Turn up the power: The rise of Corporate Power Purchase Agreements 

Since 2014, the Contracts for Difference (CfD) scheme has been an established route for renewable generators to access the market.  

However, CfDs are not the only avenue for developers to secure their required funding. Now that the latest annual auction has concluded, developers can also consider Corporate Power Purchase Agreements (CPPAs) as an alternative funding source for renewable energy generation.   

Therefore, now is an opportune time to consider whether a CPPA could be right for your organisation. Although not a one-size-fits-all solution, a CPPA can play a powerful role in your organisation’s wider decarbonisation efforts.  

What are CPPAs? 

A CPPA, a long-term energy contract between a corporate customer and a renewable power generator/developer, is an increasingly popular choice for organisations seeking to decarbonise. 

In practice, having a CPPA means the energy you use can be traced back to a specific renewable energy project, such as a wind or solar farm, which feeds an equivalent amount of power into the grid. This means your premises and the project in question can be located at the opposite ends of the country. 

What are the benefits of a CPPA? 

• Additionality: Contracting with a generator allows large-scale off-site renewable energy development, such as wind and solar. 
• Long-term price certainty: A CPPA is usually agreed over a period of 10-15 years, offering protection against rising costs and market volatility while allowing you to budget in the long-term. 
• Set your net-zero and ESG initiatives in motion: A CPPA demonstrates your organisation’s long-term commitment to renewable energy to clients, investors and other stakeholders as part of your wider decarbonisation and Environmental, Social and Governance (ESG) ambitions. 
• Secure Renewable Energy Guarantees of Origin (REGOs): REGOs are certificates showcasing electricity has been generated from renewable sources. The demand for REGOs will only grow as the UK approaches net-zero, and the price can be forecasted to rise with the demand. However, a CPPA secures REGOs throughout your contract.