Power Purchase Agreements: A key to securing renewable energy

As the world accelerates its efforts to address climate change, Power Purchase Agreements (PPAs) are emerging as an essential tool for securing long-term renewable electricity supply. These contracts, typically lasting between 5 and 20 years, offer organizations the opportunity to purchase green energy at a fixed price.

PPAs take various forms to suit different needs. On-site PPAs involve installing renewable energy production directly at the client’s location, while off-site physical PPAs source energy from external renewable facilities. Virtual PPAs, on the other hand, use financial agreements to support renewable projects without a direct physical link to consumption.

A Rapidly Expanding Market

“PPAs have become an essential tool for companies looking to secure their clean energy supply while stabilizing costs,” explains Aude Beuter, in charge of the Green Power at ENGIE Global Energy Management & Sales (GEMS). “By locking in prices over the long term, these contracts protect businesses from market fluctuations while driving the growth of renewable energy.”

Once primarily used by multinationals, PPAs are now attracting a broader audience. SMEs and local authorities increasingly view them as an effective solution to accelerate their energy transition and reduce their carbon footprint. “Demand is growing, as mid-sized companies and even public institutions recognize the benefits of these contracts,” Aude Beuter adds.

A Driver for Renewable Energy Development

Beyond their financial and environmental benefits, PPAs play a key role in funding green infrastructure. By guaranteeing producers a stable outlet for their electricity, they facilitate investment in solar, wind, and hydroelectric capacity.

In 2024, GEMS signed 85 corporate clean energy PPAs, securing 4.3 GW of renewable capacity across solar and wind projects. The company is also leveraging blockchain solutions like Attributes to enhance transparency and traceability in energy sourcing.

A Necessary Evolution in a Challenging Industry

The growing adoption of PPAs comes at a critical time for the energy sector, which is facing rising electrification demands and the rapid growth of the digital economy. Power grids are under increasing pressure, and data centers have become major players in the PPA market, seeking to secure clean energy while reducing their environmental impact.

“The digital sector is now one of the largest electricity consumers. Artificial Intelligence (AI) will reinforce this trend.” says Aude Beuter. “With well-structured PPAs, we can support its growth sustainably while strengthening Europe’s energy security and competitiveness.”

While PPAs may not be a universal solution, they are proving to be a crucial tool in building a more resilient, low-carbon energy system. As businesses and public authorities recognize their potential, their adoption is expected to accelerate in the coming years.