Power purchase agreement (PPA) is a long-term contract under which a business agrees to purchase electricity directly from a renewable energy generator. Power purchase agreement provide financial certainty to customer and the project developer. PPA removes a significant roadblock to building for new renewable facilities. PPA allows the customer to receive stable and often low-cost electricity with no upfront cost, while also enabling the owner of the system to take advantage of tax credits and receive income from the sale of electricity.
Different PPA have different terms and conditions such as in physical on-site power generation solutions are installed directly on the company’s property, be it on rooftops, parking carports or ground mounted. The electricity is then consumed on site. In physical off-site PPA, renewable energy producer is a electricity supplier and the renewable facility is not a customer’s immediate. Renewable facility distributes the power to customers in small proportion. Varied PPA have different terms and conditions, for example, physical on-site power generation solutions are put on the company's land, whether it be on roofs, in parking garages, or mounted on the ground. After then, the electricity is used on site. In a physical off-site PPA, the renewable energy producer serves as an electrical supplier rather than the customer. Small amounts of electricity are distributed to customers using grids.
As per the global power purchase agreement market analysis, increase in global warming and changes in climatic conditions are projected to lead to faster adoption of PPA in corporate segment in the coming years. The awareness related to the clean energy is increasing in the developing nations which boosts the demand for power purchase agreement during the forecast period. The consumption rate of clean energy is accelerating in developing nations which is contributing toward the increase in power purchase agreement market share. Globally, there is an increase in the adoption rate of power purchase agreement due to various factors such as surge in demand for electricity or power, depletion of fossil fuel resources, and surge in environmental pollution. PPA helps to overcome the concerns which are related to pollution reduction, sustainability, and renewability of resources which is projected to showcase positive impact on power purchase agreement market trends in near future.
For the purpose of analysis, the power purchase agreement market is segmented on the basis of type, application, end-use and region. On the basis of by type, the market is classified into physical PPA, portfolio PPA, block delivery PPA and other. On the basis of application, the market is classified into wind, solar, hydro, geothermal and others. By end-use, the market is segmented into corporate, merchant and residential. On the basis of region, the market is studied across North America, Europe, Asia-Pacific, and LAMEA. Presently, North America accounts for the largest share of the market, followed by Europe. Major players operating in the global Power purchase agreement industry include Schneider Electric, RWE, ENGIE, Statkraft AG Group, Enel Spa, Siemens, Ameresco.
Key Benefits For Stakeholders
- This report provides a quantitative analysis of the market segments, current trends, estimations, and dynamics of the power purchase agreement market analysis from 2021 to 2031 to identify the prevailing power purchase agreement market opportunities.
- The market research is offered along with information related to key drivers, restraints, and opportunities.
- Porter's five forces analysis highlights the potency of buyers and suppliers to enable stakeholders make profit-oriented business decisions and strengthen their supplier-buyer network.
- In-depth analysis of the power purchase agreement market segmentation assists to determine the prevailing market opportunities.
- Major countries in each region are mapped according to their revenue contribution to the global market.
- Market player positioning facilitates benchmarking and provides a clear understanding of the present position of the market players.
- The report includes the analysis of the regional as well as global power purchase agreement market trends, key players, market segments, application areas, and market growth strategies.
Key Market Segments
By Application
- Wind
- Solar
- Hydro
- Geothermal
- Others
By End Use
- Corporate
- Merchant
- Residential
By Type
- Block Delivery PPA
- Others
- Physical PPA
- Location
- Off-Site PPA
- Type
- On-Site PPA
- Portfolio PPA
By Region
- North America
- U.S.
- Canada
- Mexico
- Europe
- Spain
- Sweden
- Norway
- UK
- Germany
- Rest of Asia-Pacific
- Asia-Pacific
- China
- India
- South Korea
- Japan
- Rest of Asia-Pacific
- LAMEA
- Saudi Arabia
- Brazil
- UAE
- Rest of LAMEA
Key Market Players
- General Electric
- Siemens AG
- statkraft
- Ameresco Inc.
- Enel S.p.A.
- ecohz
- RES Group
- Schneider Electric
- Shell Plc.
- RWE AG
- Engie
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Table of Contents
Executive Summary
According to the report titled, “Power Purchase Agreement Market," The power purchase agreement market was valued at $11.6 billion in 2021, and is estimated to reach $18.4 billion by 2031, growing at a CAGR of 4.9% from 2022 to 2031.PPA is the foundation document for most power projects and fundamental instrument to facilitate the sale and purchase of electrical power. Power purchase agreement is another step towards the sustainability arrangement under which a company enters a long-term contract with an independent power producer or a utility and commits to purchasing a specific amount of renewable electricity or the output from a specific asset (sleeved or virtual), at an agreed price. Development in the global energy sector has raised the demand for power purchase agreements.
