Power Purchase Agreement Market: Introduction

  • Power purchase agreement is a financial agreement between electricity producer, developer, and end-user. The agreement defines the conditions of the agreement. This includes the amount of electricity to be supplied, prices, and penalties for non-compliance.
  • Power purchase agreement typically works for the duration of 10 years to 25 years. Developer remains responsible for the operation and maintenance of the system for the duration of the agreement.
  • Power purchase agreement provides two benefits: electricity can be supplied physically or it can be shown on a balancing sheet. Companies with high power consumption are now implementing power purchase agreement to lower investment costs associated with planning or operating energy plants.

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Key Drivers and Restraints of Power Purchase Agreement Market

  • Long term price security is the major driver of the global power purchase agreement market. Traditionally, the price of electricity has been dependent on the market variability. Power purchase agreement protects consumers from this variability and provides steady power supply with consistent price for an agreed period. The agreement helps companies save up to 25% to 30% on electricity bills. Thus, long term price security is a major factor driving the power purchase agreement market.
  • Supportive policies enacted by governments of various countries is another key driver of the power purchase agreement market. Governments across the globe are promoting power purchase agreements by providing tax credits and carbon credit. Led by an increase in environmental awareness, companies are actively entering into power purchase agreements. This is anticipated to drive the global power purchase agreement market during the forecast period.
  • Companies do not own the power station system. These systems are owned and installed by developers. This is one of the key restraints of the global market. Companies do not have any control over the power station. As a result, companies sometime hesitate to proceed with power purchase agreement. Hence, lack of ownership of the power plant system is the key restraining factor of the power purchase agreement market.   

Global Power Purchase Agreement Market Segmentation

  • The global power purchase agreement market can be segmented based on type and location
  • In terms of type, the power purchase agreement market can be divided into geothermal, hydropower, solar power, and wind power. Demand for solar power is high in various manufacturing facilities. Hence, the segment is estimated to expand at a rapid pace during the forecast period.
  • Based on location, the global power purchase agreement market can be segregated into on-site and off-site. The on-site segment dominated the global power purchase agreement market in 2018. This trend is anticipated to continue during the forecast period.

Global Power Purchase Agreement Market: Regional Segmentation

  • Based on region, the global power purchase agreement market can be classified into North America, Asia Pacific, Europe, Latin America, and Middle East & Africa
  • Asia Pacific dominated the global power purchase agreement market in 2018. The market in the region is expected to expand at a significant pace during the forecast period, as demand for renewable power is high in Asia Pacific, particularly in China, India, and Japan.
  • North America is projected to account for important share of the power purchase agreement market in the forecast period. The U.S. is estimated capture the leading share of the market in the region in the near future.
  • The market in Europe is projected to expand at a significant pace during the forecast period. Government support to maximize the use of renewable sources of energy is a key factor augmenting the power purchase agreement market. Germany is likely to lead the power purchase agreement market in Europe during the forecast period.

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Key Developments

  • In February 2019,Nike, Inc. signed a power purchase agreement with The Climate Group, wherein the company will get 40 MW of wind power from the 111 MW project being built in Navarra, Spain. After implementation of this project, Nike, Inc. is expected to get 75% of its power supply from the wind energy.

Key Players Operating in Market

  • Renewable Energy Systems Ltd
  • RECONNECT energy
  • Greentech India
  • Ameresco
  • RWE
  • The Royal Dutch Shell PLC
  • Siemens
  • Enel Spa
  • The Climate Group
  • GENERAL ELECTRIC

Global Power Purchase Agreement Market: Research Scope

Global Power Purchase Agreement Market, by Type

  • Geothermal
  • Hydropower
  • Solar Power
  • Wind Power

Global Power Purchase Agreement Market, by Location

  • On-site
  • Off-site

Global Power Purchase Agreement Market, by Region

  • North America
    • U.S.
    • Canada
  • Europe
    • Germany
    • France
    • U.K.
    • Italy
    • Spain
    • Russia & CIS
    • Rest of Europe
  • Asia Pacific
    • China
    • South Korea
    • Japan
    • India
    • ASEAN
    • Rest of Asia Pacific
  • Latin America
    • Brazil
    • Mexico
    • Rest of Latin America
  • Middle East & Africa
    • GCC
    • South Africa
    • Rest of Middle East & Africa

This study by TMR is all-encompassing framework of the dynamics of the market. It mainly comprises critical assessment of consumers' or customers' journeys, current and emerging avenues, and strategic framework to enable CXOs take effective decisions.

