Amazon is one of the world’s largest and best-known companies, and as such has made a public commitment to reach net zero carbon dioxide emissions by 2040.
Harnessing the potential of renewable energy will help achieve that target, and ORIX Group company Elawan is assisting by supplying carbon free renewable energy to Amazon under a so-called corporate Power Purchase Agreement (PPA). Elawan, a wind and solar developer and operator based in Spain is developing and operating wind and solar plants in 15 countries and currently has 1.8 gigawatts of projects in operation and a further 8 gigawatts under development.On January 17, Elawan announced it will start delivering around 160 megawatts of power from two wind farms and four solar plants that it is currently developing in Spain from 2024 and 2025. This builds on an earlier PPA between the two companies that began last year and provides 180MW of power for Amazon from five solar farms.
“Corporate PPAs are a growing trend in our sector”, says Hidetake Takahashi, Senior Managing Executive Officer and Head of Energy and Eco Services, the ORIX business segment which includes Elawan as well as operations in Japan, India, China and the US. “They are a win-win for both sides in the current environment”, he adds.
In its infancy, renewable energy was relatively expensive, so most governments subsidized it in some form, and it made sense for users to buy their power directly from the utilities that benefited from those subsidies. In recent years, however, as renewables have scaled up massively around the world, their cost has come down, reaching what is known as ‘grid parity’ (price equivalence with power delivered directly from the electricity grid) in most countries.
This means that it now makes sense for large, corporate users to lock in renewable power supplies for the long-term, Mr. Takahashi explains, both to avoid volatile spot energy prices and to reduce their carbon footprint by contracting for a steady supply of clean electricity.
For a developer like Elawan, meanwhile, a multi-year PPA with a single creditworthy ‘offtaker’ such as Amazon makes it much easier to finance a new renewables project. Having a financially robust customer already lined up, makes the new facility ‘bankable’. It therefore contributes to the broader energy transition, argues Mr. Takahashi, by encouraging the construction of clean energy projects that might not otherwise be viable.
In order to meet its own target to achieve carbon neutrality by 2050, ORIX will continue to expand its global renewable energy business: both by investing in existing Group companies such as Elawan; and through acquisitions, as Mr. Takahashi recently signalled in an interview with Bloomberg. ORIX has built up considerable knowledge and expertise in clean energy over many years and corporate PPAs such as the one between Elawan and Amazon will form a part of its drive to realize a more sustainable world.