COPENHAGEN (Reuters) – Offshore wind firm, DONG Energy, soon to be renamed Orsted, says big European companies are increasingly interested in buying renewable power directly from renewable developers as they seek to reduce their carbon footprint.
The shift comes as the price of renewable power has plunged to levels that make it competitive with traditional types of energy: in Britain, the price of new offshore wind power fell last month below new nuclear generation for the first time.
In the United States, companies like Alphabet’s Google, Facebook and Walmart have already developed a market for so-called corporate renewable power purchase agreements (PPAs). Denmark’s DONG Energy, the world’s biggest offshore wind producer, sees Europe following suit.
“We see an increased interest,” DONG Energy CEO Henrik Poulsen told Reuters on Monday. “We have not yet seen the European market really get started but I believe that we will see something within the next couple of years.”
Big tech companies, which use a lot of energy on hosting activities, for example, and want to promote a green profile, would be potential buyers along with heavy industry manufacturers, Poulsen said.
“It would make sense to look at some of the global corporates, which have established the market in the United States,” he said.
Corporate PPAs allow companies to buy renewable energy directly from the energy generator, reducing their emissions while managing volatile energy expenses by locking in electricity costs at a fixed price.
Last year, the volume of corporate renewable PPAs almost tripled in Europe, with around 1 gigawatt of capacity contracted, according to material from the Re-Source 2017 conference, which aims to connect buyers and sellers of renewable energy.
Despite the significant rise this is still below levels seen in the United States, where PPAs accounted for almost half of the 4 GW of renewable energy installed in 2016, according to Re-source.
Poulsen was speaking after the firm announced its name change from DONG Energy, originally short for Danish Oil and Natural Gas, to Orsted. The new name fits in with the firm’s strategy to focus on renewable energy after it divested its oil and gas business – and relieves it of the unfortunate acronym in the old name that is a crude, slang word in some languages.
“(DONG Energy) is a name and logo shaped in a world of fossil fuels,” Poulsen told employees on Monday before revealing the new name.
“Separately, in some languages the DONG name does not translate that well … The name is not suited for the global expansion journey we are on,” he said.
The company’s new name is inspired by 19th century Danish physicist Hans Christian Orsted, seen as a pioneer in energy who among other things discovered electromagnetism.
Reporting by Stine Jacobsen; Editing by Jacob Gronholt-Pedersen and Susan Fenton