Harnessing renewable energy with PPAs: Solar, wind and hydropower

Power Purchase Agreements (PPAs) are becoming a more attractive option for businesses as they seek to secure clean energy and meet sustainability goals. From solar energy to wind turbines, renewable PPAs could be the solution for companies seeking tailored energy contracts to power their operations.

What is a renewable energy PPA?

A renewable energy PPA is a long-term contract where a business agrees to purchase electricity directly from a renewable generator. These providers install, own and maintain renewable energy systems. This could be using solar panels, wind turbines, hydroelectric, tidal capture or even biomass, depending on how the energy is generated.

What are the options available to businesses?

Solar PPAs: Solar PPAs offer unique advantages and are increasingly popular among businesses looking to reduce their carbon footprint and stabilise energy costs. Solar panels can be installed in a much wider range of locations than most other generation sources. They also naturally produce more electricity during daytime hours which suits many business operations.

With an on-site solar PPA, a solar developer installs, owns, and operates a solar energy system on a consumer’s property, roof-top, ground mount or car park canopies. The consumer agrees to purchase the solar power generated at a predetermined rate, and in most cases, this will be lower than the grid-supplied rate. This arrangement allows consumers to benefit from clean energy without the upfront costs and maintenance responsibilities associated with solar panel installations.

Off-site solar PPAs are also an option, where businesses source energy from larger solar farms located away from their premises; these are a little more complex because the supply is indirect and so they must be balanced against wider grid demand.

Wind PPAs: Businesses may be interested in PPAs sourced from wind power as they can provide an excellent alternative to electricity generated from burning fossil sources such as coal or gas. Wind energy is particularly effective in areas with consistent wind speeds, such as coastal regions or open landscapes.

In a wind PPA, businesses can either invest in an on-site wind turbine (if their site is large enough) or engage in off-site agreements, purchasing energy from a wind farm.

Hydropower PPAs: Hydropower is another reliable source of renewable energy. With a hydropower PPA, businesses can secure energy from flowing water resources like rivers or man-made dams. This option is often more location-specific but provides consistent, year-round renewable energy. Hydropower agreements are more often offsite agreements and more commonly struck by utility companies than corporates.

Biomass and Biogas PPAs: For businesses that want to explore more diverse renewable options, biomass and biogas PPAs could be something to consider. These PPAs involve generating energy from organic materials such as agricultural waste. Biomass energy can be particularly appealing to companies in the agricultural or food processing sectors, providing a circular economy approach by turning waste into power.

Why are corporate-backed PPAs a useful tool for businesses?

Renewable energy PPAs allow businesses to lock in a stable price for energy over the contract’s duration, protecting them from any volatility in the energy markets. By choosing renewable PPAs, businesses are also making a clear statement about their commitment to sustainability and give consumers a way of achieving their own Net Zero objectives.

PPAs also provide the electricity generator with a long-term route to market for their product at an agreed price, which supports financing the scheme’s assets. This contributes to increased additionality and contribution from renewables to the generation mix. The business is therefore accelerating the expansion of renewable generation by supporting the investment case by buying the electricity.

How Amber can help

With the UK’s commitment to achieving Net Zero by 2050, now is the perfect time for businesses to consider renewable PPAs. Not only do they offer the potential for cost-effective ways to meet sustainability goals, but they also demonstrate leadership in the transition to a greener economy. We work with businesses to connect them with truly renewable energy, and one of the ways we can do this is through exclusive corporate Power Purchase Agreements (PPAs). Please get in touch to find out how we can support you.