The benefits of CPPAs
Corporate Power Purchase Agreements – or CPPAs – offer energy consumers a range of financial, environmental, reputational and risk-reduction benefits.
Price stability
As a consumer, you’ll generally agree a CPPA contract with a generator for a period of 5-20 years. This long-term agreement helps you manage power price risk as it reduces your exposure to volatile market prices. This gives you a better idea of what you’ll be spending on energy – and a clearer picture of what you can budget elsewhere.
Emissions reduction
CPPAs deal exclusively with renewable energy. As a consumer, using guaranteed renewable source electricity – supplied with relevant Renewable Guarantee of Origin (REGO) certification – enables you to reduce your reportable Scope 2 emissions.
Diversification of supply
As a consumer, you can agree multiple CPPAs across different technology types to spread the source of renewable electricity supply. Doing so offers:
The spread of risk
CPPAs associated with certain technology types – such as solar, for example – may be more affordable or desirable but have greater associated intermittency. In such situations, it’s safer not to be overly reliant on one generation technology.
The potential for a ‘flatter’ baseload profile
One technology type’s generation profile can help plug gaps in another’s. Agreeing complementary CPPAs can reduce the impact of intermittency and reduce shaping costs.
More PR opportunities
Having more than one named technology source – or more than one specific generator – means more opportunity for focused ESG stories.
Hedging
You can contract to buy some or all of the electricity your organisation needs from a renewable generator through a CPPA.
It’s common for large consumers to arrange CPPAs that cover a defined proportion of their energy use. In this way, they’re able to benefit from a degree of stability and hedging a proportion of their energy investment against volatile wholesale prices.
Renewable certification
Agree a CPPA and you’ll also receive certification – REGOS in the UK – assigned to each MWh of renewable electricity it covers. REGOs show your commitment to sustainability, and proves the power your organisation consumes, is coming from a known renewable source.
Corporate social responsibility advantages
Being able to state exactly where the power you’ve purchased comes from offers your organisation reputational benefits. Of course, it’s worth promoting the reduction of emissions associated with your organisation’s electricity consumption. But, by choosing renewables technologies that align with your location, sector or business strategy, there may be opportunities for further good news stories.
Deeper renewables investment
The benefits of CPPAs extend to generators as well. By entering a contract, you’ll be securing funding for a generator to develop subsidy-free renewable generation assets. Known as ‘additionality’, this investment in renewables infrastructure also carries wider societal benefits such as job creation and investment in local economies.
Read more about the current CPPA landscape, available profiles and contract types in our guide to CPPAs.
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