Energy for companies and PPA/cPPA contracts – what does it mean?
PPA/cPPA agreements are a key element of the decarbonization of the energy market, which is a response to global trends, i.e. the growing interest in Renewable Energy Sources (RES). Thanks to them, the company's electricity helps to achieve ecological goals by providing a constant source of clean energy.
What does PPA/cPPA (Corporate Power Purchase Agreement) mean and what does corporate electricity have to do with it? This is energy for companies in the form of a long-term contract for the purchase and sale of electricity. A contract for electricity for a company is concluded between the owner of a generating unit producing electricity and the entity purchasing this energy (these may be, for example, end users and companies selling electricity to companies). cPPA is therefore nothing more than an advanced form of agreement on the basis of which green energy is delivered to the company. Electricity for companies from renewable energy sources is characterized by much greater availability thanks to this.
Company electricity thanks to the cPPA agreement – what does it involve?
PPA/cPPA agreements are a simple way to provide green electricity in a company. What does this type of contract look like in practice? Under a cPPA agreement, the producer undertakes to deliver electricity to the company in a specified amount, at a specified time and from a specified source. The recipient, in turn, undertakes to purchase and pay for the company's electricity at previously agreed prices.
How long is a cPPA usually signed for electricity? Business tariff is based on a long-term contract (PPA in Poland is usually concluded for a period of 10-15 years). Due to the fact that the company's energy is delivered in an agreed quantity and price, the contract helps secure the investment and limits the risk for each party.
Green electricity for the company - cPPA market in Poland
cPPA contracts are becoming increasingly popular in Poland, providing electricity not only to small companies but also to large enterprises. This is confirmed by the report of the Polish Economic Institute, according to which in the period from January 2023 to May 2024, the volume of energy contracted by PPAs constituted 42% of the total amount of contracted energy in Poland to date. Domestic Companies selling electricity to businesses are starting to catch up with other European countries – by May 2024, 1,9 GW of renewable energy capacity had been contracted through cPPA, which represented a 4% share of the European market.
What types of companies most often choose corporate electricity? contracted by cPPA? Global corporations such as Amazon, Google and Microsoft are responsible for a quarter of the European cPPA market (12,3 GW out of 48,4 GW). Companies from the manufacturing and industrial sector, automotive and discount chains most often decide to purchase such electricity for their companies.
Types of PPA/cPPA contracts – electricity offer for companies
The cPPA contract is green electricity for small businesses, as well as medium and large enterprises, which provides considerable flexibility in terms of adapting solutions to business needs. What types of contracts for electricity for a company can we distinguish? The basic division concerns a contract with physical delivery and a financial contract (so-called virtual contracts). The first of these ensures that the company's energy will be delivered physically from the producer to the recipient. Virtual contracts, in turn, are an offer of electricity for companies assuming only financial settlement. Company electricity in the form of a physical cPPA contract also takes the following forms.
cPPA on site
The on-site cPPA contract is characterized by the fact that the energy source is located on the recipient's premises (these can be, for example, wind farms or photovoltaic panels from which the company will draw electricity). Thanks to this, the company buys energy directly from the source, and surpluses can be sold to the grid. Electricity for companies is supplied without additional fees, which results from the fact that the generating unit is located in the place where the electricity is consumed.
cPPA near side
What is corporate energy? transmitted by a near side cPPA contract? The company's electricity is supplied by a direct line, so the installation and the recipient must be located in close proximity. And what are the benefits of such a energy? The company does not have to use public networks. Electricity for the company is also delivered directly. However, when creating such infrastructure, one must take into account the need to obtain a license (legal procedures are quite complicated).
cPPA off side
The cPPA off side contract is a good idea for green electricity for small and medium-sized companies. Why? This type of contract assumes that electricity for the company is supplied by a classic transmission or distribution network through a network operator. Therefore, companies selling electricity to companies participate in the cPPA contract. Contracts of this type come in two variants, as: off site multi-buyer (the producer sells energy on the basis of one contract concluded with several recipients) or off site multi-seller (several producers sell electricity to the company) one recipient on the basis of one contract).
VPPA – energy for companies based on a virtual contract
Virtual cPPA, or VPPA, is a financial contract in which energy is not physically delivered to the company. The parties to the contract only make financial settlements in the form of a so-called contract for difference. Based on the VPPA, the energy producer sells physical energy on the market (e.g. on the Polish Power Exchange). How does electricity reach the company in this situation? The company, or the recipient, buys physical energy in a separate purchase agreement.
