Corporate Power Purchase Agreements (CPPAs) are widely promoted as a cornerstone of corporate Net Zero strategies. Yet despite this momentum, many CPPA discussions fail to progress beyond early legal and commercial stages.
Why CPPAs Are So Hard to Close
CPPAs are bespoke, long-term contracts designed to support the financing of new renewable assets. Tenors typically range between 5 to 15 years and must allocate a wide range of risks between buyer and generator.
Credit Risk and Integration Reality
Buyer creditworthiness is the least visible barrier to CPPA execution. Developers and lenders typically require investment grade rated counterparties. Corporate buyers cannot physically integrate the power directly from a renewable asset into their supply position without the agreement of their licensed supplier.
Time, Cost, and No Outcome
The protracted legal process, credit requirements, and supply integration challenges can result in months and even years of work with no signed agreement achieved.
What Successful Buyers Do Differently
Organisations that successfully execute CPPAs take a more structural approach. They obtain a clear board mandate for their risk appetite upfront and recognise the importance of understanding the capability and appetite of their incumbent supplier.
The Cost of Inaction
The danger is assuming that waiting will somehow make things easier. Regulation is tightening, scrutiny on ESG is rising, and investor expectations are only going one way.
