What is Corporate power purchase agreement (Corporate PPA)?

A Corporate power purchase agreement (Corporate PPA) is a bilateral contract between a renewable energy generator (e.g. wind farm, solar plant) and an energy user (e.g. company, university, city) in which the buyer agrees to offtake power from the generation facility generally for a specified period (generally 10–20 years).

Despite the fact that power purchase agreements used for a long time with it's direct meaning for power procurement, it was widely spred throughout the gradual erosion of subsidies that provide developers with the guaranteed revenue they need to finance new projects and hedge against price and volume volatility. The market for renewable energy among corporations has been sparked by corporate social responsibility objectives, better economics for renewable technologies and more flexible regulation. Power purchase agreements are now the favored tool for bringing new renewable energy onto the grid, and can also help companies hedge against power price swings. Corporations are setting clean energy targets and entering the PPA market, while others are looking at ways to de-carbonize their supply chains.

Although, very often the term Corporate PPA is used to describe different approaches for corporate's renewable energy procurement where Corporate PPA is only one among others:

  • Certificate procurement
  • Onsite generation
  • Direct investment
  • Corporate PPA
  • Green tariff