Joshua 
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What is a PPA?
Power Purchase Agreements (or PPAs) allow a company to purchase power at a fixed price long-term. A company does not have to worry about price volatility as in power markets because the PPA is a fixed-price contract.
What is the point?
The cost of building power stations, solar farms, or offshore wind farms can be staggering for power producers. They have been encouraged to make these investments for a long time by government subsidies that can guarantee their price or lower the cost of power production.
We see European subsidy programs ending, being reduced or even withdrawn completely. Moreover, new environmental guidelines are being developed and enforced. This means that generators must find a way to sell green electricity at a low price. One solution is a power purchase arrangement. This agreement has a key advantage: consumers pay a more predictable price for their electricity.
Big business
Companies and corporations are the largest consumers of energy. Many of these companies around the globe are seeking 24/7 access to reliable, affordable renewable power. They can achieve two things by committing to long-term power purchase agreements with generators. First, they will achieve their goal of having reliable renewable energy available whenever they need it. They also allow developers to increase the value of their investment in power generation facilities, stimulating the market and decreasing the dependence on state subsidies.
Europe has seen significant growth in the onshore and solar energy deals. Offshore wind farm agreements are also being made.
AB InBev, a brewing company, has set a goal to use 100% renewable energy in its global operations. This year, it signed the largest European solar PPA. The size of the agreement, which is 130 megawatts, will provide enough electricity to power 14 European breweries. It also allows the German developer to finance two additional projects.
Another example is the Eneco-Google agreement. Eneco constructed the largest offshore wind farm in the country, and Google agreed to buy its entire output of 175GWh over 10 years.
The future
Offshore wind is an “obvious solution for corporate PAs, because it’s scaled and it’s green as can be,” stated Rasmus Errboe (senior vice president at Orsted Offshore) and company leader on corporate PPAs.
In Taiwan, the national semiconductor company signed a 20-year contract to produce a 920-megawatt offshore wind farm fully. It will be commercially operational in 2025/26.
German chemical company Covestro signed a 10-year, 100 megawatt PPA with Orsted’s Borkum Riffgrund 3 Wind Farm. The wind farm is expected to begin producing power in 2025.
Although the potential market for corporate PPAs in offshore wind is enormous, governments will likely continue supporting larger offshore projects somehow.