The reference point in the VPPA is the market price for electricity for the company. The parties to the contract settle the difference between the price they specified in the cPPA and the current market price. If the market price for electricity for the company is higher than the cPPA contract, the producer pays the difference to the recipient. When current market prices are lower than the cPPA price, the recipient pays the difference to the producer. What are the advantages of electricity for the company provided by VPPA? The basic benefit is stable prices for each party of the virtual contract. It is worth remembering, however, that the company's electricity will be supplied through the distribution network, which is associated with additional costs.
Who can choose to purchase electricity for their company through a cPPA contract?
What types of entities can sign a cPPA agreement? electricity? Small companies, as well as medium and large enterprises and local governments or municipal companies. Importantly, cPPA is not only electricity for small companies - it is a solution aimed at every company that:
- consumes large amounts of energy,
- pays attention to whether the electricity for the company is stable,
- wants the electricity offer for companies to be predictable in terms of price,
- ensures that the company's electricity takes care of sustainable development,
- wants to create a positive image of the company.
What are the typical motivations of companies that decide to supply electricity to a company through a cPPA contract? It is not only the fact that it is green electricity that matters. Companies they can also protect themselves in this way against rising energy prices, gaining a sense of stability.
Benefits of cPPA contracts – is such corporate electricity a good choice?
cPPA contracts are becoming increasingly popular. What are the advantages of such electricity? Tariff for companies based on PPA allows you to implement development and investment plans without worrying about energy price increases. The benefits that corporate energy brings in the form of a cPPA contract include:
- reducing the risk that the company's electricity supply will be highly volatile,
- a guarantee that the company's electricity comes from a renewable source,
- predictable fixed costs for electricity for the company,
- reducing the company's carbon footprint,
- electricity for the company ensures the green image of the company
More and more customers and investors are checking where the electricity comes from. A company that decides to use cPPA contracts can therefore strengthen its position in terms of image. At the same time, the entrepreneur does not have to worry about high investment costs to get green energy into their company. Electricity for companies in the form of a cPPA contract gives the possibility of using energy generated on the premises belonging to the energy supplier. Therefore, the investment costs are borne by the companies selling electricity to companies.
Ecological electricity in the company and ESG reporting
Green energy for companies delivered through a PPA contract is also important due to changing EU regulations. A perfect example is ESG reporting, which is a necessity in an increasing number of Polish companies. How does this relate to where the energy comes from? A company subject to ESG obligations must report the impact of its activities on the environment, society and corporate governance. And although the regulations apply primarily to large companies, they also have an indirect impact on electricity for small and medium-sized companies.
Companies required to submit a sustainability report must include their relationships with SMEs in their supply chains. This means that they can require that energy for small and medium-sized enterprises (with whom they cooperate) has the lowest possible impact on the environment. Electricity for small companies that is obtained from renewable energy sources may in this situation be decisive when establishing cooperation with the company. What does corporate energy from cPPA have to do with this? Such contracts support the decarbonization of companies by providing green corporate electricity, which is why they help with ESG reporting.
Green electricity for the company from Veolia
At Veolia, we offer a comprehensive portfolio of services and products dedicated to business clients, local governments and public institutions. Among them is also 100% green energy for companies, which supports the sustainable development of the company. Importantly, our offer is addressed to entities of all sizes. Veolia's proposal includes, among others, energy for small and medium-sized enterprises, as well as corporate electricity for large consumers. Both electricity for small companies and large enterprises is characterized by security and stability of supply.
Electricity for companies from Veolia means various types of contracts (including fixed price, flexible tariff, spot price settlements), which we adjust to individual customer needs. We are also consistently expanding our commercial offer to include PPA agreements, thanks to which you can deliver green electricity to your company.
How to reduce negative impact on the environment? Choose the right electricity for your company!
Energy for companies currently offers a variety of options that you can easily adapt to the specifics of your business. So how do you choose the right electricity? A tariff for companies should take into account various variables, including the environmental aspect. Regardless of whether it is electricity for small companies or large enterprises, it is worth ensuring that it has the least impact on nature. So how do you deliver ecological electricity to your company? Small companies, as well as medium and large companies, can easily obtain energy from renewable energy sources. Just take advantage of our offer.
At Veolia, we offer various types of electricity contracts for small and medium-sized companies (up to 10 mWh per year), large enterprises (over 000 mWh per year) and public institutions. Our electricity offer for companies may also include the sale of electricity from renewable energy sources. Thanks to us, company energy will not only be green, but also economically beneficial. See for yourself and take advantage of the support of our advisors - choose green electricity for your company from Veolia.
