What is the feasibility of using Power Purchase Agreements as a green electricity sourcing method for a large industrial company? : A Case Study

Sammanfattning: With the increasing volatility on electricity markets and a growing emphasis on sustainability, renewable electricity has gained significant attention from corporate entities seeking to secure their green energy supply. Among the various methods available for securing green electricity, one method on the rise is Power Purchase Agreements (PPA). The purpose of entering a PPA from a generator perspective is to secure future revenues and from an offtaker perspective it is to secure future electricity costs. This research aims to assess the feasibility of PPAs as a green electricity sourcing method for a large industrial company with specific requirements. The research comprises a case study focused on a specific company. It involves qualitative interviews with nine company representatives, analysis of internal documents, and a review of relevant literature on PPAs. Additionally, four external experts knowledgeable about the company's electricity sourcing method and the PPA market were interviewed. This approach provides insights into the company's practices and ensures a comprehensive understanding of PPAs. The study demonstrates that PPAs can be structured in various ways. To organize the results and strengthen the arguments and conclusions drawn, Kraljic's sourcing framework has been utilized. Importantly, the findings indicate that implementing a PPA is a highly viable green electricity sourcing method for the company given their current structure andmission for the future. The findings suggest that adopting a PPA to source green electricity can be a viable option for companies if they prioritize renewable electricity,value price predictability highly, and can leverage the agreement for sustainability and marketing efforts. It is important to note that while the risks associated with a PPA can be mitigated to a large extent through a price premium, it is crucial to tailor the PPA setup to align with the specific needs of the company. Furthermore, it would be intriguing for the research community to investigate or propose an optimal PPA structure that maximizes benefits for both sides of the value chain, considering the interdependence highlighted in this study.