Power Purchase Agreement Market: Current Analysis and Forecast (2024-2032)

Report Description

Power Purchase Agreement Market Size & Forecast

The Power Purchase Agreement market was valued at USD 65,959.9 Million in 2023 and is expected to grow at a strong CAGR of around 23.1% during the forecast period (2024-2032). Power purchase agreement (PPA) is a contractual agreement that covers the purchase of electricity between a power producer and a consumer or trader over an agreed period. Also, the PPA defines the conditions of the agreement, such as the amount of electricity to be supplied, negotiated prices, accounting, and penalties for non-compliance.

The PPA market is growing fast because of the many drivers such as environmental concerns regulation pressures and the cost savings that accrue from adopting renewable energy. PPAs are a financially ready-made and acceptable model that reduces the risks associated with price fluctuation in energy and that presents projects at scale with a financial cushion through long-term offtake agreements. For instance, on 21 September 2022, Amazon announced its first utility-scale renewable energy projects in India – three solar farms located in the state of Rajasthan. These include a 210 MW project to be developed by India-based developer ReNew Power, a 100MW project to be developed by local developer Amp Energy India, and a 110MW project to be developed by Brookfield Renewable.

Power Purchase Agreement Market Analysis

PPAs also known as long-term power contracts are recognized globally as the key financial model for funding renewable energy projects. Due to offering long-term purchase agreements for electricity produced through renewable sources, PPAs help in the establishment of financial security and long-term investment in the renewable energy sector. Meanwhile, analyzing the current state and future developments of the PPA market for renewable energy sources, this article offers a brief overview of the recent policies and trends in this area and presents the main initiatives of key market players.

Power Purchase Agreement Market Trends

Increasing Corporate PPAs

The use of PPAs among corporations has also increased in the Renewable energy market since many companies have embraced the concept of green energy and procurement. A corporate PPA is where a company will purchase electricity from a renewable energy producer at a fixed rate for a fixed period. These are due to ambitions of winning sustainable development targets, decreasing carbon emission and energy costs, and fixed long-term costs.

North America is Expected to Grow with Significant CAGR During Forecast Period

North America has acquired a significant share of the power purchase agreement market. This is due to several factors like supportive policies, sufficient availability of renewable resources, and high company ownership in sustainable development. It is important to note that the United States has put in place measures regarding the promotion of renewable energy projects. The promotion of renewable energy through PPAs is facilitated by federal policies like the Investment Tax Credit (ITC) and state policies like Renewable Portfolio Standards (RPS). A lot of the leading global companies from North America including such big movers as Google, Amazon, and Microsoft, have pinned sustainable development goals for themselves. More and more of these companies are relying on PPAs to purchase power from renewable sources to cut costs and greenhouse emissions.

 Power Purchase Agreement Industry Overview

The Power Purchase Agreement market is competitive and fragmented, with the presence of several global and international market players. The key players are adopting different growth strategies to enhance their market presence, such as partnerships, agreements, collaborations, new product launches, geographical expansions, and mergers and acquisitions. Some of the major players operating in the market are GE Vernova, Siemens Energy, Shell, Statkraft, Iberdrola, S.A., NextEra Energy Resources, Enel Green Power, Ørsted A/S, Brookfield Asset Management, ReNew.

Power Purchase Agreement Market News

In 2021, Iberdrola signed a PPA with Amazon for a 350 MW solar project in Spain, further solidifying its position in the PPA market.

In 2021, Microsoft signed a 230 MW solar PPA in the U.S. and a 350 MW wind PPA in Ireland, reinforcing its commitment to becoming carbon-negative by 2030.

On October 16, 2024, Tesco announced the signing of its largest UK Power Purchase Agreement (PPA), facilitated by EDF, securing 65% of the solar power generation from Cleve Hill Solar Park. Cleve Hill, located on the north Kent coast, is the largest solar and battery storage project ever constructed in the UK, with a capacity of 373 megawatts (MW).

Power Purchase Agreement Market Report Coverage

Reasons to buy this report:

• The study includes market sizing and forecasting analysis validated by authenticated key industry experts.
• The report presents a quick review of overall industry performance at one glance.
• The report covers an in-depth analysis of prominent industry peers with a primary focus on key business financials, product portfolios, expansion strategies, and recent developments.
• Detailed examination of drivers, restraints, key trends, and opportunities prevailing in the industry.
• The study comprehensively covers the market across different segments.
• Deep dive regional level analysis of the industry.

Customization Options:

The global Power Purchase Agreement market can further be customized as per the requirement or any other market segment. Besides this, UMI understands that you may have your own business needs, hence feel free to connect with us to get a report that completely suits your requirements.

