Why are Corporate PPAs important for the Technology & Communications sector?
Corporate PPAs are becoming increasingly prominent for global businesses in the Technology and Communications sector, driven largely by their environmental and economic advantages. These PPAs allow corporate energy consumers to purchase power on a long-term basis, directly from renewable energy generators without being co-located.
By providing price certainty and long-term hedging against volatile power prices, Corporate PPAs are attractive to large power users who need a continuous and reliable supply, or have energy-intensive server farms for example (such as data centres). In 2022, Amazon was the biggest buyer globally, with 10.9 GW of Corporate PPA deals. By comparison, other tech companies with major clean power purchases in 2022 were Meta (2.6 GW), Google (1.6 GW) and Microsoft (1.3 GW).
With many technology companies making ambitious ESG and net zero targets, such as Microsoft using 100% renewable energy by 2025 and Amazon by 2030, Corporate PPAs enable them to source a significant proportion of their energy from renewable sources, thereby reducing carbon footprints and demonstrating commitment to sustainability targets. As the technology sector has to navigate the energy demands of blockchain and AI applications and pushes for innovative energy solutions in the data centre world (reducing companies’ vulnerability to grid disruption), PPAs provide an important route to obtaining energy resilience.
Whilst it can be difficult for smaller companies to participate in PPAs due to the commercial efforts required and relative lack of bargaining power compared to the likes of Amazon and Google, as existing PPA projects grow more sophisticated and the price of renewables drops, intermediaries are expected to offer aggregated off-take products to open the market up to the wider Tech and Comms sector.
Overall, PPAs are an important tool for the Tech and Comms sector to reduce energy costs, increase sustainability, support the development of renewable energy and improve the sector’s resilience to energy disruption and volatility. Accordingly, the trend is likely to remain at the forefront of companies’ energy agenda as the sector works towards its net zero targets.
If you would like to find out more, please visit our Corporate PPA Hub or get in contact with us.
