If the world is going to reach its target of tripling renewable energy capacity by 2030, companies will need to pick up the pace in their purchases of clean energy.
According to S&P Global, corporates making long-term commitments to buy clean energy have been a key driver in the uptake of renewables globally since the Paris Agreement was signed 10 years ago.
In 2023, corporate power purchase agreements (PPAs) unlocked a quarter of wind and solar capacity globally, outside China, compared with 5% in 2015, with U.S. headquartered companies “playing a pivotal role as early adopters”.
“There was record growth eight years in a row up to 2024, largely led by the big tech companies,” says Nayel Brihi, corporate sustainability analyst at Bloomberg New Energy Finance. “Momentum has accelerated still further because of the rise of AI.”
Last year, corporate commitments to buy clean energy through PPAs were 35% higher than the year before, at 62.2 gigawatts (GW).
However, as more renewable capacity comes onto the system, there are growing questions over how companies, including the more than 400 companies that have committed to 100% renewable energy through the Climate Group’s RE100 group, are meeting their targets.
Currently, they buy certificates to prove they have signed long-term contracts to buy clean power, anywhere in the world, equal to the amount of energy they consume over the course of a year.
But this can lead to a situation where electricity a company consumes in, say, Poland in January is in reality being filled by the coal or gas that is available on the Polish grid, yet is being “matched”, or offset, with solar power generated in Spain in July.
Sam Kimmins, director of energy at the Climate Group, says companies seek long-term contracts to buy renewables because they ensure a steady price for energy, and helps them to meet emissions targets for themselves, their customers and the countries in which they operate. PPAs have transformed the energy market, and a huge amount of private money has gone into renewable energy systems, he says.
But he concedes that “we’re getting to the point where we need to increase the sophistication of the system to ensure we avoid having to rely on coal or gas for back-up”.
A small but growing number of companies, led by tech sector titans Google and Microsoft, have in the last few years begun to source clean power 24 hours a day, seven days a week. This form of procurement, known as 24/7 carbon-free energy (CFE), means that consumption is matched to clean energy production on an hourly, or sub-hourly, basis, in the location it is needed.
In part this is driven by the ballooning energy needs of data centres as a result of AI, but also by grid challenges from surges in demand not being met by enough clean energy supply.
As of last June, 170 companies, investors, governments and system operators and other organisations had signed up to the United Nation’s 24/7 Carbon-free Energy Compact, which seeks to accelerate its adoption. Government signatories include the U.S, Icelandic and Costa Rican governments.
Round-the-clock matching is backed by the IEA, which says it means companies can’t simply purchase cheap solar PV to fulfil their commitments. “Compared to yearly matching, shorter matching periods can deliver a more diverse clean energy portfolio, bringing wind, batteries and clean dispatchable capacities online in addition to cheaper solar PV,” the IEA says.
Trigya Singh, head of corporate sourcing at the Global Renewables Alliance, says regulatory and trade developments are driving adoption. She points out that the EU’s carbon border adjustment mechanism (CBAM), which will start affecting companies in 2026, will require hourly matching.
This means a company needs to prove that it has matched its electricity consumption with clean energy generated during the same hour, and in the same grid or region. “If you don’t have it, you can’t prove your product is low-carbon,” Singh says.
Two-thirds of India’s steel exports, for example, go to Europe, while other Asian countries are also looking at hourly matching, either through new regulations (as in Taiwan and South Korea) or pilot projects (China, Singapore, Japan). “The momentum is already there,” Singh adds. “Eventually, countries and businesses that are not compliant will lose out on trade opportunities.”
The Greenhouse Gas Protocol is also updating its guidelines on Scope 2 emissions, those that come from buying energy, to require hourly matching.
“This more granular measurement means companies can understand how much of their electricity consumption is really carbon-free,” according to the Climate Group’s 24/7 coalition. “It’s the next frontier for procurement.”
However, providing clean power 24/7 is more complex and expensive than annual matching. It demands new skills and capabilities, and requires a host of different stakeholders needing to work together. According to McKinsey, “24/7 clean PPAs demand sophisticated trading, structuring and risk-management capabilities".
Unilever has been a trailblazer on clean energy use, and has a science-based target to achieve a 100% absolute reduction in Scope 1 and 2 emissions by 2030. But while it has PPAs all over the world, “securing PPA deals is not always practical or even possible”, says Lewis Rae, global climate procurement manager.
“In many markets they’re simply not yet available, and options to diversify renewables to generate and/or store power to match consumption on a 24/7 basis are limited both technically and commercially, and will need to be built gradually over time.”
For window maker Velux, setting a 24/7 renewables goal is impractical because it does not consume enough energy. “We monitor the situation, but at the moment we don’t see it as an option,” says Kim Jonas, global energy and climate manager. “Over time, we expect the market will become greener and 24/7 will be more accessible for us.”
While 24/7 renewables remains challenging, hourly matching is becoming more common.
In the UK, companies such as Octopus and Good Energy are offering hourly matching, while tools such as Granular Energy’s energy trading software help to build the infrastructure needed to make 24/7 renewables a reality.
Companies are also becoming much more sophisticated in the way they use energy, thanks to a host of new digital tools, demand-management strategies and grid integration.
As the proportion of renewables on the grid increases, long duration storage – of both power and heat – will become increasingly important, says Will Broad, global director of policy and markets at the Long Duration Energy Storage Council (LDES).
However, apart from pumped hydro, which has severe geographical restrictions on where it can be deployed, all the technologies are still very early stage.
Google is working with Energy Dome on a CO2 battery that uses off-peak power to compress CO2 into liquid form, which can then be released to produce power for up to 24 hours.
Chemicals group BASF has developed sodium-sulphur batteries as a product, but it is also deploying them on its own sites in Germany, while PepsiCo has replaced a gas boiler at a facility in Belgium with long-duration heat storage, cutting 98% of the plant’s emissions.
Another option for companies is to sign hybrid agreements, for example deals to buy both wind and solar power, as they have very complementary generation profiles, says BNEF’s Brihi. A growing number of projects, particularly PV schemes, have battery storage attached to them from the start, while others are being retrofitted with batteries.
In addition, there has been an increase in the number of aggregated PPAs, bringing together smaller companies that on their own do not use enough power to justify a PPA.
We remain a long way from 24/7 clean power, but the building blocks are falling into place for the next phase of the energy transition.