“As the Covid-19 pandemic continues and oil and stocks continue to suffer shocks, investment in renewable energy projects is now the way forward,” IEFFA analyst Clark Butler said, noting that tech giants and financial institutions increasingly set their own decarbonisation targets.
“Corporates realised early that investing in renewable power purchase agreements (PPAs), makes good business sense,” he said, and “the more electricity-intensive an industry, the larger the financial savings.” Large U.S. tech players strive to migrate large data centers to wind and solar-powered energy.
Bloomberg New Energy Finance data shows a record take-up of 13.6 gigawatts (GW) capacity, contracted by U.S. companies under either PPAs or green tariffs.
Oil and gas stocks are in the doldrums, hit by a sharp fall in energy demand in the face of the Covid-19 crisis and no supply reductions from OPEC+ or U.S. fracking companies. The fossil fuel energy sector commanded just 4.3% of the Standard & Poor’s 500 index at the end of 2019, “and probably just half of this today,” Butler suggested. That’s a stark contrast to the 1980s, when oil and gas companies represented seven of the top 10 companies in the S&P 100, accounting for 25% of the index.
Striving to go green
Investment in renewables and energy storage is the new trend among U.S. corporate. Google’s portfolio of renewable energy increased 43% in 2019 alone and has been 100% powered by renewables since 2017. Apple achieved 100% renewable energy in 2018, and is planning to buy ‘green aluminium’ from Elysis, a joint venture between Rio Tinto and Alcoa.
Facebook is on track to hit its 2020 target of 100% renewable energy as a result of large PPAs for wind and solar, while Microsoft already reached that target. Amazon also heavily invested in utility-scale wind and solar energy projects in the U.S and around the world.
IBM and HP Enterprise have committed to 55% renewable energy by 2025, and Accenture has committed to only rely on renewable energy by 2023.
U.S. President Trump, in contrast, has removed the world’s second largest greenhouse gas emitter from the Paris Climate Agreement, which makes private sector efforts on sustainability all the more important. The U.S. tech sector, along with some banks is setting an example for promoting the use of renewable PPAs and energy storage. “Governments should do more, but the least they can do is get out of the way of the private sector,” Butler concluded.