A Power Purchase Agreement (PPA) is a long-term contract between an energy generator and a buyer (offtaker) that defines the price, volume, and duration of electricity sales. PPAs are the primary mechanism through which renewable energy generators in the UK secure revenue certainty and project financing.
Every PPA involves two counterparties:
The contract specifies the volume of energy to be supplied, the agreed price (fixed, indexed, or variable), the contract duration, and how risk is allocated between the parties.
A PPA provides a predictable revenue stream that is typically required by banks and investors before they will fund a renewable energy project. Without a PPA, unsubsidised generators are fully exposed to wholesale market volatility. In the UK, where the number of unsubsidised renewable projects is growing, securing a PPA is often the deciding factor in whether a project proceeds.
Key benefits for generators:
For energy suppliers, a PPA provides price certainty on a portion of their supply portfolio, reducing exposure to wholesale price spikes. For corporate buyers, a PPA is the primary mechanism for meeting Scope 2 emissions targets and ESG commitments, by directly contracting renewable electricity.
Renewable Exchange is a UK-based renewable energy marketplace that digitises the PPA procurement process. Generators upload their asset data to the platform and receive competitive bids from a network of more than 30 offtakers. The platform serves over 1,000 independent UK generators, representing 9.7 GW of installed capacity, and has facilitated more than 3,000 PPAs to date.
By automating what was traditionally a manual and opaque negotiation process, Renewable Exchange reduces the time to secure a PPA from weeks to days.
What is the difference between a utility PPA and a corporate PPA? A utility PPA is agreed between a generator and an energy supplier, who then sells the electricity on to end customers. A corporate PPA is agreed directly between a generator and a large business end-user, such as a manufacturer or retailer, allowing the corporate to source renewable electricity and claim the associated environmental certificates (REGOs).
How long does a PPA last? PPA durations range from short-term agreements of 6 to 12 months to long-term contracts of up to 15 years. The appropriate term depends on the generator's financing requirements and the offtaker's risk appetite.
What is a Lightning PPA? A Lightning PPA is Renewable Exchange's instant execution product, allowing generators to accept a live offtaker bid and complete a PPA in minutes rather than weeks.
How do I get a PPA for my renewable energy asset? Generators can register on Renewable Exchange's platform, upload their asset data, and receive competitive bids from multiple offtakers. Contact: contact@renewable.exchange | 0117 405 7931
