The RE100 initiative consists of international companies aiming to procure renewable electricity to cover 100% of their electricity consumption. In 2021, RE100 members in Europe were responsible for 59,6 TWh of electricity consumption on the continent (comparable to that of the Czech Republic), 85% of which came from renewable electricity. Below, we outline key corporate demand RES – E procurement trends from RE100 for 2021. This is due to the fact that the RE100 2022 Report shows data reported by the members for the period of January – December 2021.

Additionally, in the 2022 disclosure cycle, RE100 members greatly improved the quality of their reporting to the initiative, with all members disclosing country-level consumption and corresponding procurement of renewable electricity.

Trend 1. EACs are the second most widespread decarbonisation tool for RE100 members in Europe, with PPAs also becoming a preferred option.

RE100 members in Europe increased their renewable electricity consumption from 49 TWh in 2020 to 51 TWh in 2021. Around 9 TWh of renewable electricity procurement was cross-border with 4 TWh of the volume coming from Norway (predominantly using hydro GOs, 71%) and used for claims of RES-E consumption outside of Norway.

Direct contracts with suppliers were the most widespread RES-E procurement option, overtaking the EACs by 1%, at 41% (21.5 TWh). However, their overall share shrunk by 13% y-o-y, giving way to increases of EACs and PPAs shares. Yet, it is worth noting that RE100 reporting has also changed: whereas in the past, the renewable energy sources were more detailed, encompassing six categories, now, they have been slimmed down to three.

The corporates procured 40% of renewable electricity from unbundled EACs (+7% y-o-y), corresponding to a total of 20.8 TWh. The companies also significantly increased the share of procurement using PPAs in the region, now accounting for 20% (10,3 TWh), up from 4% in 2020.

RE100 Sourcing Methods in Europe 2021

This upward trend is in line with the accelerated growth of PPA contracting in Europe: in 2021, annual PPA volume increased from 3 GW in 2020 to 7.9 GW in 2021. We expect PPAs to gain a strong foothold in RE100 reporting, however, its share is likely to shrink for the 2023 disclosure cycle (for the period of 2022) on the back of energy market volatility and the corresponding high electricity prices, inflation, and regulatory uncertainty inflected by market intervention with 

EU emergency measures in the form of market revenue cap on renewable generators

. In this context, certain market players opted for spot market as opposed to concluding PPAs to hedge against price uncertainties, which is reflected in the 2022 PPA volume statistics below.

Annual PPA volume by technology 2013 - 2022

Trend 2. RE100 members will gradually start to shift away from Nordic Hydro GOs to comply with the new technical criteria.

 in October 2022, to include a revised definition of a single market for renewable electricity in Europe and a new 15 – year commissioning or re-powering date limit for renewable electricity purchasing. The new rules enter into force on 1 January 2024.

This age limit is expected to significantly reduce the pool of power plants available for companies willing to meet the criterion. Thus, most hydropower plants in Norway will be ineligible: the current average age of Nordic hydroelectric stations is 46 years old, meaning that the demand from the RE100 members for Norwegian benchmark GOs will likely decrease after 2024. As can be seen from the map below, 15 countries, where RE100 members source their renewable electricity from exceed the power plant age requirement as per the updated technical criteria. The data for average plant age is pulled from the information reported by RE100 members and the countries of origin of their RES-E procurement to characterise an average project age by country, as since 2021 RE100 members are required to disclose the commissioning dates of facilities for RES-E procurement. 

RE100 Power Plant Age in Europe 2021

We expect this to shift the demand profile of RE100 members to be more focussed on procuring renewable electricity from younger plants such as wind and solar PV as opposed to older hydro technologies. This demand shift could trickle down into the EAC markets: reduced availability of GOs from non-compliant power plants could result in a tighter market, leading to GO price hikes. Already, last year saw volatility on the GO market, with 

GOs almost reaching a price ceiling of 10 EUR/MWh in November 2022

 for the 2022 and 2023 supply contracts and then plummeting shortly afterwards.

Important to note, the RE100 is a voluntary initiative, therefore, the companies are not obliged to comply with the new technical criteria (for instance, 15% of renewable electricity did not fully comply with RE100 technical criteria in 2021). While some companies will opt for GOs that fully meet the criteria, others, still, could wield the opportunity to purchase cheaper GOs.

Trend 3. Decarbonisation target pushed forward by one year.

Last year, the average target year of RE100 members in Europe was earmarked for 2025, whereas this year the decarbonisation deadline target moved one year into the future, to 2026. This could have been explained by the fact that new members joining the initiative choose later target years, however this alone would not be enough to bring the average European target year up (the initiative counted three more members based in Europe in 2021, totalling at 127). Instead, it seems more likely that RE100 members choose to push the decarbonisation date forward in light of the change in technical criteria, which obliges them to procure renewable energy from newer power plants, thus limiting their supply choice, as explained above. 

Overall, we see that corporate demand for renewable electricity and GOs remains strong, however as RE100 technical criteria becomes more stringent, the corporates will inevitably become more selective with their procurement options, lowering demand for Nordic Hydro in the mid – term, as the rules become effective from January 2024. At the same time, the decarbonisation deadline moves forward into the future, as it becomes less feasible to reach the target in full, in light of the highly volatile energy market, as witnessed in 2022.

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The RE100 and CDP 2022 Report shows that corporate demand for renewable electricity continues to grow in Europe, with RES-E procurement for 2021 increasing by 2 TWh. Taking a closer look, there has been a reported increase in members sourcing RES-E through both EACs and PPAs (20.8 TWh and 10.3 TWh, respectively) with the latter demonstrating a strong positive dynamic (+172% y-o-y). Three RES-E procurement trends emerge: 1) EACs remain a widespread decarbonisation tool in Europe, 2) the demand for Nordic Hydro GOs will fall as RE100 members seek to comply with the new technical criteria, and 3) Decarbonisation target is pushed forward into the future.