A single U.S. state accounted for more than a quarter of all corporate renewable energy deals signed around the world last year. No prizes for guessing which one.

The global market for corporate renewable energy deals surged again in 2019, reaching 19.5 gigawatts of new contracts, up 40 percent over the previous record year of 2018, according to new figures from Bloomberg New Energy Finance.

There are lots of ways to explain the market’s stunning growth, but start with this: Big corporations love cheap renewable power, and Texas has it in abundance.

Corporate deals were signed in 23 countries last year, but the U.S. accounted for virtually all of the market’s growth. Contracted capacity rose only modestly in Europe; it shrank a bit in the Asian market.

Within the U.S., Texas continued its reign, accounting for 5.5 gigawatts of last year’s deals, said Kyle Harrison, sustainability analyst at BNEF and the report's lead author. That’s more than Europe and Asia combined.

In some ways this is unsurprising; there are few places in the world where it’s cheaper to build a new wind farm than West Texas. More surprising is the fact that roughly 80 percent of the corporate deals signed last year in Texas were for solar energy, a dramatic shift for a market long dominated by wind.

Many corporate wind deals signed last decade have not proven good bets, with their offtakers “very much in the red right now,” Harrison told GTM.

The majority of corporate deals today take the form of a virtual power-purchase agreement; rather than corporations directly taking the electricity from a project, virtual PPAs are a financial transaction, allowing companies to lock in long-term power prices while helping wind and solar projects get built. But there’s a downside risk for the offtaker if wholesale power prices end up becoming cheaper than expected.

That’s happened with a number of Texas wind deals, Harrison said, as the state’s enormous influx of wind and gas-fired electricity depresses prices at times when contracted wind farms are generating power.

That dynamic partially explains the corporate market’s rapid pivot toward solar projects, which tend to generate power at more lucrative, on-peak times in the cutthroat Texas electricity market. Another important factor is, of course, the falling price of solar energy.

Rising demand from oil and gas producers

Another interesting wrinkle in Texas’ white-hot corporate renewables market is growing demand from oil and gas producers. ExxonMobil kick-started the trend in late 2018, Harrison said, signing up for 500 megawatts of wind and solar power in West Texas’ Permian Basin.

While big technology companies such as Google and Facebook continue to drive the overall corporate renewables market, a number of oil companies have piled on this year, including ExxonMobil, Occidental Petroleum and Energy Transfer Partners.

Last month, Baker Hughes announced deals with developers Apex Clean Energy and 7X Energy to source 100 percent of its electricity in Texas from wind and solar.

“These companies are vulnerable to what we’d call 'transition risk,'” Harrison explained. “You’re going to see more...carbon [reduction] policies implemented in the U.S. and globally,” as well as growing pressure to decarbonize from investors.

In the case of American oil companies, “a lot of their emissions are coming directly from their Permian operations, so in a way this is a direct offset — they can find a solar PPA in the same area where their upstream operations are.”

“It’s the beginning of something very exciting,” Harrison said.

More data centers, more renewables

There’s a question of whether the American corporate renewables market can maintain its growth as federal subsidies for wind and solar projects phase out. Such subsidies allow developers to offer lower prices to offtakers than they otherwise would be able to.

But Harrison said all signs point to sustained momentum in the market. Project economics are “strong enough to survive without subsidies,” he said.

Another tailwind is the proliferation of clean energy targets being made by companies around the world, both large and small. More than 60 new companies committed to achieving 100 percent clean electricity last year, bringing the total to more than 220.

“These are long-term commitments,” Harrison said. “A lot of tech companies, for example, even if they’ve already reached their goals, their electricity demand continues to grow as they continue to build factories and data centers.”

The corporate market, he said, is "not going anywhere."