Advantages of power purchase agreements – at a glance
We have often written about power purchase agreements (PPAs). In connection with discussions about industrial electricity prices, there has been speculation as to whether this is deterring companies from securing their supply and risks in the long term in the form of PPAs. For us, this is reason enough to summarise the advantages of PPAs once again.
December 2025
Für Industriekunden und Partner sind Offshore-Windparks oder große Photovoltaik-Parks eine zuverlässige Quelle für grünen Strom und eine Möglichkeit, langfristige Stromabnahmeverträge in Form von Power Purchase Agreements (PPAs) abzuschließen. Sie bieten Planungssicherheit, Kostenstabilität, klare Nachhaltigkeitsvorteile und eine strategische Differenzierung im Markt.
The advantages in detail:
Medium to long-term volume and price hedging for renewable electricity
Long-term contracts enable companies to secure reliable volumes of renewable electricity. This reduces the risk of electricity price fluctuations or market volatility for renewable electricity certificates. In addition, PPAs enable fixed or indexed prices, making electricity costs more predictable. Particularly in volatile markets, PPAs reduce long-term dependence on the wholesale market by diversifying electricity procurement.
Support for sustainability goals (ESG, Net Zero, SBTi)
PPAs contribute to a measurable reduction in Scope 2 emissions. Many sustainability standards (e.g. RE100, SBTi) favour or require the use of additional renewable electricity, which PPAs often enable. In addition, certificates of origin are issued for electricity from PPA contracts. This means that it is explicitly labelled as renewable electricity from a specific source. This also ensures compliance with the double marketing ban. This stipulates that electricity from renewable sources cannot be reported or sold twice – for example, with a subsidy under the EEG and additionally via a form of direct marketing.
Differentiation from the competition
Companies can actively communicate that they procure renewable energy directly and promote the expansion of new facilities. This can be a strategic advantage in tenders and supply chain audits. In addition, they can actively play the sustainability card in employer branding.
Meeting the demand for sustainably produced products
More and more B2B and B2C customers are demanding low-carbon or carbon-free products. PPAs enable a clean energy base in the value chain that companies can use to promote themselves: slogans such as ‘green products’ or ‘made with 100% renewable energy’ meet customer expectations and help companies fulfil their supply chain transparency obligations.
Transparency & traceability
Overall, clear energy sourcing and transparent allocation of emission savings simplify reporting for reports under the EU Corporate Sustainability Reporting Directive (CSRD) as well as for taxonomy and customer and investor enquiries.
Promotion of new renewable energy projects
Finally, PPAs enable plant operators to finance new wind or solar farms without government subsidies. Consumers also play an active role in the expansion of renewable capacity.
Conclusion
In our view, large-scale renewable energy projects are essential for a sustainable future. With the help of PPAs, they ensure profitability for project developers, investors and plant operators without government subsidies. And from the consumer's point of view, they ensure volume and price stability and the fulfilment of sustainability requirements. They also provide advantages in the competition for customers and employees. PPAs are therefore one of the most effective instruments for reconciling long-term price hedging, energy supply and climate targets.
Do you have questions about PPAs? Feel free to contact us!
<a class="arrow">renewables@vattenfall.de</a>