Corporate Power Purchase Agreement (PPA)

What is a PPA?

A corporate Power Purchasing Agreement, also known as a PPA, is a long term electricity price hedging instrument, agreed between a company and a renewable energy project developer.

PPAs can be a core lever to achieve sustainability targets and large scale decarbonisation over a longer period of time, across multiple geographies. They also provide energy buyers with dual benefits from both economic and sustainability perspective, such as:

• Reduce Scope 2 emissions by transitioning from conventional grid power to a renewable PPA
• Achieve cost savings that PPAs can unlock compared to traditional energy procurement approaches
• Protect against market risk exposure by fixing energy costs and avoiding energy price volatility over longer contracting periods
• Demonstrate leadership and make additionality claims as PPAs from new build projects speed up deployment of new renewable energy projects by unlocking access to project finance

How can we help you?

PPA Strategy

South Pole helps businesses to establish a PPA strategy prior to market engagement, to ensure stakeholders are educated, engaged and understand the potential risks and opportunities of PPAs. Our strategy service can include:

• Introductory workshops to PPAs covering risks and opportunities, accounting implications and structuring options based on different available PPAs and pricing models
• A comprehensive assessment of the business case for each region, for both Physical and Virtual PPA opportunities, using market leading energy price forecasts. Additional assessments may include: hedge effectiveness calculations, and key risks and opportunities to be aware of in your markets
• Deep-dive technical advice and workshops on important topics (including derivative/hedge accounting, credit position and contractual 'red lines') to ensure stakeholder alignment and to support decision making

• A roadmap detailing various PPA options based on actual project and pricing data across all regions in which your business is active. This includes defining the key potential parameters for your PPA(s)
• Recommendations for next steps into the PPA implementation, including internal resource requirements and process execution mapping

PPA Implementation

South Pole also supports corporate energy buyers through the entire PPA sourcing phase, which can include:

• Tender design during a set of workshops that includes an introduction to PPA concepts, PPA risk and opportunities, PPA structuring, accounting and credit considerations
• Issuing a bespoke market tender to a comprehensive list of developers and project owners via our digital platform. Identify potential projects and counterparts based on pre-agreed quantitative and qualitative criteria
• Conducting a detailed cash flow analysis at-risk modelling evaluation. Using industry leading energy price forecasts and current tradable market price data, we present a business case analysis of all submitted projects and pricing structures
• Leading the PPA contractual negotiations phase, from establishing an agreement of the initial term sheet through to the completion of the final form contract

Why South Pole?

Sourcing the right PPA for your specific procurement and sustainability goals is a complex process. Our expert, global team can support your organisation with deciding when to go to market and once decided, ensure you find the best offer(s) available.

Our approach to PPAs creates synergies between the electricity procurement perspective and corporate sustainability - focusing on high-impact and cost-effective solutions.

South Pole's experts have helped clients secure PPA deals in well-established markets such as North America, Europe and Australia, as well as in emerging markets such as Vietnam and China.

• 6+ years of experience in PPA markets
• Active in both mature and emerging PPA markets
• 59 TWh of renewable energy facilitated up to 2030

Get in touch with us today to discuss how we can help you with your PPA sourcing and find you the best opportunities