What is PPA?

What is corporate sourcing and how can PPA be used?

We live in a time of incredible opportunities for renewable energy supply. Now, more than ever, it is important to understand how PPA and other forms of corporate supply can help you make electricity supply greener, cheaper and more efficient. That’s why RE-Source has put together this quick guide on how, why and how PPAs work.

What is corporate sourcing and what are PPAs?

The corporate supply of renewable energy sources is a rapidly growing trend worldwide. Driven by sharp cost reductions combined with growing calls for sustainability among investors and consumers, renewable energy has become an attractive investment for companies around the world.

The potential for the market for renewable corporate sources in Europe, which includes both electricity purchase agreements (PPAs) and other forms of corporate sources, is significant. Between 2016-2020, more than 16 GW of new renewable energy was contracted in Europe through corporate PPAs or the construction of power plants to meet its own industrial needs.

The corporate PPA is a preliminary contractual agreement between a buyer and a seller for the purchase of a certain amount of electricity from a renewable source at an agreed price (fixed or market-related). These agreements usually last between 10-20 years. Starting in 2014, the corporate PPA market in Europe has grown to a cumulative capacity of over 12 GW at the end of 2020. In 2020 alone, approximately 4 GW PPAs have been contracted. Until 2018, wind accounted for 90% of contracted capacity in Europe, but the recent growth of solar PPAs has further stimulated market growth.

Solar energy represents the majority of installed commercial and industrial plants on site, including own projects, leasing, PPA on site and PPA near the site. The last five years in Europe have seen the construction of 2-3 GW per year of commercial and industrial solar installations on site, with forecasts showing that the installations will increase dramatically in the coming years.

Why is Corporate Energy Supply Becoming More and More Popular?

Societies around the world have begun to realize the urgent need to use clean energy sources and be more resilient. Large industrial companies are increasingly aware of the need to achieve their goals of Corporate Social Responsibility (CSR) and the opportunity to position themselves as organizations responsible for tackling climate change and protecting the environment.

Renewable corporate contracts are designed specifically to help achieve these goals.

More than 300 companies worldwide are already engaged in the supply of 100% renewable energy (through the RE100 initiative). The corporate source of renewable energy has become a major business opportunity, increasing the economic competitiveness of companies and reducing their carbon footprint.

Why should I be interested in corporate sources?

Reduce and fix costs

Corporate PPAs allow companies to pay a fixed price for energy over a period of years, reducing the volatility of electricity costs and generating long-term energy cost savings.

Decarbonization

PPA and other forms of corporate supply provide an efficient and affordable way for companies to reduce their greenhouse gas emissions and gain access to reliable renewable energy.

Corporate social responsibility

The corporate source allows your business to show its social awareness and positive impact in the community.

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