Jul 2020 4 Mins read
You might have already heard about corporate PPAs from your accountant or from news stories like the group of UK universities who joined forces in a landmark renewable energy deal. But what does it mean to sign up for a corporate PPA? How do they work, and what are the concerns and capabilities?
Unlike a private wire PPA (where you develop a solar farm of your own close to your business), a corporate PPA connects you to a network of solar farms across the UK. Corporate PPAs are perfect for inner-city businesses who have medium to high energy usage and green energy targets to achieve, but may not have the space to have a solar farm developed for their exclusive use.
Through a corporate PPA, your business will receive a portion of their energy ‘sleeved’ across the National Grid, while continuing to gain your off-peak power from your existing energy supplier.
A power purchase agreement or PPA is a legal contract between the business receiving the energy and the energy provider. The contract details an agreed energy tariff against a specific time period, most often between 5-20 years.
While corporate PPAs are growing to become the future of business energy, they are quite different to the typical, short-term business energy contracts we’re all used to. These are the most common concerns we hear below:
"This is a longer contract than what I'm used to"
True. A power purchase agreement can be a far longer energy contract than a typical deal on the energy market, operating from 5 to 20 years compared to the standard 1-2 years. Switching to a PPA means you can save your business the hassle of shopping around, as well as the threat of downtime when changing tariffs and suppliers.
Time savings aside, power purchase agreements can also offer long-term financial savings, protecting businesses from the fluctuations of the energy market by offering fixed or discount to market alternatives, and providing long-term foresight into operational costs. This means you can finally spend time working on long-term business solutions rather than short-term fixes.
So, what will you do with all of that free time and extra money in the business account?
"It's going to be difficult to change over and result in downtime affecting my business"
We know the horror stories associated with changing suppliers only too well. Businesses being left without energy, but with never-ending bills in the post from suppliers-past. Don't worry. Changing to a power purchase agreement won’t change anything in terms of your billing - unless you want it to. As power is simply allocated from a new additional supplier, it doesn't change your connection and the whole process is designed to be a seamless addition reducing the amount of peak power you purchase from your existing supplier. In fact UKSE can also top up power, but in any event you'll receive one simple, easy to understand monthly bill that looks no different from the one you've been used to. And contains no hidden surprises.
By switching to a corporate power purchase agreement, that dreaded downtime will become a thing of the past. When we connect you to our network of UK solar farms, a portion of your business energy will still be provided from the national grid. This will then act as your crucial ‘off-peak’ back up supply, which is even more important here in the UK when we're often provided with very limited sunshine.
"l don't know what tariff to pick"
The nitty-gritty of corporate power purchase agreements are subject to two-way conversations about what’s best for your business but typically they take one of two forms:
Choosing a fixed price tariff allows you to pay the same amount each month, without impact from the unpredictable energy market. This means, whether the market fluctuates up or down, your payments stay the same. Providing you with long-term price certainty and foresight on future costs. Perfect for the game-changers who need to have price certainty.
The variable option offers a discount structure to the best market available prices and also provides immediate cost savings on what you're currently paying. But, as the contract rolls on, it may be subject to large increases or decreases depending on direction of the energy market volatility. This is a perfect solution for those seeking to lock in to a metric that discounts the best in the market and follows that price (at a discount) whether rising or falling. But, if you’re looking for the comfort of knowing your price is lower than the market and you need to make long term savings, then becoming a change-maker may be for you.
"I already have green business energy - how is this different or better?"
With lots of suppliers providing businesses with green energy, you’re right to wonder how a PPA is better and whether the swap is actually worthwhile. By signing up to a corporate power purchase agreement with us, you can benefit from REGO certificates allocated to your business by Ofgem, boosting your reputation and business value, as well as free, reliable environmental reports. Key assets to have to hand that prove your business energy efficiency and low carbon readiness to stakeholders.
"How do I know if a corporate PPA is right for my business?"
Medium to high energy usage is required to make a power purchase agreement worthwhile. Download our infographic to find out if it's right for your business.
Corporate PPAs are becoming the future of business energy. Use our business energy calculator to get your quote today.