2024 is upon us – bringing UK businesses yet another year closer to the target of achieving Net Zero by 2050.
What’s more, there’s a 70% chance that 2024 will be the year that emissions finally begin to fall, provided that green technology continues to be developed and countries around the world remain committed to cutting their emissions.
These facts (alongside the zest for fresh starts traditionally brought on by the new year!) are prompting numerous businesses to take another look at how they can strengthen their carbon reduction plans for the year ahead.
This is just one area where Power Purchase Agreements (PPAs) prove particularly invaluable. In fact, according to Deloitte, the PPA market is “likely to continue strengthening in 2024 to meet demand from the growing number of corporations with 24/7 decarbonization targets.”
Read on to find out more about PPAs, the many reasons to start a PPA for your business in 2024, and how our experts at Innova can help you get started.
Firstly, what is a Power Purchase Agreement (PPA)?
Briefly, a PPA is a long-term contractual agreement between an energy buyer or business (such as yours) and a renewable energy generator. The energy you purchase is generated by a renewable energy development, such as a solar park, or a wind farm. You can find out a bit more about PPAs here.
Here are four reasons your business should look for a PPA in 2024:
1) It will help you achieve your Net Zero goals faster.
As mentioned above, a PPA is a great way to bolster your carbon reduction plan as, instead of purchasing power generated by fossil fuels, the power will come from a renewable energy development, such as a solar park or wind farm.
Of course, it’s arguable that you could also achieve this with a green energy tariff, as you can choose a tariff from your current energy supplier that delivers 100% renewable energy.
However, as a PPA buyer, you’ll be seen to be purchasing power from a named asset, rather than any asset within the supplier’s portfolio.
2) A PPA will stabilise your business’s overall energy costs.
PPAs offer a fixed price for a 10–15-year period, meaning that your business will be protected against the volatility of energy prices, including those from green tariffs.
Add into the mix that renewable energy is generally less expensive than energy generated from fossil fuels, a PPA may see your business’s energy bills reduce overall.
3) It’ll support you to achieve your Scope 2 emission reduction targets
Unlike Scope 1 emissions, which are produced directly by your business (for example, through manufacturing activity or heating), Scope 2 emissions are indirect, originating from energy you purchase from other sources.
By signing a PPA, your business will be purchasing power from a renewable source as opposed to fossil fuels, thereby reducing your Scope 2 emissions.
4) A PPA will put you in the spotlight as a sustainable business
There is greater demand than ever before from key stakeholders – such as customers, investors, and prospective employees – for businesses to invest in sustainable practices, and be able to evidence this.
With a PPA, you’ll be purchasing renewable energy that is traceable to you, which you can use to illustrate your sustainable business practices to those key stakeholders.
What’s more, by signing a PPA, you’ll be helping to finance renewable capacity, subsequently adding new green electrons to the UK grid – a concept otherwise known as additionality – further demonstrating your commitment to sustainable business practices.
Ready to kick-start 2024 with a PPA for your business?
At Innova, we work with energy-intensive businesses to help them achieve all the above benefits and more through our PPA offerings, including Corporate PPAs and Private Wire PPAs.
If this is something you’d like to find out more about, we’d be delighted to chat with you!
Let's talk PPAs for 2024Authors: Andy Peyman, Head of Energy Sales and Dom Griffiths, PPA Sales Business Developer.