What is a PPA?

What does PPA mean?

Google, Amazon, and Apple — these tech leaders were all early adopters of what is now a well-established way of procuring renewable energy directly from the source: a power purchase agreement, or PPA. 

A PPA is a long-term contract between a power producer and a customer, allowing the customer to secure a supply of clean, affordable energy during the tenor of the contract period, typically 10-25 years. 

Power purchase agreements can be signed for all types of energy, however, solar and wind power have become the most popular ones.

According to the latest Corporate Energy Market Outlook by BloombergNEF, companies around the world purchased a record amount of clean energy through PPAs in 2022. In total, 36.7 gigawatts (GW) of offsite projects were backed with PPAs, signed by more than 167 companies. Adding the onsite PPAs signed, this figure is significantly higher.

What are the benefits of a PPA?

With a solar PPA, you as a customer buy clean energy and save money from day one. And you can leave the heavy lifting to the pros.

Signing a PPA ensures a given project gets built — be it a wind or solar farm — while also helping you to lock in your electricity cost at a low and predictable rate in a volatile power market. You save money and reduce your price risk. 

You’re also actively promoting a more sustainable future. As opposed to buying power from already-built green sources, helping to build new renewable projects creates “additionality” — more green energy in the world.  

How does a solar PPA work?

Thanks to the low cost of solar technology, solar is now one of the cheapest renewables available. That’s what makes solar PPAs popular. 

Solar PPA projects can be onsite (rooftop, parking lot, etc.) or offsite (solar farms). 

Your supplier will build, finance, own, insure and operate the solar project, plus secure permits, as well as all other regulatory compliance. You only pay for the electricity that is produced, at a predetermined price per kWh.

For you as a customer, a PPA means no upfront costs, no CAPEX spend, and no legal, technical and operational risk to manage.

Types of solar PPAs

Onsite PPA

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In an onsite PPA, the solar installation is located on your company’s own site, such as on roofs, carports, the ground and even near-site areas. You consume the power behind the meter, but a third party designs, develops, constructs and finances the project.

Offsite PPA

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In an offsite PPA, the solar installation is located outside of your own site. A third party develops the site and then constructs, finances and operates the solar farm. You as a customer pay for the electricity at a predetermined price throughout the tenor of the contract.

Why sign a solar PPA with Alight?

At Alight, we’re 100% specialized in solar PPAs for energy-intensive businesses. With a 10-year track record and more than 50 operational assets, we know the opportunities and challenges of solar PPAs.

We take a flexible, tailor-made approach to PPA contracts, profiting from our experience of multiple customer industries. And we’re now putting that experience to work across all of Europe. Fully independent from the fossil-based energy industry, we’re a partner for the future.


Interested in learning more about solar PPAs? Check out our Insights hub.