Many companies are procuring renewable energy as a key part of their sustainability strategy. While reducing power consumption is the first step to lower costs and reduce emissions, companies need to maintain continuous operation. Renewable energy can meet that remaining electricity demand.
Corporate renewable PPAs help companies reduce their environmental footprint and often lower their energy costs.
Corporate renewable PPAs also speed up deployment of renewable energy projects by securing a revenue stream for generated electricity and by easing access to project finance. For utilities and project developers, corporate renewable PPAs provide access to corporate buyers, as an alternative to government-led auctions.
A PPA is a contract between the corporate buyer (off-taker) and the power producer (developer, independent power producer, investor) to purchase electricity at pre-agreed prices for pre-agreed periods. The contract contains the commercial terms of the electricity sale: length, delivery point/date, volume and price. The electricity can be supplied by existing renewable energy assets or new build projects.
Financing requirements mean PPAs for new projects often have strict criteria – for example, a duration covering the debt term. New project deals are typically long-term (10+ years) PPAs, but short-term PPAs or PPAs for existing assets can have a tenor of less than a year. There is a wide variety of pricing structures, including fixed prices and discounts pegged to wholesale prices.
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