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Corporate Power Purchase Agreements (PPAs)

Corporate Power Purchase Agreements (PPAs) Corporate Power Purchase Agreements (PPAs)

Corporates account for two-thirds of the world’s electricity end-use consumption. Every year large corporates spend millions on energy. Outside the energy-intensive industries, the majority of firms treated energy procurement as a cost to be managed rather than a strategic area for risk reduction and value creation. More recently however, a significant number of companies – primarily in Europe, Asia and the US – is taking active steps in optimizing their energy consumption and broader emissions program. Clear ambitions regarding renewable energy targets are being communicated, implying further growth of renewable energy sourcing in the future, among other things driven by falling costs of renewable energy sourcing.

A set of opportunities with different investment characteristics is emerging, creating new services and business models within the energy space for corporates to benefit from. Corporates have multiple options to lower their carbon footprint, varying from energy efficiency projects to corporate PPAs to the development of own renewable energy generation assets.

When sourcing renewable energy, corporates face key challenges and need to manage different risk profiles as operations could span different geographies and markets. As such, they have to form views on the main strategic considerations if they are to succeed and they need to secure the right combination of expertise across different functions (e.g. finance, strategy, tax, reporting, procurement, sustainability, legal) to develop the most suitable solutions and give their company that vital competitive edge in the energy transition.