What is a Power Purchase Agreement (PPA)?

What is a renewable energy PPA, and why do companies like Walmart value it as a mechanism for carbon reduction?

A PPA for renewable energy is generally a long-term contract (typically 10-20 years) between a clean energy developer and a creditworthy buyer. PPAs enable renewable energy developers to secure financing for new wind or solar projects and allow buyers to lock in predictable electricity pricing from clean energy sources.

Historically, buyers of PPAs have included utilities and power traders. However, over the past decade, corporate PPA buyers have collectively purchased more than 52 gigawatts (GW) of renewable energy via PPAs. Most of these corporate renewable energy deals have been executed on an enterprise-scale by large organizations, such as Walmart.

PPAs are attractive to corporate buyers for several reasons. They can provide corporates with favorable economics relative to other energy sources. They can also help companies reduce environmental impact and demonstrate sustainability leadership.

However, it can be challenging for many organizations to participate in large-scale PPAs based on the size of their energy load and their credit.

Thanks to the leadership and experience of Walmart, the Gigaton PPA (GPPA) offers Walmart suppliers the opportunity to partner together to purchase a PPA via a buyer’s group model. Under this model, smaller tranches of a large-scale PPA will be made available for purchase by the individual program participants. For illustrative purposes only, this could mean that, together, 10 Walmart suppliers could each purchase a 10 megawatt tranche of a 100 megawatt wind power project.*

As a Walmart supplier, your organization plays a pivotal role in achieving the Project Gigaton goal of avoiding one billion metric tons of greenhouse gases from the global value chain by 2030. We invite you to register for the GPPA program to learn more about how your organization can accelerate its renewable energy goals. Please note that registering for the program only commits your organization to wanting to learn more.

*Actual PPA size, price, and contract structure will vary based on program participants and project availability.