A corporate power purchase agreement (PPA) can sustainably reduce your costs and carbon emissions. But how long do they last, and what influences their pricing? Find out more about how a PPA can future-proof your business.
For many companies across Central and Eastern Europe, embracing sustainability is no longer a future aspiration; it’s an urgent priority. Whether driven by corporate mandates, shareholders, regulators – or a combination of all three – more organizations are committing to clean energy and decarbonization targets.
At the same time, European electricity prices have hit all-time highs in the last two years. Fueled by the Russian gas crisis, energy shortages, and rising inflation, electricity costs are now a substantial (and growing) proportion of many operating budgets – and the trend only looks set to continue.
These financial and environmental challenges are driving European companies to seek cleaner and more affordable energy. But green initiatives such as purchasing a large rooftop solar PV system require a significant capital investment, not to mention ongoing maintenance costs.
One solution rapidly gaining popularity is a green PPA. It’s a long-term electricity supply agreement between a renewable energy producer (such as Enery) and a corporate customer. A green PPA is highly rewarding for both parties: the producer secures a buyer for its clean electricity, and the customer receives a fixed power cost (often below existing market rates) for the duration of the agreement.
How long is a typical PPA?
A PPA is a highly customized agreement generally lasting between 10 and 25 years. For example, entry-level PPAs may span 10 or 12 years, while more comprehensive PPAs are commonly 15 to 25 years.
When your business engages in a PPA, your electricity price is fixed for the entire contract, protecting you from market volatility and rising power costs. As the owner of the renewable energy asset, Enery is responsible for all operations and maintenance, providing your business with simple, capital-free access to clean energy.
What factors can influence the length of a PPA?
Every company has unique financial and environmental goals, which is why we can tailor a PPA to your specific requirements. These include the annual electricity supply volume, delivery profile, contract price, agreement length, termination clauses, and payment terms. You can discover more about these factors during initial discussions with our PPA team.
Your country and electricity market can also influence the length of your PPA. At Enery, we provide green PPAs across Central and Eastern Europe in Austria, Bulgaria, Romania, Estonia, the Czech Republic, and Slovakia. In each country, we analyze the various market, government, and regulatory factors that can determine the optimum length of an agreement.
Due to their long-term performance guarantees, green PPAs are valuable for progressing toward ESG and sustainability commitments. For instance, a company may sign a 20-year PPA to help meet its goal of achieving net-zero emissions by 2040. The PPA guarantees clean energy at a fixed price and volume, giving the company the certainty and transparency needed to meet its target.
What are the benefits of signing a longer PPA?
PPAs, like most contracted business services, benefit from economies of scale. For example, 20 or 25-year agreements generally offer the most attractive terms and pricing. They provide the renewable energy producer with greater security and create a rewarding, long-term industry partnership.
On an environmental level, longer PPAs also demonstrate to your employees, customers, and stakeholders that you are committed to improving the health of our planet.
Similarly, purchasing higher volumes of green electricity can reduce the cost per megawatt-hour. In many cases, PPAs directly fund the construction of new clean energy plants, which gain efficiency as they increase in size and capacity. As a result, raising your supply volume can result in a larger project that generates cheaper electricity.
Enery’s green industry partnerships in action
Enery recently signed a 20-year green PPA with Lenzing AG, one of Europe’s leading producers of biodegradable, wood-based fibers for the global textile industry. Through this PPA, Lenzing AG has funded the construction of a new 5.5 MW solar farm in the Austrian city of Lassnitz. The company has secured the purchase rights to the plant’s clean energy output, which is enough to power the equivalent of 1,800 homes per year.
In early 2023, we also signed a 12-year green PPA with Bulgaria’s KCM AD, a leading producer of lead and zinc in Southeastern Europe. Our PPA will deliver significant cost and environmental benefits to the energy-intensive company by closely matching our electricity supply with its consumption profile.
Discover more about a PPA for your business
Engaging in a green PPA is a simple and affordable way to decarbonize your operations and establish your business as an ESG leader. Enery is one of the most advanced PPA providers in Central and Eastern Europe, with a growing portfolio of solar PV, wind, hydro, and battery storage projects.
If you’d like to discover more about how green energy can elevate your business, contact our PPA team.