29 January, 2018
As part of their sustainability strategies, companies across the globe are entering into power purchase agreements (PPAs) with renewable energy generators. This paper aims to help address issues surrounding accounting for corporate renewable PPAs.
Companies across the globe are evaluating their impact on the environment. As part of their sustainability strategies, they are striving to reduce their greenhouse gas emissions. Because technology is evolving and renewable energy is becoming more cost competitive, the decarbonization of electricity is an achievable goal. One way to buy renewable power is by entering into corporate power purchase agreements (PPAs) directly with renewable energy generators. Corporate renewable PPAs are contracts that contain the commercial terms of the purchase of renewable energy, such as the contract period, point of delivery, delivery date/times, volume, price and product.
In addition to fulfilling sustainability goals, companies are also entering into corporate PPAs for economic and branding reasons. PPAs are economically attractive because they often contain pre-agreed prices for a period of time, which limits exposure to power price variability, while direct sourcing from renewable producers ensures long-term energy cost affordability.
