At government level, the impact that CPPA deployment by significant energy consumers can have on hitting national and multinational renewable energy and emissions targets, has not gone unnoticed.
CPPAs invariably contain requirements on the generator to provide evidence that the electricity is from a renewable or clean source, for example through the use of guarantees of origin.
For the business, demonstrating that its purchasing commitment has resulted in the construction of a new wind farm or solar park is a powerful message of its commitment to sustainability, with far reaching benefits from branding to investor relations.
Several models of CPPA are in use around the world, for both projects which are physically connected to the corporate consumer and those which are remote and supply electricity via the local transmission or distribution system.
Global CPPA volumes have increased from 0.1GW in 2010 to 23.7GW by the end of 2020, up from 20.1GW in 2019 and 13.6GW in 2018, according to BNEF.
Of course, one factor which is unique to 2020 is the impact of the Covid-19 pandemic, which has proven to be more infectious and to have a wider global impact than was the case with other recent disease outbreaks, such as SARS.
It has suggested that this will be due to “possible delays in construction activity due to supply chain disruptions, lockdown measures and social distancing guidelines, and emerging financing challenges”.
It is likely that these reductions in demand and construction of new capacity has had, and will continue to have, an impact on the market for CPPAs, although the BNEF figures are encouraging.
We have seen evidence that companies are more hesitant to enter into new CPPAs at the moment, given uncertainty around electricity demand and energy prices.
As more organisations rely on cloud storage, for example, the demand for data centres – which tend to be highly electricity and cooling-intensive – will increase.
Although difficult to say with any certainty, it feels more likely than not that any downward trend on CPPA deployment caused by Covid-19 will be temporary.