Corporate PPA Trends in the Global Market

There has been significant growth in the number of Corporate PPA deals signed in numerous industries across the globe year-on-year, with 30.9GW of clean power deals emerging from Corporate PPAs in Europe as at October 2023.[1] 

The trend towards the Corporate PPA in the energy market has mostly been fuelled by:

1. Global sustainability, decarbonisation and net-zero goals.
2. Energy security and climate change.
3. The benefits associated with directly sourcing renewable power (Corporate Social Responsibility, supply diversification, economic incentives, and reputational goals).
4. The ongoing rise of energy prices and the desire for price certainty.
5. The need for flexible and tailored agreements to suit the commercial and financial needs of corporations and power generators. 

The most prominent players in the global Corporate PPA market are technology companies (Amazon, Meta, Google and Microsoft) and data centre owners, followed by telecommunications, ICT and heavy industries. Thus far, Amazon has been the largest global buyer, with 10.9 GW of deals in 2022 alone, [2] with its main investment locations being the US, the UK, Canada, Sweden and Spain. Contributions to the market by other sectors such as transport, automotive and retail is also currently on the rise.

Where the US continues to top the PPA market globally [3], Europe is the second-largest market, led by Spain and the Nordic countries, mostly utilizing solar and wind power. Other popular energy sources include the production of green hydrogen through wind power PPAs in Germany and  the geothermal power PPAs in the US, Iceland and New Zealand.

Over the past two years, due to the energy crisis and the impact of the invasion of Ukraine on the supply of gas, deal activity in EMEA has declined. However, since 2022 activity has risen quite significantly with and increasing preference of the virtual PPA. The virtual PPA represents a purely financial transaction in which power is sold directly to the wholesale market. The virtual PPA therefore does not involve with sale of power to a corporation but is instead a contract for difference and gives corporations the opportunity to hedge a fixed price for energy output and renewable energy certificates against a variable (and currently volatile) market price. This structure has allowed corporations to show a commitment to renewable energy and efficiently meet their environmental goals at a lower cost, whilst also accruing financial benefit, if the wholesale market price if more than the agreed fixed price.

It is expected that global corporate PPA activity will continue to further increase in 2024 amidst global energy market reforms, sustainability, and decarbonisation goals.

If you would like to find out more, please visit our Corporate PPA Hub or get in contact with us.