Large corporations are entering into PPAs to purchase electricity from renewable energy projects. The projects are setup at premises called as on-site projects or near to premises called as off-site project. According to market forecasts for power purchase agreements, corporations are signing PPAs to promote energy efficiency and conservation, which aids the company in implementing sustainability initiatives. The market for power purchase agreements is expanding as green energy consumption is rising quickly across all regions. With implementation of the proposed programs to build a energy efficient corporate building will help to boost the power purchase agreement market trend in near future.
Power purchase agreement is also called as “Green Power Purchase Agreements” (Green PPAs). The power purchase agreements operate over the medium or long term (5 to 20 years). In the agreement, the developer sells the power generated to the host customer at a fixed rate which is typically lower than the local utility’s retail rate. Several benefits are associated with PPA such as a fixed long-term rate and guarantees of origin of renewable assets. All regions are engaged in the development of the power sabing solutions which can help to lower the global footprints and cost saving on power consumptions. The adoption of green energy is increasing in Asia, and Australia which is creating power purchase agreement market opportunity.
According to a study of the global power purchase agreement industry, climate change and global warming are expected to hasten the adoption of PPA in the corporate sector in coming year. In developing countries, growing awareness of sustainable energy is driving up demand for power purchase agreements during the projection period. In emerging countries, the rate of clean energy consumption is increasing, which has a positive impact on the market share growth for power purchase agreements. Factors contributing to the growth of power purchase agreement market are increasing demand for electricity or other forms of power, increase in environmental pollution concerns and depletion of fossil fuel supplies.
Power purchase agreements have a chance to grow in the solar market. Solar energy PPA offers a number of advantages which are persuading companies to switch to clean energy. Establishing solar electricity under a PPA offers a number of advantages, including lower material and installation costs, possibility for savings, better technology and less environmental stress. Small businesses in underdeveloped countries can enter into power purchase agreements in order to use renewable energy at affordable rate. The market for power purchase agreements is expanding due to the growing financial advantages of solar PPAs.
The power purchase agreement market is segmented into type, end use, and region. On the basis of type, the market is classified into physical PPA, portfolio PPA, block delivery PPA and other. On the basis of application, the market is segmented into solar, wind, geothermal, hydro and other. On the basis of end use, the market is segmented into merchant, corporate and residential. Region-wise, the market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.
The power purchase agreement market analysis covers in-depth information of the major industry participants. Some of the major players in the power purchase agreement market include Schneider Electric, RWE, ENGIE, Statkraft AG Group, Enel Spa, Siemens, Ameresco. Other players in the Power purchase agreement market are General Electric, Shell, Renewable Energy Systems Ltd., Ecohz and others.
Key findings of the study:
The report outlines the current power purchase agreement market trends and future scenario of the market from 2021 to 2031 to understand the prevailing opportunities and potential investment pockets.The Power purchase agreement market size is provided in terms of revenue.
- On the basis of type, physical PPA segment holds the market share of 59.5% in 2021 in terms of revenue.
- On the basis of application, wind segment holds the market share of 39.9% in 2021 in terms of revenue.
- On the basis of end-use, the corporate segment gained 57.0% share in 2021 in terms of revenue.
- On the basis of region, the North America region hold the market share of 31.8% in 2021 in terms of revenue.
Companies Mentioned
- General Electric
- Siemens AG
- statkraft
- Ameresco Inc.
- Enel S.p.A.
- ecohz
- RES Group
- Schneider Electric
- Shell Plc.
- RWE AG
- Engie
Methodology
The analyst offers exhaustive research and analysis based on a wide variety of factual inputs, which largely include interviews with industry participants, reliable statistics, and regional intelligence. The in-house industry experts play an instrumental role in designing analytic tools and models, tailored to the requirements of a particular industry segment. The primary research efforts include reaching out participants through mail, tele-conversations, referrals, professional networks, and face-to-face interactions.
They are also in professional corporate relations with various companies that allow them greater flexibility for reaching out to industry participants and commentators for interviews and discussions.
They also refer to a broad array of industry sources for their secondary research, which typically include; however, not limited to:
- Company SEC filings, annual reports, company websites, broker & financial reports, and investor presentations for competitive scenario and shape of the industry
- Scientific and technical writings for product information and related preemptions
- Regional government and statistical databases for macro analysis
- Authentic news articles and other related releases for market evaluation
- Internal and external proprietary databases, key market indicators, and relevant press releases for market estimates and forecast
Furthermore, the accuracy of the data will be analyzed and validated by conducting additional primaries with various industry experts and KOLs. They also provide robust post-sales support to clients.
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Table Information
Report Attribute | Details |
---|---|
No. of Pages | 447 |
Published | December 2022 |
Forecast Period | 2021 - 2031 |
Estimated Market Value ( USD | $ 11.6 billion |
Forecasted Market Value ( USD | $ 18.4 billion |
Compound Annual Growth Rate | 4.7% |
Regions Covered | Global |
No. of Companies Mentioned | 11 |