EnergyWatch

Solar and wind PPAs entered like never before

Power purchase agreements on 13.4 GW of renewable energy project were entered in 2018. The Nordic region has adopted the financing model, but Europe still lags behind other regions, particularly the US.

Photo: Vestas

How should the expansion of renewable energy projects be financed around the world in step with global state subsidies disappearing? Power purchase agreements (PPAs) are increasingly being offered as an answer to this question. The model, which secures cheap electricity and allows companies to insert a green boy scout badge in their corporate social responsibility pamphlets. Furthermore, project developers are able to present PPAs to lenders as credit security.

A new review from Bloomberg NEF shows that 2018 saw PPA agreements for 13.4 GW of renewable energy projects. That is far more than a doubling from the previous year, when 6.1 GW were secured through such contracts.

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