Electricity purchasing
Power Purchase Agreements (PPAs) for medium-sized businesses
Written by:
Robert Quick
Power Purchase Agreements (PPAs) at a Glance
PPAs are power purchase agreements that secure green electricity in the long term
Medium-sized businesses benefit from PPAs through predictable and more favorable terms than full-service supply, significant savings compared to futures market prices, as well as measurable contributions to sustainability goals
PPAs strengthen energy independence through direct partnerships with producers, promote regional value creation, and are partially relevant for electricity price compensations
Conclusion: With the growing energy transition and digitalization, PPAs are becoming the central lever for cost-effective decarbonization in medium-sized enterprises
What are Power Purchase Agreements (PPAs)?
Power Purchase Agreements (PPAs) are electricity purchase agreements with renewable energy plants and are increasingly being used by medium-sized German companies to source cost-effective green electricity.
PPAs offer long-term price guarantees, in some cases significant cost advantages, and enable companies to achieve their sustainability goals.
The Basics of Power Purchase Agreements (PPAs)
PPAs are forms of contract in the energy market that regulate the purchase and sale of energy between two parties. They are therefore electricity delivery contracts. These contracts allow energy buyers to source electricity directly from an energy producer, often from renewable sources such as wind and solar energy.
In Germany, PPAs are increasingly gaining in importance, particularly since the gradual reduction of feed-in tariffs for renewable energies.
The legal framework in Germany generally supports the conclusion of PPAs. However, companies must overcome complex regulatory and market-technical challenges. A PPA can be concluded on a bilateral level, but requires an intermediary electricity supplier for successful processing.
What types of Power Purchase Agreements (PPAs) are there?
PPAs come in various formats. Ultimately, a distinction is made between two pricing models and several forms of electricity delivery, depending on geographic proximity, processing method, and risk profile.
Pricing Models
Fixed Price: The electricity price is agreed upon as fixed for the entire contract term.
orMarket Price: The electricity price is based on current market prices (e.g., spot market) and can fluctuate.
Models by Delivery and Settlement Method
On-site PPA (directly on site)
The electricity is produced directly where it is consumed – for example, via a photovoltaic system on the company roof or on adjacent property.
Example: A medium-sized production company installs a PV system on the company premises with the support of trawa and sources the electricity directly for self-consumption.
Advantages:
High self-consumption share with direct CO₂ savings effect
Independence from grid prices and transmission losses
Positive sustainability impact through local generation
Disadvantages:
High initial investment or space requirement
Technical dependence on location and roof statics
Limited expansion potential with growing electricity demand
Risks:
Technical Risk: Malfunctions or underperformance of the system directly affect the supply.
Yield Risk: Lower solar radiation or aging of the system reduces generation and economic benefits.
Contractual Risk: Incorrect distribution of responsibility (e.g., maintenance, insurance) can lead to disputes.
Off-site PPA (balanced supply)
The green electricity comes from an external plant, e.g. a wind farm, and is
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