Find creditworthy developers and buyers – Companies typically expect developers to be able to issue a letter of credit (LoC) or solvent parent company guarantee (PCG) to cover the risk that the project will not progress once the CPPA is complete. Sometimes these are just preparatory obstacles, as often as soon as the project is generated, the LoC or other security is released. Similarly, except in the case of large buyers of solvent businesses, generators often need security to ensure that the corporate purchaser pays for the electricity supplied, particularly given the long-term nature of the CSLA. This is particularly important because the CSLA, as a grant-free project, is likely to be almost the entire source of revenue for the generator. However, good creditworthy business customers can be hard to find, and this remains a challenge. The renewable energy producer liquidates the electricity at the available prices of the wholesale market at which the plant is located. If this price is higher than the “strike price”, the producer pays the positive difference to the company/buyer. Conversely, if the “strike price” is lower than the market price, the company/buyer pays the producer the difference up to the strike price. [13] In order to understand the hedging effect of this type of billing, it is useful to consider scenarios in which wholesale energy prices fluctuate in unison in both wholesale markets (i.dem where the producer is located and where the commercial buyer is located). For example, if wholesale prices in the producer`s market exceed the “strike price”, the commercial buyer receives a payment of the difference, but this payment is used to offset the price increase in its domestic market. Conversely, if wholesale prices on the generator market fall below the “strike price”, the commercial buyer must pay the difference to the producer, but this payment is also offset by lower energy costs in its domestic market. The renewable energy project and the energy consumer do not need to be in the same place (and are often in completely different electricity markets).

Wind projects typically have a larger capacity than solar PV projects, allowing buyers to source larger amounts of electricity in individual transactions and offer 24-hour operation. [7] PPPCPs have also expanded beyond first-tier tech giants like Google and Microsoft to gain momentum in various sectors, particularly telecommunications, consumer goods and financial services. [8] The UK itself has so far experienced a relatively slow adoption of PPPCs, but some of the country`s largest trade and industrial organisations are involved in those signed. Settlement is usually made on a monthly basis, with some form of contract for difference (CFD) or long-term commodity exchange transaction under the 2002 ISDA Framework Agreement being the most common structure. [9] The piE interview: specialist in corporate PPAs, Ecompany, Power in Europe, 11 February 2019. [23] EFET launches standard enterprise power purchase agreement, Platts European Power Daily, 20 June 2019. Multi-buyer CPPAS structures allow more than one corporate buyer to support an EA project, either by providing various parallel PPAs with different companies, or by creating a single purchase agreement that allows multiple corporate buyers to participate. Direct investments in renewable energy projects – Companies can develop or invest directly in a renewable energy generation plant from which the electricity produced can be transferred to the company. However, such an approach often requires high upfront investment costs (or financing costs) and requires the company to develop (or commission) significant energy expertise to build, operate and maintain the project and meet all regulatory requirements. The greater the distance of such a project from the company`s load center (i.e., when electricity is needed), the greater the transportation costs and potential complexities from a technical and regulatory perspective. [10] Next Kraftwerke, What is a PPA, available at:, accessed January 5, 2020.

[12] Everoze, Our essential cribsheet to the top 3 corporate PPA models, February 2018, available at:, accessed January 5, 2020. A multi-technology PPA covers several projects of different technologies (e.B, wind, solar, biomass, geothermal or hydropower). The objective of this document is to support continuous innovation in the way companies purchase renewable energy for their operations. Renewable energy certificates are a flexible product that allows you to source green energy on a pan-European or global scale where alternative green energy options are not available PPA sleeves/physical – companies are able to source renewable energy from third-party producers via green CPAs, under which companies enter into a power purchase agreement (PPA) with an energy producer renewable. For example, under such a PPA, the generator provides the company with green electricity at a fixed price for a certain period of time over the long term (sometimes subject to an agreed annual escalation). .