Data centers; gigafactories; semiconductor fabs. The boom in giant infrastructure projects, alongside continued construction of new logistics centers, warehouses and factories means private companies have a rapidly rising demand for power, particularly clean forms of electricity.
On the other side of the equation, renewable energy developers are looking for creditworthy ‘offtakers’ - large, long-term customers that can help make a new solar or wind farm more ‘bankable’ and hence likely to secure financing.
The mechanism that allows the two sides to meet is a corporate power purchase agreement (PPA), under which a company commits to buy a given volume of electricity, usually at a fixed or indexed price, and typically for a period of 3-30 years.
Contracting directly with each other effectively cuts out the local utility, though the electricity still passes through its wires; it also guarantees the origin of the energy, so the customer can be sure it is indeed clean.
Given these advantages, the market for corporate PPAs is booming. Corporations globally announced a record 46 Gigawatts of solar and wind PPAs in 2023, according to Bloomberg New Energy Finance, a 12% increase, with further growth expected this year.
Technical requirement
Much of the growth is being driven by the giant US technology companies that are not only rushing to build data centers to meet the boom in cloud- and AI-based applications, but have also set themselves ambitious decarbonization targets.
Amazon, whose AWS subsidiary is the leading cloud computing provider, was the world’s largest corporate clean energy buyer for the fourth consecutive year in 2023, announcing 8.8 GW of PPAs across 16 countries.
The American group is a customer of ORIX Group’s Spanish renewables arm, Elawan. In fact, Elawan has two contracts with Amazon in its home country: the first, which went operational last year provides 180 Megawatts of power from five solar farms; the second, announced in January 2024, will deliver 160 MW from a combination of two wind and four solar plants.
More recently, Elawan won its first corporate PPA with another US tech giant: Google. While the project is smaller, supplying 37 MW of solar power from 2026, it is based in Texas, helping to strengthen Elawan’s footprint in the US, which is one of its strategic growth markets and where it currently operates a 300 MW-strong portfolio (out of a total of 1.8 GW worldwide).
The agreement is also notable for having been facilitated through a new process called LEAP, co-developed by Google and LevelTen Energy, which makes sourcing and executing clean energy PPAs more efficient. The project will contribute to Google’s ambitious 2030 goal to run on 24/7 carbon-free energy on every grid where it operates.
“The corporate power purchase agreement with Google is a significant milestone for Elawan Energy, reinforcing our commitment to expanding renewable energy solutions on a global scale,” says Dionisio Fernández Auray, CEO of Elawan Energy. “It brings mutual benefits: supporting Google’s path to a greener future while enhancing Elawan Energy’s footprint in strategic markets and showcasing the potential of corporate PPAs as a driver for emerging opportunities in the renewable sector.”
Big in Japan
Such deals are also becoming popular in Japan according to the country’s Renewable Energy Institute. ORIX, already one of the nation’s leading renewables developers with over 970 MW of installed capacity, added a new twist to the market by doing a deal with one of its own subsidiaries.
In November 2023, the group’s Energy & Environmental segment signed one of Japan’s largest corporate PPAs with Kansai Airports, which another division of ORIX co-manages with VINCI of France, to supply 23 MW of electricity by installing 40,000 solar panels on spare land near the runways at Kansai International Airport.
“Corporate PPAs are growing fast because they are a win-win for both sides,” 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.
“And by enabling the construction of renewables projects that might not get financing otherwise,” he adds, “they advance the energy transition as a whole.”
Rising demand for clean electricity, coupled with the need to make renewables projects easier to finance suggests that the market for corporate PPAs will continue to expand. For developers like ORIX and its Elawan subsidiary, these contracts provide guaranteed income and stable cash flows, making them an ideal way to underwrite their future growth.
