Frequently Asked Questions About Power Purchase Agreements


Have you heard a lot of talk about Power Purchase Agreements but you’re not quite sure what it means? Are you ready to embrace sustainable energy solutions and prepare your business for a seamless transition into the future?

If you’re keen to gain more information about PPAs look into booking some online renewable energy courses. In the meantime, here are some frequently asked questions about the world of PPAs.

What is a PPA?

A PPA, or Power Purchase Agreement, is a long-term contractual agreement between an energy buyer and an energy supplier. The contracts can last sometimes between 5-20 years, depending on the nature of the agreement.

Businesses of all sizes utilise PPAs to gain some stability in potentially volatile power markets. With an agreed-upon locked-in price, companies can embrace the use of sustainable and renewable energy for decades to come.

Why are Power Purchase Agreements even made?

Due to the cost-effective nature of modern renewable builds, there has been a large increase in developments when it comes to renewable assets. This increase in demand has led to most governments removing their financial incentive schemes that once attracted businesses to these kinds of eco-friendly practices.

A gap was created, which these Power Purchase Agreements have subsequently filled, helping renewable energy investors to maintain their green trajectories while doing what’s best for their businesses.

What are the benefits of obtaining a PPA?

Businesses that don’t want to have the additional stresses of finding their way through the various ups and downs of the power market can have more control over it by utilising a PPA.

Read Also: Green Future Outlook: Solar Energy Trends for 2022

Well-negotiated Power Purchase Agreements can also be extremely cost-effective. It also provides businesses with a more comprehensive idea of exactly where their energy is coming from. Companies that are dedicated to PPAs are also able to easier maintain their carbon neutrality goals.

What is an on-site Power Purchase Agreement?

An on-site Power Purchase Agreement is what it’s called when the renewable energy asset has been put on the client’s site. Essentially, the energy operator and provider install and operate the equipment, while the client consumes the energy provided. 

What is an off-site Power Purchase Agreement?

Off-site PPAs refer to energy-providing equipment that’s not on the premises of the purchaser. The buyer has still agreed to obtain a certain amount of renewable energy, but that energy is provided from a source that’s nowhere near the client’s site.

What is a virtual off-site PPA?

Clients who choose to purchase a virtual off-site PPA are still buying a certain amount of energy from a supplier. However, in this case, they purchase it on the green energy market. Renewable energy itself isn’t necessarily connected with any specific places in the case of a virtual PPA.

Do I need to get a Power Purchase Agreement?

Any business, whether they’re a global enterprise, a long-serving SME, or even a start-up, is going to need to plan ahead for a more sustainable future. Power Purchase Agreements help facilitate this while keeping your business working as hard as ever to achieve your goals.


Please enter your comment!
Please enter your name here