European aluminum producers and technology companies sought greener ways to drive their machinery and data centers last year, buying a record amount of wind power capacity. In a PR push to market a cleaner image to customers, large companies are securing renewable energy to manage costs and reduce their carbon emissions.
The biggest buyers of wind power were aluminum producers Norsk Hydro and Alcoa, which both signed big deals to buy power from farms in Norway and Sweden. In July, Hydro signed the world’s longest corporate PPA at 29 years with Green Investment Group (GIG), a unit of Australian investment bank Macquarie. Wind firms are looking for new ways to secure their income as the subsidies that have underpinned the industry come to an end.
According to new data from industry body WindEurope, wind power has become more price competitive compared with conventional energy in many countries and new wind deals through so-called corporate power purchase agreements (PPAs) were signed in Europe last year for 1.5 gigawatts (GW) of capacity, up from 1.3 GW in 2017. Wind power PPAs signed by companies in Europe have now reached a total capacity of 5 GW, almost the same as Denmark’s total wind energy capacity. The PPA market was traditionally driven by the IT sector to power data centers, but other industries have since joined in. In the United States, Google, Facebook, and Walmart have already developed a mature market for corporate PPAs. According to data from the American Wind Energy Association (AWEA), corporate and other non-utility customers signed nearly 40 percent of capacity contracted in the United States in the third quarter. Mercedes-Benz announced its first PPA deals in Poland and Germany in 2018, with the latter set to power its electric vehicle and battery manufacturing.
However, Germany’s onshore wind industry recently warned of a sharp drop in new turbines installed last year and said there was little prospect of a recovery without government help. According to Fraunhofer Institute research, wind power is one of the most important drivers of Germany’s transition to renewable energy, accounting for nearly 30 percent of total power generation sent to public grids in 2018. However, the rapid expansion in onshore wind energy achieved from 2013 to 2017 came to a halt last year due to red tape, opposition from local communities, and uncertainty among operators after the government abandoned 20-year fixed payments for new projects in favor of an auction system.
Germany installed 2,402 megawatts (MW) worth of onshore wind turbines in 2018, down 55 percent from 2017, engineering group VDMA and wind energy association BWE said in a joint statement. The groups had expected 3,300 MW of additional capacity. “The stop and go must end. A sustained and faster expansion of renewables would be logical, given that costs have been reduced and a plan to go without brown and hard coal-to-power generation has just been announced.” said Matthias Zelinger, managing director at VDMA Power Systems, of government policy towards wind power. VDMA represents companies such as Siemens Gamesa, Nordex and Senvion.
Two months ago, Germany parliament approved special 8,000 MW tenders for wind and solar energy plus an unspecified amount of offshore wind between 2019 and 2021, on top of regular tenders. The legislation compensates for the coalition government’s decision to throw out strict emissions targets for 2020 and instead push for more aggressive ones by 2030.