Major Power Utilities Embrace Solar Power’s PPA Model

June 15, 2022|Solar Energy

After years of distrust in green energy pricing models, Japan’s major power utilities are warming to the business potential of renewables. Recently, a number of the big utilities (EPCos), ventured into the realm of Power Purchase Agreements (PPAs) for the first time, testing a business model that offers to boost the adoption of solar power among Japanese business consumers.

The push into PPAs is led by Hokkaido Electric and Okinawa Electric, both of which have recently received their first corporate PPA orders. Also, Shikoku Electric has established a new joint venture with Sumitomo Corp to promote the PPA business model.

Corporate PPAs are a growing global trend. The scheme has emerged as an effective means to mobilize private sector capital in support of the energy transition, allowing renewable energy projects to progress while supplying green electricity for corporations eager to advance their sustainability goals.

With a typical duration of 10 to 25 years, corporate PPAs create a direct long-term power supply contract between an electricity generator and a large energy consumer, which is usually not involved in the energy sector; for example a Big Tech firm, or an industrial major, such as an aluminum producer. In 2021, corporations across the globe bought a record 31 GW of clean power through long-term PPAs, which was a 24% increase on the previous record of 25 GW set in 2020.

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