Getting ahead of the energy transition

Regulations around the globe are evolving and will require companies to develop ambitious decarbonization plans. Under increasing pressure to decarbonize, companies should expect to undertake more direct management of their energy consumption and use more renewable energy. There are various ways to source renewable energy and KPMG professionals’ experience shows that Power Purchase Agreements (PPAs) are effective. PPAs not only speed up decarbonization journeys, but also increase competitiveness, as they are nearly always the most cost-effective option.

Roads to decarbonization

As companies consider their decarbonization strategies and their net zero ambitions they should aim to reduce their energy consumption and source higher amounts of low carbon or green energy. The recent energy crisis is also making companies reconsider their energy strategies - in terms of both consumption costs and the security of energy supplies. There are various renewable energy supply options available which all companies can consider. These include buying Renewable Obligation Certificates and Renewable Energy Guarantees of Origin. These will, however, have price premiums and their value can fluctuate according to market conditions and government targets. Companies can also generate their own renewable energy, but this is often not a realistic option as it can be expensive, will impact the balance sheet and will more often fulfill only a limited part of the energy needs . For companies looking for a secure long-term supply of renewable energy, PPAs offer the most cost-effective method of sourcing large amounts of renewable energy, at competitive prices.

What is a PPA?

A PPA (Power Purchase Agreement) is a long-term contract signed by a company with a renewable energy supplier to buy electricity and its certificates of origin. The energy is purchased at pre-determined price and volumes over a given period. There are generally two types of PPA – physical, where power is supplied to the company directly from the grid, and virtual, which is a pure financial transaction, exchanging a fixed-price cash flow for a variable-priced cash flow and renewable energy certificates. Virtual PPAs are also known as Synthetic PPAs or “Contract for Differences”.

Explore our approach to PPAs

How can your organization source energy through PPAs

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Key features of our approach

Selecting a PPA requires deep knowledge of electricity markets and strong capabilities in energy pricing, financial modelling, and risk assessment. KPMG professionals have experience in supporting the negotiation and management of renewable PPAs — they have supported over 100, 10GW + PPAs in just 5 years and KPMG professionals can guide clients with holistics support through the entire PPA journey.

Strategy with consumption data collection and analysis, market screening and regulatory analysis and strategies for renewable energy sourcing.
Execution with supporting PPA bids, contract negotiations, initiating partner selection and the PPA implementation process.
Follow-up helping with the moniotring and compliance of the PPA contract until the start of production.

Expected benefits of KPMG professionals' approach

As companies come under more pressure to meet their net zero targets and decarbonize, they need to consider the best options for sourcing reliable and cost-effective supplies of renewable energy. Leveraging KPMG professionals’ experience and approach to Power Purchasing Agreements can help. They bring a leading PPA track record, developed by an experienced team that has worked on similar projects for major clients and who can leverage numerous lessons learned. This approach has the following expected outcomes:

Using our track record in PPAs, we can help structure all types of PPAs, mitigate related risks and evaluate developers’ bids using advanced financial modelling and KPIs.
While we are independent from renewable energy developers and utilities, we also have a strong relationship with them allowing us to initiate, facilitate and complete the PPA process.
Our risk management, accounting and legal processes provide strong safeguards and ensure our service teams act according to the highest ethical standards and are fully independent.
We understand and analyze the latest trends and developments related to the PPA market and we regularly publish insights and analysis on renewable energy sourcing and PPA topics.