Any time a new market becomes available, it’s usually good news for business. That was certainly the case for wind power in 2015, as major brands and other emerging non-utility buyers increasingly purchased wind to meet their energy needs. This gives the U.S. wind industry a new arena of customers in addition to traditional utility purchasers.
New customers become a real trend
Last year, 52 percent of the wind power capacity contracted through power purchase agreements (PPAs) was signed by non-utility buyers, more than twice the amount in 2014 and a record high by a considerable amount. New customers included Fortune 500 companies, major American cities and universities.
With costs that have fallen 66 percent over the last six years, in many parts of the country wind is now the cheapest source of new electric generating capacity. That’s highly attractive for buyers that want to protect their bottom lines while cleaning their operations.
“Because energy is a large operating expense at Google, it is beneficial to power the data centers with low-cost wind power,” said Gary Demasi, Director of Operations, Energy and Data-center location strategy at Google.
Because wind power uses no fuel, it protects customers from conventional fuel price fluctuations. When a company signs a wind energy PPA, it knows exactly how much its electricity will cost in five, 10 or 15 years. That predictability is appealing because it facilitates and adds accuracy to long-term planning.
Think of wind power acting as a fixed rate mortgage and conventional fuels acting as an adjustable rate one.
Diversity of buyers
Wind energy’s new customers come from a diverse background. Tech companies like Google, Amazon and Microsoft have purchased large amounts of wind, while traditional manufacturers like General Motors and Procter & Gamble have also entered the market. Procter & Gamble purchased enough wind energy to power all of its home care product manufacturing, meaning products like Tide and Mr. Clean are now created using wind power.
Washington, D.C. made a large wind purchase last summer, while Cornell University and Oklahoma State University have also signed wind power PPAs.
“The Pilot Hill Wind Project is important to Microsoft because it helps solidify our commitment to taking significant action to shape our energy future by developing clean, low-cost sources to meet our energy needs,” said Brian Janous, Director of Energy Strategy for Microsoft.
There’s still plenty of room for growth as well. To date, 58 global companies, such as IKEA, Nike and Starbucks have signed a pledge to source 100 percent of their electricity from renewable energy. Hewlett-Packard was the latest signee, making its commitment just last week and offering proof the list of companies promising to go 100 percent renewable is still growing. Many of these organizations still have a long way to go to reach that goal, meaning they’ll be looking to purchase a lot of wind power in the coming years.
And this is just one example that only covers companies. There are similar pledges for cities and universities, and many buyers are looking to purchase wind energy even if they haven’t signed a pledge.
More customers mean more new wind farms
Often, one of the biggest hurdles in the construction of a wind farm is ensuring a customer for its electricity. Utilities have been buying wind for years, but now there’s also another avenue to find partners. Having a diversity of customers and a wider market will help wind power continue to grow in the coming years.
Looking back at how successful wind power was in 2015, it’s evident how large of an impact new buyers can have. Demand from companies, cities and universities helped wind become the largest source of new electric generating capacity last year. Moving forward, it should clear the way for even more impressive growth.