Keeping the energy transition on track: What’s next for PPAs and business leadership in renewable energy?

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14 September, 2020


WBCSD insights



Lucy Hunt

Business is leading in sustaining and driving renewable energy

To overcome COVID-19 setbacks, we need to double down on accelerating the renewable energy transition. Economic stimulus packages announced by countries around the globe will provide much needed investment, but can only go so far.

More action is needed and business is already taking up the reins. Large companies purchasing electricity for their operations have created a clear demand signal over the past decade by committing to 100% renewable electricity targets and sourcing ever greater proportions of their electricity demand from renewable sources, driven by sustainability and economic incentives. Energy suppliers have responded by offering new renewable energy solutions that meet the needs of this burgeoning demand.

PPAs are key to meeting company demand for renewable electricity

Lockdowns and economic uncertainty have impacted PPAs and corporate renewable sourcing in the short term

We expect to see more changes for PPAs in the medium term

With every crisis comes an opportunity to pause, analyze the situation, assess the lessons learned and approach things differently. Now we’re probing how PPAs can adapt to make corporate renewable sourcing even stronger in a post-pandemic world. Through our work on PPAs over the last five years we can say without doubt that PPAs are no stranger to complexity – they are extensive electricity contracts with multiple parties sharing multiple risks and benefits. But with this complexity comes adaptability: making them the perfect tools for innovation amid difficult circumstances.

There are three key areas where we expect to see changes in the medium to long term.

1. Companies will need to maintain momentum with fewer resources

2. More innovative pricing structures could better meet needs of electricity buyers and suppliers alike

3. Increased credit risk will bring alternative credit support mechanisms and multi-buyer PPA structures

Business will continue to lead the renewable energy transition

COVID-19 and the economic downturn are by far the biggest challenges that the renewable electricity sector and the corporate renewable PPA movement have faced in recent years. This comes at a time where we urgently need to ramp up deployment of renewables to help limit global warming to 1.5°C.

Business has shown its commitment to driving the renewable energy transition by continuing to set ambitious renewable energy targets and persisting through the pandemic to implement them.

Companies now need to prove their resilience and adaptability to changing circumstances while keeping up their strong contribution to the energy transition. Resilient by nature, PPAs offer a crucial tool to do this, as they can be designed to withstand market volatility and contribute to the new build out of renewable energy. We’re confident that companies will step up to the challenge.