The Problem with PPAs
Max Schulz
Tate Cantrell
The Problem with PPAs
Q : Why aren ’ t power purchase agreements as good in reality as they look on paper ?
Max Schulz
TITLE : DIRECTOR
COMPANY : SUSTAINABLE DIGITAL INFRASTRUCTURE ALLIANCE ( SIDA )
INDUSTRY : SUSTAINABILITY LOCATION : HAARLEM , NETHERLANDS
PPAs and GoOs are both financial products . This is something that most people do not fully appreciate . There is a physical electricity system and virtual / financial power markets . With a PPA , I buy the “ output ” of a wind farm over a very long contract period ( e . g . 10-15 years ), and with that I basically finance that wind park .
Tate Cantrell
TITLE : CTO COMPANY : VERNE GLOBAL INDUSTRY : DATA CENTRES LOCATION : WASHINGTON DC , US
While there are physical PPAs , like
Google ’ s long-term agreements with power producers for renewable solar and wind power – backed by ' carbon free thermal ' ( nuclear ) – there are also virtual PPAs , which are more of a financial vehicle , and start to tilt in the direction of greenwashing .
However , the challenge today is actually not just building renewable power systems and making it profitable , but ensuring that the physical electricity ( the electrons ) actually make it into the energy system . The constraint , e . g . in the case of the UK or NL with a lot of offshore wind , is the transport from the coastlines to the cities is still very difficult . And therefore many industries will need to relocate to where there is physical green power available ; otherwise the electricity will simply never be used ( as is already the case with a lot of wind and solar parks around Europe ), but on paper “ its all sold ”.
82 February 2022