Amid rising electricity prices, expiring tax credits, and persistent interconnection challenges, small and midsize companies are reassessing their renewable energy strategies. The urgency to embrace on-site installations and local suppliers has never been more pressing as businesses navigate a rapidly changing landscape.
The U.S. tax credits for solar and wind energy are set to begin phasing out in July 2026 as part of the One Big Beautiful Bill Act. This impending sunset looms large over companies already grappling with escalating capital investments and per-megawatt costs driven by a surge in data center construction. Simultaneously, many are encountering protracted delays in securing interconnection permits on the aging power grid, adding to the complexity of transitioning to renewable energy. Furthermore, uncertainty over stringent new greenhouse gas accounting rules is complicating matters for electricity buyers, forcing businesses to act decisively.
The impact of these market dynamics is manifesting in the diminished activity surrounding virtual power purchase agreements (vPPAs). For companies looking to align their energy consumption with operational needs, 2025 marked a notable downturn. Reports from BloombergNEF indicate a reduction in corporate clean energy deals—the lowest in over a decade—with a global contract volume of just 55.9 gigawatts, reflecting a 10 percent decrease from 2024.
Experts are echoing the sentiment that the U.S. is experiencing a seismic shift akin to the electrification era of the 1950s. Dan Keyes, director of capital markets at Clearway Energy Group, emphasized the increasing challenges posed by interconnection costs and grid constraints as electrification reaches new heights. Tyson Maulhardt, director of sales for Prologis, echoed this urgency, asserting that “speed to power is more important than ever.”
Market Dynamics Shifting
The landscape for solar and wind power purchase agreements has changed considerably, with prices surging by 9 percent in 2025. Certain markets even reported premiums as high as 25 percent. In the PJM region, renowned for its burgeoning data center activity, prices climbed to an average of $81.03 per megawatt-hour. This price increase, combined with a dramatic contraction in unique vPPA buyers—down by 50 percent in 2025—poses unique challenges for smaller companies seeking renewable energy. Major tech giants like Amazon, Google, Meta, and Microsoft dominate the market, making it increasingly difficult for smaller entities to secure deals.
Nayel Brihi, a corporate energy analyst at BloombergNEF, highlighted the disparity in buying power among corporate clean energy buyers. While large tech companies pursue ambitious, large-scale projects, smaller firms are left to contend with the market’s harsher realities.
Adapting Strategies
Cardinal Health exemplifies how companies are adapting their renewable energy procurement tactics. Initially, the company intended to balance on-site development with offsite PPAs. However, after thorough evaluations revealed limitations on potential on-site projects, Cardinal shifted its focus toward securing clearer, more straightforward contracts. Megan Maltenfort, the company’s vice president of ESG, underscored the urgency of accelerating procurement efforts in light of upcoming changes to greenhouse gas accounting rules. “We have to get as much done as possible in the next 12 months,” she noted, emphasizing the need for simplicity in negotiations.
Another notable trend is the rise of joint transactions among midsize companies to pool their renewable electricity requirements. Andy Battjes, director of global environmental, health, safety, and sustainability at Brown-Forman (the distillery behind Jack Daniels), mentioned how collaborative approaches are gaining traction as companies navigate this turbulent energy landscape.
Emphasizing Simplicity and Locality
Outdoor products retailer REI is pivoting in response to market uncertainties by prioritizing smaller, community-focused renewable projects. By investing in local initiatives near their retail locations, REI aims not just for sustainability but also for social impact, creating jobs and offering more affordable energy solutions. “We want to have things that are going to be more accessible to us,” stated Jay Creech, REI’s net-zero lead. The company is keen on simplification, favoring shorter contract terms and smaller deal sizes while still focused on delivering impact.
Both Cardinal Health and Brown-Forman are strategically targeting regions with favorable regulations and incentives for renewable energy projects. Cardinal, for instance, is focusing on placing several of its on-site projects in Latin America, while Battjes emphasizes the need for local policy alignment to maximize effectiveness. “Your local and state policy is everything right now,” he affirmed, indicating a shift toward localized plans that incorporate specific market conditions.
As electricity prices escalate and the complexities of the energy market deepen, the the strategies of small and midsize companies reflect a profound recalibration of priorities. Companies are opting for simplicity and locality to navigate these challenges, positioning themselves for success in an uncertain energy future.