US Corporates Investing In Renewable Energy on The Up

  • According to a report by Bloomberg New Energy Finance, this year large corporates are set to shatter the previous high of 4.8 gigawatts of recorded deals last year.
  • AT&T Inc. and Walmart Inc. are among 36 businesses, government agencies, and universities that have agreed to buy 3.3 gigawatts of wind and solar power so far this year.
  • The surge is brought on by the fact that renewable energy investments now has a proven track record – there is a lot less risk for new entrants.

The surge in renewable energy investment is due to local renewable energy programs in the US plus incentive programs offered by foreign countries. There is a growing demand in international, decentralised markets like Mexico and Australia. The returns are proven, long-term and steady. Provided that the off-taker is financially sound, banks love financing renewable energy deals.

There are other reasons clean power is attractive. Renewable energy is often the cheapest source of electricity. Long-term contracts to buy clean power from wind and solar farms can also serve as a hedge against conventional supply dependency and tariff spikes. New markets like car charging also catch the eye. To an acquisitive corporate, it simply lessens the core business risk and diversifies the asset base.

It is no longer progressive companies like Google driving the trend. Decentralisation and standardisation of power supply structures invite smaller and medium-sized companies to enter the fray. Peer to peer selling of surplus energy produced opens up the market to virtually all potential players.

The trend could set globally as energy supply becomes more decentralised. At the moment telecoms and technology companies are leading the way in the US:

Green Giants

Author: Bryan Groenendaal

Source reference: Bloomberg New Energy Finance

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