What are Corporate PPA's?

Corporate PPA’s (CPPA’s) are contractual agreements between energy users and renewable energy producers. Falling costs of renewable energy allow generators to sell power to end users at a competitively agreed price. A long-term agreement with a bankable offtaker can help secure project financing in a post-subsidy market.

 

Bridges the gap between on-site renewable generation (if applicable) and total energy consumption. Helps end users to meet net-zero targets while benefiting from fixing a proportion of otherwise volatile commodity costs long-term.

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Producer

Typically looking to sell all generation under the agreement.

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Grid / Supplier

Required to facilitate transfer of energy (with certificates) and associated energy supply agreements.

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Consumer

Purchases in line with requirement for power and wider procurement/risk strategy.

Growing Market

While PPA’s have been around in many forms for quite a while, Corporate PPA’s (CPPA’s) have seen significant growth over the last decade. The American market has led the way followed by a rapidly growing market across Europe.

Projections show that a significant number of renewable energy projects will be constructed in the UK and wider Europe over the next 5-years on the back of end users entering CPPA’s. The boat certainly hasn’t sailed. This market has only just got started and is continually adapting to welcome new parties.

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Low-Carbon, Low-Cost

If seeking the lowest energy cost, you need look no further. CPPA’s allow energy users to contract with the cheapest forms of energy generation. Levelised Cost of Energy (LCOE) offers a simple view on generation lifecycle costs against output.

This takes into account of elements such as construction, O&M, fuel, carbon and decommissioning.

Large solar: -50% on 2013 projected cost

Offshore Wind: -47% change in projected costs over the last 4 years

Gas: Gas with Carbon Capture Storage (CCS) expected to be cost neutral with unbated gas.

Nuclear: Costs have not been revised

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Growing Importance of Traceability

Looking beyond the label

Energy contracts have become increasingly ambiguous with products available covering low-carbon or undefined renewable sources. Most ‘green’ contracts don’t fully disclose the source of the associated power being delivered. 

Reporting

With growing emphasis on businesses to report on energy usage and carbon, it’s increasingly important to have named sources of energy.

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Net Zero Building Requirements

The UK has embraced climate change targets that require new building to operate at net-zero by 2030. This means that by 2025, all new buildings need to be designed to meet these targets. It is estimated that between 35-50% of lifecycle carbon from office developments were previously emitted before the building is even opened. Reducing lifecycle carbon is now a key consideration.

What are the benefits of a Corporate PPA?

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Our Tailored Solution

Producer
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Our experienced team of energy traders, risk managers and analysts will assess client requirements before advising CPPA implementation strategies within a wider procurement strategy.

Understand Purchasing Requirements

Required to facilitate transfer of energy (with certificates) and associated energy supply agreements.

Grid / Supplier
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Identify Suitable Project Partners

Whether looking to contract with large renewable developers or single projects, suitability will depend on elements such as export volume/profile, start date and financial requirements.

Consumer
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The crucial part of CPPA’s is defining how they will operate for all associated parties.

From Heads of Terms (HoT’s) to drafting a final contract, this is a key area for everyone to get right.

Contract(s)
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Renewable energy solutions tailored to generators and consumers to maximise value and reduce emissions.