As businesses see greater demand for sustainable options from their customers, renewables have increasingly become a focal point, with a greater variety of procurement options required to suit their needs. Corporate Power Purchase Agreements (CPPAs) are one such option, as they can help organisations reach their sustainability goals and assist wider decarbonisation. 

So we sat down with Rob Haddow, Strategic Account Manager at Bryt Energy, to answer some questions you might have about the benefits and considerations of CPPAs. 

Corporate Power Purchase Agreements (CPPAs) are long-term energy procurement agreements between a customer and an energy generator, such as a wind or solar farm. Through a CPPA, generators commit to provide long-term renewable power (and REGOs) to businesses. They typically last between 5-15 years and provide the option of either a ‘New to Earth’ project or existing asset. CPPAs can give businesses access to longer-term prices and greater budget certainty than they would receive under a regular electricity supply contract.

There are many different types of CPPAs to choose from, ranging from the type of asset to the type of contract, and it is important to understand which one best fits your business’ needs.

New to Earth

New assets, also known as ‘New to Earth’ CPPAs, are agreements with a new renewable electricity generation project that can only proceed as a result of the business’ investment. This means that the agreement is directly increasing the amount of renewables on the grid, and through this, businesses can display a strong commitment to sustainability.

New to Earth CPPAs do also come with some considerations. There can be challenges associated with the development of the project, such as obtaining planning permission and grid consent, meeting the agreed timeframes of the project, and producing the anticipated amount of renewable generation. Many of these risks can be mitigated through the terms of a CPPA, protecting customers financially, though they would need to consider their supply procurement options, should delays occur.

Existing

CPPAs with already existing electricity generation assets can provide long-term price certainty. Whilst existing CPPAs don’t enable the completion of a new renewable project, they do avoid any potential development challenges that can be associated with a New to Earth CPPA.

Other variations

CPPAs also vary by contract and agreement. A ‘Pay as Produced’ CPPA would involve agreeing to buy a percentage of the electricity produced by the generator, with payment varying based on the amount produced. In contrast, ‘Pay as Forecast’ CPPAs involve the customer purchasing energy based on the day-ahead forecasted generation, rather than the actual generation. ‘Shaped” or “Firmed” CPPAs have the intermittency of the generation profile turned into baseload blocks or an agreed profile, making it simpler to manage within a procurement strategy or an accompanying electricity supply contract.

Many consumers value environmental consciousness in companies, and there can be significant benefits to businesses choosing renewable options¹. Should you wish to go a step further than a traditional renewable electricity supply contract, CPPAs can offer longer-term commitments to renewable generation projects and sustainability plans. Choosing a CPPA can demonstrate a direct link to a specific renewable asset or, through a New to Earth CPPA, be an essential part of enabling projects to complete, adding more renewable electricity to the grid.

CPPAs can also provide some budget certainty. These long-term agreements may include fixed prices for Renewable Energy Guarantees of Origin (REGO) certificates and power, so will be unaffected by increasing market prices movement, providing a hedge that could be helpful for long-term strategies and stability.

CPPAs are not for everyone, and that’s okay! Whilst CPPAs can be a key part of a sustainability strategy, it can be difficult to align the needs of your business with the right renewable generation project. For organisations who are thinking about a CPPA, thorough consideration and preparation early on can make a real difference in successfully agreeing one. Here are some things to consider if you’re thinking about a CPPA for your business.

• Credit ratings

A CPPA provides a long-term revenue stream for the generation project, so the financial strength of the business is key. To agree one, you will need either an investment grade credit rating, subject to the provider’s thresholds, and/or the ability to post collateral (such as a bank guarantee). It’s also important to consider the credit standing of the project and the business managing the agreement between the generator and customer to ensure success.

• Annual electricity consumption

CPPAs can be offered to a range of customers. They may suit businesses that have an annual electricity consumption of at least 20GWh+, and should typically provide you with approximately 50% of your required volume, to ensure you retain the ability to hedge against any usage change and market movements.

It may be possible to arrange CPPAs for businesses with smaller energy consumption through ‘baskets’, especially if they are looking to be contracted with an existing asset. ‘Basket’ CPPAs contain multiple smaller organisations contracted with one renewable energy generator and can allow smaller businesses to successfully establish a CPPA, collectively.

• Internal engagement

There are a few things to consider within your organisation when looking into a CPPA. You’ll need to consider how a CPPA may align with your wider energy and decarbonisation strategies, and how this may fit into any existing electricity supply contracts you have. Additionally, choosing a CPPA should ideally be agreed at a decision-maker, even board level, as early as possible, to ensure a smooth procurement process.

Bryt Energy is part of the Statkraft Group – Statkraft is Europe’s largest renewable energy producer and a leading international hydropower company. Spanning 20+ countries, and with an A credit rating², Statkraft develops and operates renewable energy assets, buys and sells energy, and invests 100% of growth into renewables.

Statkraft has invested over £1.4 billion in the UK’s renewable energy infrastructure since 2006 and is a leading provider of Power Purchase Agreements (PPAs), having facilitated over 4.3GW of new-build renewable energy generation through PPAs, and have signed a number of CPPAs both here in the UK and across the globe. Statkraft also offers a Firming service for CPPAs. Through this service, Statkraft manages the intermittency of the generation profile, converting it into baseload blocks or an agreed profile, making it simpler to manage within a procurement strategy or an accompanying electricity supply contract.

As part of the Statkraft Group, we and our customers benefit from their 125+ years of renewables expertise, and their access to a range of renewable projects. As such, we work closely with Statkraft to integrate your CPPA seamlessly with your Bryt Energy supply contract, for a smoother process.

To find out more about CPPA options, and how this can work alongside a zero carbon, 100% renewable electricity* supply contract, get in touch with our team of experts here.