Supply for CPPAs is set to outstrip demand by 2022

Supply for Corporate Power Purchasing Agreements (CPPAs) is expected to outstrip demand. This situation is likely to give companies seeking a CPPA more bargaining power according to research from Cornwall Insight’s latest insight paper, “Unlocking net zero strategies for business”, published in collaboration with Shoosmiths.

The below graph shows that the supply of renewables is expected to outstrip demand as soon as next year.Text Box: Figure 1: Outlook for CPPAs

Kate Hill, Lead Research Analyst at Cornwall Insight, said:

“A CPPA is an energy supply contract between a generator and an end-user. Similarly, it will set out pre-agreed volumes, contract length and price, which will be bespoke on a case-by-case basis. The energy is delivered over the public network, so the negotiations are essentially about fixing the wholesale cost element of the end bill. As a result, the CPPA signing process can be lengthy and complex and can take six months to two years to conclude.

“Currently buyers of CPPAs still tend to be large creditworthy companies that have made corporate social responsibility commitments. Moreover, demand from corporates for green power is restricted to creditworthy companies able to progress lengthy contracts.

“However, the supply for CPPAs is shortly set to exceed demand . So, if we are to meet net zero, the market needs to expand, with potential for smaller corporates to club together or piggy-back to deliver a bankable offtake solution.”


Notes to Editors

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About the Cornwall Insight Group

Cornwall Insight is the pre-eminent provider of research, analysis, consulting and training to businesses and stakeholders engaged in the Australian, Great British, and Irish energy markets. To support our customers, we leverage a powerful combination of analytical capability, a detailed appreciation of regulation codes and policy frameworks, and a practical understanding of how markets function.