While CPPAs can bring price security to energy costs, concerns remain around the longer-term economic benefit of a fixed price structure – especially at times when electricity prices are relatively high compared to historic averages.

“Companies need to consider how they want to hedge their electricity costs,” explains James Lythgoe, Associate Director – Energy & Infrastructure at JLL. “They must understand the long-term outlook for their energy market, the financial implications of entering a CPPA and build confidence with key internal stakeholders when negotiating terms.” 

For CPPAs to drive the transition to green energy, they need to be accessible beyond large-scale corporate consumers, Mead believes.

“CPPAs won’t move the needle on clean energy installations until there are less restrictive credit requirements on one hand, and on the other, more willingness for long-term contracts at a decent price versus a short-term chase to the lowest price,” he says.

Aggregate CPPAs, anchored by large corporates, could bring more small companies into the fold by selling on electricity - although this could involve a complex contracting process. Smaller companies in leased spaces could equally discuss renewable energy procurement with their landlord, ideally during the lease event.

The involvement of local authorities could also drive market growth. In 2023, a first-of-its-kind 50MW solar park in Dorset went live following a 15-year deal between the City of London and Voltalia, setting a precedent for the public sector to reduce emissions without the risk of managing their own infrastructure investments.

Digital platforms are another driver in widening CPPA market liquidity. Evolving technology can also support on contracting processes, traceability and matching supply and demand for renewable power within a PPA more accurately.

The growth of CPPAs is key to the wider decarbonization of the built environment.

“To meet our decarbonization targets we clearly need to build out a substantial volume of renewable capacity,” says Lythgoe. “In many cases, CPPAs can bring tangible financial support to enable additional capacity.”

The UK Green Building Council, for example, is among the industry bodies that cite additionality as a criteria of clean energy procurement. “Corporates need to verify their renewable electricity procurement fits best practices, including the provision of additionality, which is often the hardest criteria to meet,” says Andrei.

Government policy has an important role too. “Greater support and the right incentives for new renewable capacity to come online can enable additionality to be a standard feature in corporate electricity procurement,” Andrei adds.

As the transition to green electricity gathers pace, CPPAs will continue to evolve with the help of technology, new contract structures and the growing emphasis on the social impact of projects to help establish CPPAs in broader ESG strategies.

“Ultimately, CPPAs not only allow businesses to lock in electricity prices and secure a supply of renewable certificates, but they facilitate active participation in the development of renewable assets,” says Lythgoe. “With broader accessibility, they could be an important tool in building out the infrastructure needed for a net zero economy.”