Energy · Glossary
Power Purchase Agreement (PPA)
A power purchase agreement (PPA) is a long-term contract in which a buyer agrees to purchase electricity, usually from a renewable project, at negotiated terms. PPAs give developers the revenue certainty needed to finance construction.
Corporate PPAs became the engine of renewable growth as companies chased clean-energy targets. Structures range from physical delivery to virtual (financial) PPAs, each with different accounting, risk, and additionality implications.
In practice
In the energy industry, a Power Purchase Agreement (PPA) is critical for developers, investors, and corporate buyers. Developers rely on PPAs to secure financing for renewable projects, while corporate buyers use them to lock in energy costs and meet sustainability goals. Decision-makers analyze PPA terms to assess risk and forecast energy expenses. The certainty provided by a PPA enables stakeholders to plan budgets, ensure project viability, and navigate market fluctuations, making it a cornerstone of commercial energy transactions.
Where Power Purchase Agreement (PPA) shows up on MarketScale
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