edie launches new explains guide on Corporate Power Purchase Agreements
edie has today (31 January) launched a new explains guide detailing everything you need to know about Corporate Power Purchase Agreements.
What is a Corporate Power Purchase Agreement (CPPA)? Why choose CPPAs? What are the business benefits of CPPAs? How to undertake a CPPA – key considerations for business How is the CPPA market developing?
This new edie Explains guide, developed in assistance with EDF, answers all of these questions and more, providing the definitive, need-to-know guide on CPPAs.
Broadly speaking, there are two PPA models: the traditional ‘utility PPA’ – where the energy buyer is a utility company; and ‘corporate’ or ‘end-user’ PPAs – where the end-user is a business that is purchasing energy directly from a generator as opposed to purchasing it from a licensed supplier.
For the purpose of this guide, we will be focusing exclusively on the ‘corporate’ PPA model, referred to throughout the document as a ‘CPPA’.
The market for Power Purchase Agreements (PPAs) is currently far more mature in the USA and Central America at present than in Europe. Bloomberg NEF’s analysis of clean energy PPAs concluded that a 40% global year-on-year increase in corporate clean energy procurement in 2019 was led by action in the US. However, Covid-19 has meant that the amount of generation backed by US-based corporates signing PPAs was almost one-third lower in the first half of 2020 than in the first half of 2019.
Renewable PPAs made by corporates in Europe totalled 8GW in 2019, up from 5.5GW in 2018. As such, businesses need access to tailored understanding, based on geographical locations, when venturing into the field of CPPAs.
This guide helps explain those considerations and more. It also features a viewpoint from EDF’s PPA origination manager Peter Wheeler on how CPPAs can help with reporting and decarbonisation efforts.
“CPPAs are more complex and long term than some businesses want for their energy supply. But, if you have long term demand certainty, are comfortable managing a little price risk and sustainability is a top priority for your business, this could be the ideal solution for you,” Wheeler said.
“By signing a CPPA, your business is making a real commitment to achieving net-zero. Here’s how one business has already done this.”
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