For many years, the market for building renewable power projects and for purchasing their output was driven in large part by policy mandates and incentives provided by the federal and state governments. Policies like state renewable portfolio standards ("RPS"), which require utilities to acquire and sell certain percentages of renewable energy, and federal tax credits for wind and solar power were central to bringing renewable power projects online. 

However, those tax credits are currently scheduled to phase out over the next several years, and in some cases, utilities have procured sufficient renewable power to satisfy state RPS targets—often ahead of schedule. In that context, demand for renewable power from corporate America has emerged as a new and additional force driving the deployment of wind turbines and solar panels. 

Interest in the direct corporate procurement of renewable power has grown rapidly within the last couple of years. For example, some observers have calculated that direct corporate purchases of wind power—driven by corporate sustainability goals—have matched or exceeded those by utilities on an annual basis. According to several recent reports, approximately half of Fortune 500 companies have set such goals, whether to reduce greenhouse gas emissions, to meet their own energy needs with renewable power, or to improve energy efficiency. Just to meet those targets, 60 GW of new renewable capacity would need to be built in less than a decade. For context, the Energy Information Administration reported that at the end of 2016, there were only 81 GW of installed wind power capacity and 21 GW of installed utility-scale solar power capacity. 

Several rationales underpin corporate America's increasing enthusiasm for purchasing renewable power. To be sure, many companies want to be seen by environmentally minded consumers as playing a part in efforts to combat climate change, especially consumer-facing brands. But the extraordinary cost declines in wind and solar power are also playing a part, as companies discover that large-scale, off-site renewable energy projects can compete favorably on price terms with standard utility service, all while mitigating any risks associated with future increases in the cost of natural gas or coal. 

Matching the enthusiasm shown by corporate America, there are a growing number of options for companies seeking to structure deals to purchase renewable power. Until a couple of years ago, many corporations simply purchased unbundled renewable energy credits ("RECs"), but that strategy requires companies not only to acquire RECs but also to continue buying electricity to meet their energy needs. In place of unbundled RECs, companies began entering into power purchase agreements ("PPAs") directly with renewable energy project developers. 

But companies do not always have the option of a conventional PPA, especially in states where consumers (including businesses) cannot choose their energy provider. In those states, utilities will often enter into a wholesale PPA with the renewable project developer and serve as an intermediary between the corporate purchaser and the developer. Another trend is the development of "green tariffs," the number of which doubled in 2016. While the details differ from state to state, these tariffs generally allow utilities to retain corporate accounts while delivering companies energy generated from renewable power projects. The alternative, in a few high-profile cases, is that a corporation has stopped taking utility service altogether—even where that departure required the payment of a "break-up fee" to the local utility. 

Increasingly sophisticated renewable power advocates are helping to change the rules in this area, in part by enlisting the assistance of corporate purchasers. For example, one group of advocates released "principles" aimed at spurring progress in the development of policies that can help companies meet renewable power purchasing goals, and encouraged those companies to sign on. Among these goals are understandable calls for greater choice in power suppliers, access to more cost-competitive renewable energy, better contract and financing options, and cooperation with local utilities. The principles go further, however, and seek to set standards regarding the manner in which renewable attributes are accounted for and how renewable projects are sited. 

Corporate renewable energy procurement shows no signs of abating, despite the fact that 2016 did not live up to the red-hot pace of such deals in 2015—a pace driven in large part by the anticipated but ultimately forestalled phase-out of federal tax credits. Despite uncertainty arising from the direction of federal policies on power plant emissions or support for the renewable energy industry, the demand for renewable energy arising from corporate America is playing a part in keeping development pipelines flowing. 

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