Originally published on CleanTechnica
Renewable electricity power purchase agreements are looking quite attractive as a business model for corporations.
Michael Evans, Baker & McKenzie associate director of communications, recently wrote about its report on the rise of renewable Power Purchase agreements by corporates. “The report itself might not be newsworthy,” he stated, “but the trend is pretty big and seems set to continue.”
The report, titled “The Rise of corporate PPAs,” examines an emerging trend:
“From regulatory uncertainty to low fossil fuel prices, the renewable energy industry is challenged on a number of fronts around the world. But in the last three years a new development has emerged that has the potential to breathe new life into the sector – the corporate renewable energy power purchase agreement (PPA).”
Contents of the report include the following items:
- Corporate renewable PPAs on the rise
- US surges in corporate renewable PPAs
- Market for corporate renewable energy PPAs has grown significantly over the last three years
- Businesses are now purchasing electricity under long-term renewable PPAs directly from independent generators
- Businesses are also investing in generation assets instead of buying power direct from utilities
- Corporate renewable PPAs bring economic and sustainability-related advantages to the contracting parties, which is propelling the trend across the globe.
- More corporations are expected to enter into PPAs in the coming 18 months
- Corporate renewable energy PPA hotspots include the UK, Germany, South Africa, Mexico, Chile, Brazil, India, and China
- Smaller companies are entering this market. Early entrants have been some of the world’s largest technology companies and they are still doing the biggest deals. But the market has seen a diverse set of corporations including retailers, pharmaceuticals and industrials entering into renewable PPAs.
- In Europe, the market is increasingly seeing activity from small to mid-sized companies that are doing so via consortiums.
- 60% of surveyed corporations exploring renewable PPAs cite economic factors as their primary rationale
- Benefits of corporate renewable PPAs to ‘offtakers’ and generators may be large, but care needs to be given to risks that are unique to these deals.
- Large corporations appear to prefer synthetic rather than standard PPAs
The report provides a worthy read for a mix of corporate employees, including sustainability experts, CFOs and environmentalists.
Image: solar panels and wind turbines via Shutterstock