Corporate Power Purchase Agreements: A Policy Perspective

31 Pages Posted: 12 Feb 2024

See all articles by Jesse D. Backstrom

Jesse D. Backstrom

Texas State University

Michael Gillenwater

Greenhouse Gas Management Institute

Matthew Brander

University of Edinburgh Business School

Charlie Inman

Washington Utilities and Transportation Commission

Date Written: January 28, 2024

Abstract

The market for power purchase agreements (PPAs) has exploded in the last decade due, in part, to non-utility entities (e.g., corporations) attempting to meet greenhouse gas (GHG) emission reduction targets. Recent empirical research has explored the effects of this PPA activity on the renewable energy (RE) transition. It finds that PPAs are associated with increases in the deployment and share of RE capacity in U.S. counties, but the effects are heterogeneous in three important ways—whether PPAs are executed by non-utility or utility entities, the project type (solar or wind), and the resource potential of the region. This paper discusses the policy implications of these findings, including instances in which non-utility PPAs may serve as substitutes or complements to traditional RE policies (e.g., Renewable Portfolio Standards) and RE investment by utilities. The paper also discusses the implications for GHG accounting, including the ongoing update to the GHG Protocol guidance.

Keywords: Economics, Policy, Power Purchase Agreement, Renewable Energy, Energy Transition

JEL Classification: Q01, Q4, Q48, Q5, O13, H41

Suggested Citation

Backstrom, Jesse D. and Gillenwater, Michael and Brander, Matthew and Inman, Charlie, Corporate Power Purchase Agreements: A Policy Perspective (January 28, 2024). Available at SSRN: https://ssrn.com/abstract=4708811 or http://dx.doi.org/10.2139/ssrn.4708811

Jesse D. Backstrom (Contact Author)

Texas State University ( email )

601 University Dr
San Marcos, TX 78666
United States

HOME PAGE: http://www.jessebackstrom.org

Michael Gillenwater

Greenhouse Gas Management Institute ( email )

9231 View Ave NW
Seattle, WA 98117
United States

Matthew Brander

University of Edinburgh Business School ( email )

University of Edinburgh
29 Buccleuch Place
Edinburgh, Scotland EH8 9JS
UNITED KINGDOM

Charlie Inman

Washington Utilities and Transportation Commission ( email )

621 Woodland Square Loop SE
Lacey, WA 98503
United States

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