Power Purchase Agreements (PPAs) guarantee stable electricity prices and support new renewable energy capacity. Ecohz’ PPA Advisory ensures businesses get the most out of these contracts and guides companies every step of the way, from choosing the right project to negotiating terms that deliver on clean energy and financial targets.
What is a PPA?
A Power Purchase Agreement (PPA) is a contract wherein an electricity producer agrees to provide a consumer with a given volume of energy –typically through the public grid – at a stable price.
Typically signed for multi-year periods, PPAs guarantee the consumer –known as an off-taker– hedging against volatile energy markets. At the same time, they afford developers a steady, long-term source of income that makes new renewable energy projects, such as solar or wind parks, viable.
Off-takers can commit to purchasing the totality or a fraction of the volume produced by the chosen project. The delivery of renewable energy is documented with Energy Attribute Certificates (EACs) that allow consumers to report reduced Scope 2 emissions.
Types of PPAs
There is a variety of PPA models. Some focus on the physical delivery of energy or price hedging, while others emphasise location and additional clean energy capacity.
Based on the location:
|Off-site||Renewable energy is produced away from the consumption site. Electricity is delivered through the public grid, and EACs are used for documentation.|
|On-site||Clean energy is produced close to or where it is consumed. These agreements bypass the public grid, delivering electricity from the source to the consumption site via a private wire. Clean energy consumption is not documented with EACs.|
Based on the delivery of energy:
|Physical (sleeved)||Physical electricity is provided to the off-taker, along with EACs bundled with the underlying power. Consumers can either cancel the certificates or resell them. The buyer is responsible for the cost of balancing the grid.|
|Financial (virtual)||Physical electricity is not delivered to the off-taker, who only gets EACs for the agreed volume at the convened price. Consumers buy power from a third-party provider, with the producer settling the difference between the agreed energy price and the market value. The seller is responsible for the cost of balancing the grid.|
Why should you consider a PPA?
PPAs secure cash flows for renewable energy projects. For off-takers, this results in energy supplies below market prices. In turn, PPAs lower the cost of financing for project builders and offer improved business opportunities.
Cost reductionConsumers receive energy at low, stable prices while they reduce the cost of debt for project builders.
Steady income mitigates risk and attracts other sources of financing for new renewable capacity. Buyers enjoy fixed electricity prices for the duration of the contract.
Reduced carbon footprint
Consumers replace fossil energy with clean power, slashing greenhouse gas emissions.
Secure financing makes renewable projects viable, directly contributing to new capacity that would not exist otherwise.
Guidance for maximum impact
Ecohz makes PPAs more accessible for your organisation. We identify relevant projects, evaluate their quality, quantify the financials, and assess risks to secure the deal structure best suited for your business. The modules of the PPA Advisory:
We discuss your current strategy and emissions profile to understand where you stand and your goals.
2. Market analysis
We provide a complete market overview of your geographical location, including regulations and risk analyses.
3. Project evaluation
Based on your needs and targets, we produce a list of potential projects that fit your requirements.
4. Term sheet negotiation
We guide you through negotiations with producers and ensure that contracts tick all your specifications.
Verification and EACs management
We support you with the paperwork related to your contract. We take care of invoicing and monitoring the project’s performance. Also, we manage all incoming EACs, cancelling certificates on your behalf and producing documentation for reporting.
The impact of PPAs
At Ecohz, we believe the best solution for your business can also have the highest possible impact. Combining your support of newbuilt renewable energy capacity with Energy Attribute Certificates results in tangible climate action aligned with long-term business needs.
We simplify how companies use a suite of sustainability solutions and walk with you every step of the way to tailor PPAs to your goals.
Our advisors conduct personalised assessments and provide individual counsel to each of our clients, putting our extensive know-how at your disposal and breaking complexity into manageable tasks.
PPA: Construction of wind farm started to power Asahi's Polish breweries
Lech Nowy Staw wind farm covers 100% of Asahi’s Polish breweries' power needs. Ecohz was the advisor on the first PPA in Poland not benefiting from state subsidies.
Webinar: The art of hedging: understanding PPAs
This 30-minute webinar clarifies how PPAs work and explains what to look for when considering one for your organisation in the current energy climate.
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Senior Director Sales & Solutions
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