Corporate PPAs: Market Trends and Opportunities

Market Trends and Opportunities

Corporate and industrial buyers have dramatically increased their purchases of renewable energy in recent years, with contracted capacity under corporate power purchase agreements (PPAs) doubling year-over-year from 2012 to 2015.  This trend has shifted the traditional power purchase market away from reliance upon utilities  and presents a tremendous growth opportunity for renewable energy project developers.

Orrick’s Energy & Infrastructure Group is on the forefront of this trend toward non-utility purchases of energy.  This article provides an overview of (1) contract structures for corporate PPAs (both "virtual" and "synthetic", including "contracts for differences" and hedging agreements), (2) key commercial and legal issues that arise in negotiating corporate PPAs and (3) certain issues and trends in corporate PPAs in certain individual U.S. markets, including California (CAISO), PJM and ERCOT.