Green on demand? Offtaker preferences for corporate power purchase agreements

Sabrina Mili and Elizabeth Côté

Energy Policy, 2025, vol. 196, issue C

Abstract: Corporate power purchase agreements (CPPAs) have emerged as an additional instrument for accelerating renewable energy deployment. By facilitating the financing of projects, CPPAs offer numerous benefits to power producers and corporate offtakers. However, despite their growing popularity, risk allocation among these counterparties remains challenging. This study investigates risk perceptions and preferences for CPPA design based on insights from 91 corporate offtakers who made 860 hypothetical green-power-procurement decisions in the Swiss context. Our results show a strong interest in CPPAs with lower prices and shorter tenors. The latter is especially important for SMEs, who would be willing to pay considerably more for a five-year contract than a longer one. While large companies would pay hefty premiums for local power production, SMEs impute more importance to the type of technology. However, long-term commitments and the complexity of contractual obligations are major drawbacks. While our findings show that CPPAs have the potential to play an important role in complementing public support for renewables, they also point to the need to implement framework conditions that contribute to lowering risks and complexity for counterparties. Further, they highlight distinctive preferences within this consumer segment, which could inform CPPA negotiations and foster mutually beneficial agreements.

Keywords: Power purchase agreement; Choice experiment; Corporate decision-making; Green electricity procurement; Renewable energy; Business-to-business (B2B) (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:196:y:2025:i:c:s0301421524004282

DOI: 10.1016/j.enpol.2024.114408

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