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Corporations are Becoming Major Players in Renewable Energy Growth - PPAs are a Key Factor

JackSawyer MA, United States 0 Ratings 11 Discussions 8 Group posts

Posted by: JackSawyer // Student

With the Paris Agreement having set aggressive climate goals and the price of renewable energy getting cheaper, more and more corporations are adopting clean energy in order to become more economical and competitive while also meeting new mandates.

The main component leading this development is Power Purchase Agreements (PPA). These agreements have become attractive to corporations as the price of renewables has become cheaper and in turn more economical for companies energy needs. In fact, "from 2012 to 2015, contracted capacity under corporate PPAs doubled year-over-year. Even more telling, in 2015, corporate PPAs exceeded 50 percent of the overall PPA market - more than traditional utilities" (Runyon). So what are PPAs? Well they come in two forms: the first is a physical PPA where power is delivered directly to the buyer, and the second is a virtual PPA, in which the buyer purchases the output of power from a plant that may not be located in the buyers immediate vicinity. PPA's allow corporations to have their own energy sources from renewable energies like solar and wind. Increased popularity in these PPA's are cutting out utility companies and are making operations cheaper for corporations.

Despite being more economical for companies, there are a lot of requirements that they must meet in order to obtain PPA's - healthy credit is just one example. The agreements can be 20 year long contracts, and with that in mind, corporations must take into consideration if these energy prices are ideal and will be in the far future. There are many factors that companies must consider when agreeing to these PPA's. With growing popularity, PPA's are helping grow the renewable market and help companies meet climate goals.

Furthermore, there are positive externalities that come from PPA's. When a company buys renewable power generators they are able to cut down on their pollution which benefits the surrounding environment with cleaner air. Whats more, they open up the possibility to supply any excess clean energy to neighboring homeowners and businesses at competitive prices. This is an idea that Apple has taken on with their new Apple Energy division. The new branch plans to sell their excess renewable energy to people at competitive prices. These agreements are able to bring positive side effects to the surrounding parties.

What do you think about PPA's? Will they cut out utility companies down the road?

Runyon, Jennifer. "Corporations Are the New Drivers for Renewable Energy Growth." Renewable Energy World. N.p., 8 July 2016. Web. 18 July 2016.>.



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