Moody’s: Renewable Demand Driven by Corporate Buyers, Not State Mandates

Mar 13, 2017

by Margarita Fournier; Copyright 2016 by Competitive Assets, LLC.  All rights reserved

On 3/10/17, SNL Energy reported that “[c]orporate procurement has replaced state renewable energy mandates as among the main drivers of near-term renewable energy demand, according to a report by Moody’s. The ratings agency on March 10 highlighted the proliferation of corporate power purchase agreements, or PPAs, community choice aggregation in California and an emerging option to add renewable assets to rate base in regulated territories as three catalysts driving increased demand for new wind and solar capacity, often competitively priced between $15/MWh-25/MWh and $35/MWh-50/MWh, respectively. Alphabet Inc.Facebook Inc., and Microsoft Corp., along with Wal-Mart Stores Inc.Dow Chemical Co.General Motors Co., and Procter & Gamble Co. are some of the most prominent participants adding to renewable demand, according to the report. ‘The companies leading the effort often have in common high credit ratings, significant financial flexibility, and robust liquidity. Therefore, they can afford to take a longer-view to managing their business objectives, which more easily allows them to invest in these renewable energy sources directly and help influence change in the architecture of the renewables industry,’ Moody’s said.”

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