If you’re a business that has long-term goals and plans to be around for the foreseeable future, you may have already heard a lot about Power Purchase Agreements. With the carbon footprint of all businesses coming under more scrutiny than ever before, companies are searching for an alternative to keep their business running efficiently while doing their part for the planet as well.
If your business wants to embrace more eco-friendly practices while gaining a stronger brand reputation in the process, you may be eager to learn more about what entering into a Power Purchase Agreement can do for your company. In this simple guide below, you’ll discover what the fundamentals of a PPA are, and how it can be of use to you.
What is a Power Purchase Agreement?
A Power Purchase Agreement, also known as a PPA, is a long-term agreement between a buyer and seller in exchange for renewable energy. Power Purchase Agreement contracts can last between 5-20 years, although these timeframes tend to be negotiable depending on the contract in question.
There is no ‘one size fits all’ approach to companies looking to enter into a Power Purchase Agreement. In fact, PPAs are a viable option for small to medium businesses and global companies alike. These companies can agree to a specific locked-in amount they pay, helping them to plan ahead financially while also ensuring they have sustainable energy for the foreseeable future.
Why do PPAs Exist?
Modern renewable energy solutions have been more in demand than ever before, in part due to the increased number of renewable builds. Due to this rise in demand, many governments have ceased offering up financial incentives for businesses to enter into an agreement to be more environmentally friendly.
To help businesses and energy investors hit their green targets while keeping their companies running smoothly, Power Purchase Agreements were created to help fill the gap that government initiatives had left behind.
What are the Benefits of a Power Purchase Agreement?
Entering into a PPA with a provider helps to reduce the issues of volatile power markets, allowing you to have more control over your energy resources. Depending on your negotiated agreement, a Power Purchase Agreement can potentially be more cost-effective while also helping companies to achieve their carbon neutrality goals at the same time.
A company that enters into a long-term PPA can also announce this news through press releases, blogs, social media posts, and more. For many consumers, this announcement can be a reason to do business with you, as modern customers prefer to spend their money with environmentally aware companies.
Final Thoughts
Understanding what PPAs are and how they can be of use to your company is the first step towards implementing the right changes for your business while helping to achieve your specific targets.
Regardless of the size of your business, a long-term sustainability plan is vital to ensuring that your company is planning ahead and preparing to achieve its goals. For many businesses, a Power Purchase Agreement can be the ultimate contribution to a more sustainable and prosperous future.
