Europe’s energy crisis and supply-chain bottlenecks have contributed to a sharp slowdown in the amount of solar and wind power that corporations have agreed to buy worldwide.
Private enterprises and public institutions announced 14.8 gigawatts of new power-purchase agreements with clean-energy facilities in the first seven months of this year, according to a report Wednesday by BloombergNEF. That’s 24% below 2021 levels through July, making the year poised to see the first annual decline since 2016.
A prolonged slowdown in corporate buying would impair the fight against climate change. Companies have been key actors in this effort, spurred by the low cost of renewable power as well as favorable publicity that often accompany such deals. But increasing natural gas prices in Europe has helped make power of all kinds more expensive, weakening the appeal for corporations.
“For years, we saw prices drop and drop for power-purchase agreements,” said Kyle Harrison, a BNEF analyst, in an interview. “But in Europe, PPA prices have risen significantly this year, meaning the economics for signing a clean-energy deal may not be as strong as they appear on face value.”
Amazon.com Inc. was the biggest corporate buyer of clean power in the first seven months of this year, with more than five gigawatts announced, according to BNEF.
From Amazon to Google, companies are promising to zero-out emissions from their operations. Buying renewable power directly from producers was a booming tactic to achieving this, but surging prices are leaving companies more reluctant to lock into long-term contracts for now.