A Power Purchase Agreement (PPA) is an individual contractual agreement between an electricity producer and an electricity consumer. In a PPA, the electricity producer undertakes to supply a certain amount of electrical energy to the customer at a predetermined price. This agreement usually extends over a longer periodwhich can often span several years or even decades. There are different types of Power Purchase Agreements, but in general they are all designed to promote renewable energy sources and support the market entry of renewable energy projects. A common example is the PPA for renewable energy, where the electricity comes from facilities such as wind farms, solar power plants or other renewable energy sources.
Main features of a PPA (Power Purchase Agreement)
- Contract durationThe term of a PPA can vary depending on the agreement and the parties involved. It may extend over several years or decades.
- electricity price: The price at which the electricity is supplied is usually set at the beginning of the contract and can include fixed prices, variable prices or a combination of both. This price is also referred to as the "feed-in tariff".
- Delivery obligations: The electricity producer undertakes to supply a certain amount of electricity. This quantity can be defined as a fixed capacity or as a percentage of the power plant's total production.
- Risk distribution: The PPA often regulates the responsibilities and risks associated with electricity production, supply and quality.
Advantages of PPA for companies
Electricity supply contracts in the form of a PPA offer a number of advantages for electricity producers and consumers. One of the main advantages for companies is long-term price stability. By agreeing a fixed electricity price over a defined period of time, PPAs enable electricity consumers to obtain a better price. Predictability and calculability of their energy costs. This minimizes electricity price volatility. The ability to secure their own energy supply in this way makes companies more competitive. more independent from traditional energy suppliers. This is particularly relevant in times of rising energy prices or uncertainties in the energy supply and strengthens energy independence from external organizations. PPAs allow companies to procure their energy from renewable sources, which not only leads to a improved CO2-Balance sheet but also strengthens the contribution to environmental and sustainability goals. These environmental benefits contribute to the positive perception of companies among customers, stakeholders and the public.
Advantages of PPAs for investors and operators
Power purchase agreements also facilitate the project development of new renewable energy power plants. They offer predictable Financial stability and favor long-term investment decisions. Power purchase agreements created a Secure source of income for renewable energy projects. This in turn facilitates the Promotion and development of such projects, drives the expansion of renewable energies and contributes to the diversification of the energy mix. The Lower risk distribution between the electricity producer and consumer is an additional positive aspect that is reflected in the financing of commercial photovoltaic systems through favorable lending conditions.
PPA as a driving force for the expansion of renewable energies
Power Purchase Agreements (PPAs) are a decisive driving force for the expansion of renewable energies. Long-term contracts not only offer Price stabilitybut also promote the sustainable development of renewable energy projects. Companies not only benefit economically, but also help to reduce greenhouse gas emissions and strengthen their sustainable image. In addition to lower production costs, electricity supply contracts with constant electricity prices also contribute to the increasing attractiveness and competitiveness of large-scale PV systems or wind power plants. Renewable energies have long since overtaken conventional energy sources.
Long-term electricity supply contracts in PV contracting
CUBE CONCEPTS relies on PVContracting PPAs, so that clients do not have to bear any economic risks. After careful analysis and planning, the contracts are designed in such a way that a significant electricity cost savings and maximum flexibility can be calculated. In contrast to a power purchase agreement with a conventional electricity supplier, the green solar power then not only comes from your own roof or an open space, but there is not even an obligation to purchase electricity. However, there are also contracts with Terms of 15 to 20 years which ensures long-term electricity price security and a predictable electricity supply. Offer electricity cost savings of up to 30%. In general, there is always an option to purchase the PV system, there is no obligation to take off-take and the business interruption insurance ensures the smooth supply of electricity to the business at all times. CUBE CONCEPTS also conceives offsite PPAs for its clients. This means that green energy does not necessarily have to be generated where it is consumed.