Our key underpinning is the 4-Quadrant Framework EIRS that offers detailed visualization of four elements:

  • Customer Experience Maps
  • Insights and Tools based on data-driven research
  • Actionable Results to meet all the business priorities
  • Strategic Frameworks to boost the growth journey

The study strives to evaluate the current and future growth prospects, untapped avenues, factors shaping their revenue potential, and demand and consumption patterns in the global market by breaking it into region-wise assessment.

The following regional segments are covered comprehensively:

  • North America
  • Asia Pacific
  • Europe
  • Latin America
  • The Middle East and Africa

The EIRS quadrant framework in the report sums up our wide spectrum of data-driven research and advisory for CXOs to help them make better decisions for their businesses and stay as leaders.

Below is a snapshot of these quadrants.

1. Customer Experience Map

The study offers an in-depth assessment of various customers’ journeys pertinent to the market and its segments. It offers various customer impressions about the products and service use. The analysis takes a closer look at their pain points and fears across various customer touchpoints. The consultation and business intelligence solutions will help interested stakeholders, including CXOs, define customer experience maps tailored to their needs. This will help them aim at boosting customer engagement with their brands.

2. Insights and Tools

The various insights in the study are based on elaborate cycles of primary and secondary research the analysts engage with during the course of research. The analysts and expert advisors at TMR adopt industry-wide, quantitative customer insights tools and market projection methodologies to arrive at results, which makes them reliable. The study not just offers estimations and projections, but also an uncluttered evaluation of these figures on the market dynamics. These insights merge data-driven research framework with qualitative consultations for business owners, CXOs, policy makers, and investors. The insights will also help their customers overcome their fears.

3. Actionable Results

The findings presented in this study by TMR are an indispensable guide for meeting all business priorities, including mission-critical ones. The results when implemented have shown tangible benefits to business stakeholders and industry entities to boost their performance. The results are tailored to fit the individual strategic framework. The study also illustrates some of the recent case studies on solving various problems by companies they faced in their consolidation journey.

4. Strategic Frameworks

The study equips businesses and anyone interested in the market to frame broad strategic frameworks. This has become more important than ever, given the current uncertainty due to COVID-19. The study deliberates on consultations to overcome various such past disruptions and foresees new ones to boost the preparedness. The frameworks help businesses plan their strategic alignments for recovery from such disruptive trends. Further, analysts at TMR helps you break down the complex scenario and bring resiliency in uncertain times.

The report sheds light on various aspects and answers pertinent questions on the market. Some of the important ones are:

1. What can be the best investment choices for venturing into new product and service lines?

2. What value propositions should businesses aim at while making new research and development funding?

3. Which regulations will be most helpful for stakeholders to boost their supply chain network?

4. Which regions might see the demand maturing in certain segments in near future?

5. What are the some of the best cost optimization strategies with vendors that some well-entrenched players have gained success with?

6. Which are the key perspectives that the C-suite are leveraging to move businesses to new growth trajectory?

7. Which government regulations might challenge the status of key regional markets?

8. How will the emerging political and economic scenario affect opportunities in key growth areas?

9. What are some of the value-grab opportunities in various segments?

10. What will be the barrier to entry for new players in the market?

Note: Although care has been taken to maintain the highest levels of accuracy in TMR’s reports, recent market/vendor-specific changes may take time to reflect in the analysis.

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Power Purchase Agreement Market

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