Corporate PPA demand likely to remain strong in 2021

Ludovico Gandolfi


LONDON (ICIS)–Falling wind and solar project costs, increasing diversity of demand, and resiliency in the wake of the coronavirus pandemic in 2020, suggest that demand for corporate power purchase agreements (PPAs) in European countries is set to remain strong in 2021.

According to the ICIS updated corporate PPA statistics page, surging corporate demand helped see companies sign 126 deals in 2020, totalling more than 6.75GW in capacity, more than double that of 2019 levels.


A power purchase agreement is a long-term contract between a renewable generator and an offtaker of the power generation.

PPAs are increasingly used by businesses to procure renewable energy and hedge against future price risk, while guaranteeing the renewable generator a route to market and a long-term income.

In the case of corporate PPAs, the offtaker enters a deal for self-consumption of the electricity, with corporate PPAs a key part of corporate green energy procurement strategies.


Data on PPAs made publicly available in 2020 suggests that demand for corporate PPAs remains strong in Europe, with no sign yet of market saturation.

The rapid growth of renewable capacity in Spain helped see the country dominate the corporate PPA market in 2020, taking over from the Nordics.

In Spain, the largest ever corporate PPA was signed by energy giant Total to power its industrial operations with a 3GW PPA from a 3.3GW pipeline of solar projects owned by the company itself.

This could mark the start of a new trend whereby energy majors source power from their own assets for their operations, unlocking enormous potential for corporate PPA growth.

The Nordics retained their position as a key corporate PPA market with Norway, Finland, and Sweden ranked third, fourth and fifth-largest corporate PPA markets respectively in 2020, with strong growth in Norway in particular.

Germany emerged as a growing corporate PPA market, with a five-fold increase in volumes signed in 2020 relative to the previous year.

One of the main reasons for growth of the German corporate PPA market is likely to be a combination of increasing demand from the German industrial sector and high creditworthiness of corporations from a mature market.

A second motivation is likely the expiry of the country’s 20-year feed-in-tariffs (FiTs) for onshore wind turbines.

With no fixed remuneration for their assets, some developers turned to corporate PPAs to secure an alternative revenue stream for their projects and are likely to continue to do so.

An estimated 4GW of onshore wind capacity will drop out of support schemes in Germany in 2021, a WindEurope spokesperson told ICIS, and an average of 2.5GW per year could follow.

Belgium could also establish itself as a high-growth market, reaching almost 400MW of capacity signed under corporate PPAs in 2020 while it had no corporate PPA capacity as recently as 2018.


The corporate PPA market diversified in terms of buyer industry type in 2020, with a rise in buyers active in the telecommunications, transportation, and consumer staples sectors.

Corporate PPA deals in these sectors tend to be smaller in size than in the technology and industrial sectors, suggesting a growing interest in lower-capacity corporate PPAs in Europe.

The average European corporate PPA size has shrunk in 2020 relative to previous years. Signed volumes averaged 68MW in 2020, excluding the one-of-a-kind Total deal.

Between 2016 and 2019, the average deal size was 84MW.

The technology and industrial sectors continue to account for the vast majority of corporate PPA demand in Europe, but their share is gradually shrinking.

In 2020, the technology and industrial sectors accounted for 78% of corporate PPA demand in Europe, against a share of 88% in 2017 and 83% in 2018.


As many European markets move away from subsidising renewable buildout in coming years, corporate PPAs can be expected to remain an important route to market for developers.

Meanwhile, rising renewable capacity targets in Europe are set to ensure a steady stream of projects coming online, while increased public scrutiny towards corporations’ sustainability strategies could promote growing demand for corporate PPAs.

An expected increase in wholesale power prices in most European countries in the second half of this decade, coupled with falling costs of renewable projects is also set to promote corporate PPAs as a long-term price-hedging mechanism.

Additional reporting by Chetan Patel


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