What is Power Purchase Agreement (PPA)?
A long-term contract to buy electricity directly from a renewable energy generator. PPAs provide price certainty and enable organisations to claim renewable energy consumption for Scope 2 reporting.
Why it matters
PPAs offer long-term energy price stability alongside verified carbon reductions. For larger energy users, a PPA can be more cost-effective than standard renewable tariffs and provides stronger evidence of additionality for sustainability reporting.
Example
A data centre operator signs a 10-year PPA with an offshore wind farm, securing electricity at a fixed price of £45 per MWh. The agreement covers 80% of the data centre's consumption and eliminates 2,400 tCO₂e from Scope 2 annually.
Related terms
Renewable Energy
Energy from sources that are naturally replenished, including solar, wind, hydroelectric, and biomass. Switching to renewable energy is one of the most effective ways to reduce Scope 2 emissions.
Market-based Method
A Scope 2 calculation method that reflects emissions based on the electricity an organisation has chosen to purchase, such as renewable energy tariffs. This method uses supplier-specific emission factors and renewable energy certificates.
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