining the RE100 initiative, pledging to go fully renewable, the role of PPAs is expected to grow. While they still account for a small share of overall renewable energy deals, Brihi predicts that as government subsidies decline, these corporate agreements will play an increasingly vital role in expanding clean energy infrastructure.