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Research Methodology

Research Methodology for the Power Purchase Agreement Market Analysis (2024-2032)

Analyzing the historical market, estimating the current market, and forecasting the future market of the global Power Purchase Agreement market were the three major steps undertaken to create and analyze the adoption of the Power Purchase Agreement in major regions globally. Exhaustive secondary research was conducted to collect the historical market numbers and estimate the current market size. Secondly, to validate these insights, numerous findings and assumptions were taken into consideration. Moreover, exhaustive primary interviews were also conducted, with industry experts across the value chain of the global Power Purchase Agreement market. Post assumption and validation of market numbers through primary interviews, we employed a top-down/bottom-up approach to forecasting the complete market size. Thereafter, market breakdown and data triangulation methods were adopted to estimate and analyze the market size of segments and sub-segments of the industry pertains to. Detailed methodology is explained below:

Analysis of Historical Market Size

Step 1: In-Depth Study of Secondary Sources:

A detailed secondary study was conducted to obtain the historical market size of the Power Purchase Agreement market through company internal sources such as annual reports & financial statements, performance presentations, press releases, etc., and external sources including journals, news & articles, government publications, competitor publications, sector reports, third-party database, and other credible publications.

Step 2: Market Segmentation:

After obtaining the historical market size of the Power Purchase Agreement market, we conducted a detailed secondary analysis to gather historical market insights and share for different segments & sub-segments for major regions. Major segments are included in the report as type, category, size, application, and region. Further country-level analyses were conducted to evaluate the overall adoption of testing models in that region.

Step 3: Factor Analysis:

After acquiring the historical market size of different segments and sub-segments, we conducted a detailed factor analysis to estimate the current market size of the Power Purchase Agreement market. Further, we conducted factor analysis using dependent and independent variables such as the type, category, size, application of the Power Purchase Agreement market. A thorough analysis was conducted of demand and supply-side scenarios considering top partnerships, mergers and acquisitions, business expansion, and product launches in the Power Purchase Agreement market sector across the globe.

Current Market Size Estimate & Forecast

Current Market Sizing: Based on actionable insights from the above 3 steps, we arrived at the current market size, key players in the global Power Purchase Agreement market, and market shares of the segments. All the required percentage shares split, and market breakdowns were determined using the above-mentioned secondary approach and were verified through primary interviews.

Estimation & Forecasting: For market estimation and forecast, weights were assigned to varied factors including drivers & trends, restraints, and opportunities available for the stakeholders. After analyzing these factors, relevant forecasting techniques i.e., the top-down/bottom-up approach were applied to arrive at the market forecast for 2032 for different segments and sub-segments across the major markets globally. The research methodology adopted to estimate the market size encompasses:

• The industry’s market size, in terms of revenue (USD) and the adoption rate of the Power Purchase Agreement market across the major markets domestically
• All percentage shares, splits, and breakdowns of market segments and sub-segments
• Key players in the global Power Purchase Agreement market in terms of products offered. Also, the growth strategies adopted by these players to compete in the fast-growing market.

Market Size and Share Validation

Primary Research: In-depth interviews were conducted with the Key Opinion Leaders (KOLs) including Top Level Executives (CXO/VPs, Sales Head, Marketing Head, Operational Head, Regional Head, Country Head, etc.) across major regions. Primary research findings were then summarized, and statistical analysis was performed to prove the stated hypothesis. Inputs from primary research were consolidated with secondary findings, hence turning information into actionable insights.

Split of Primary Participants in Different Regions

Market Engineering

The data triangulation technique was employed to complete the overall market estimation and to arrive at precise statistical numbers for each segment and sub-segment of the global Power Purchase Agreement market. Data was split into several segments & sub-segments post studying various parameters and trends in the areas of the type, category, size, and application in the global Power Purchase Agreement market.

The main objective of the Global Power Purchase Agreement Market Study

The current & future market trends of the global Power Purchase Agreement market were pinpointed in the study. Investors can gain strategic insights to base their discretion for investments on the qualitative and quantitative analysis performed in the study. Current and future market trends determined the overall attractiveness of the market at a regional level, providing a platform for the industrial participant to exploit the untapped market to benefit from a first-mover advantage. Other quantitative goals of the studies include:

• Analyze the current and forecast market size of the Power Purchase Agreement market in terms of value (USD). Also, analyze the current and forecast market size of different segments and sub-segments.
• Segments in the study include areas of the type, category, size, and application.
• Define and analyze the regulatory framework for the Power Purchase Agreement
• Analyze the value chain involved with the presence of various intermediaries, along with analyzing customer and competitor behaviors of the industry.
• Analyze the current and forecast market size of the Power Purchase Agreement market for the major region.
• Major countries of regions studied in the report include Asia Pacific, Europe, North America, and the Rest of the World
• Company profile of the Power Purchase Agreement market and the growth strategies adopted by the market players to sustain in the fast-growing market.
• Deep dive regional level analysis of the industry

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