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Tech companies, heavy emitters drive a renewables boom in Alberta

Press Coverage
June 12, 2024
The Logic

CALGARY — From breweries and industrial-scale bakeries to tech giants such as Microsoft and Amazon, companies wrestling with their carbon emissions are driving a renewable energy boom in Alberta with a flurry of power-buying deals for clean electricity.

According to The Logic’s analysis, companies have signed at least 33 power purchase agreements with energy providers in the province since 2019, totalling nearly 3,000 megawatts, or enough to power roughly 1.8 million homes for a year. The spike in power buying has transformed Alberta’s electricity grid, prompting a massive buildout in wind and solar facilities totalling more than $5.9 billion, data show.

The popularity of PPAs has soared in recent years as companies look to offset their greenhouse gas emissions, for example, or ensure a clean supply of power for the energy-hungry data centres that power cloud services. Globally, PPA activity increased 12 per cent in 2023 to a record high, led by companies including Amazon and French utility Engie, according to a BloombergNEF study.  

PPAs are especially popular among companies with a focus on artificial intelligence such as Microsoft and Google, given how energy intensive the technology is and how quickly big tech companies are racing to achieve AI breakthroughs and bring them to market. Microsoft recently warned that its carbon emissions have leapt 30 per cent since 2020 as it races to build new AI servers, while Amazon’s emissions were up 40 per cent from 2019 as of last year.

Heavy-emitting companies such as chemical plants and oil producers have become another major buyer, with PPAs for clean power letting them offset their carbon footprints.

Most deals take the form of “virtual” PPAs, under which companies buy clean electricity to offset their use of dirtier power supplies elsewhere. Such arrangements are distinct from “physical” PPAs, where electrons are purchased to power specific infrastructure like manufacturing plants.

Experts say PPAs lend financial certainty to energy projects because they guarantee end buyers for the power they produce. And buyers often pay upfront for the power they secure. As a result, PPAs have played an outsized role in the rapid renewables expansion in Alberta, which in 2022 was responsible for three-quarters of all the clean energy projects built in Canada. The province also benefits from above-average levels of sunshine and a windy south, which make it a good spot for renewables.

Jorden Dye, director of the Business Renewables Centre Canada, said around 70 per cent of all renewables projects built in Alberta over the last five years have used PPAs.

“For a company to go to a bank to get financing for [a project], having a PPA is one of the requirements because it gives a guaranteed revenue stream,” he said in an interview. “So these buyers are acting as project anchors.”

The Logic compiled a database of Alberta’s PPAs using data from Business Renewables Centre Canada as well as other publicly available sources like press releases and financial statements.

They illustrate the range of the companies that have locked down PPAs in the province. 

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