How Yorkshire businesses can benefit from local renewable energy projects: Deborah Harvey

At the same time, larger businesses are increasing their focus on their corporate sustainability commitments and power procurement is a fundamental part of this.

The questions will be twofold: how do we buy our power and where does it come from?

One solution I’m seeing gaining traction amongst the business community is buying power from a renewable energy project under a Corporate Power Purchase Agreement (CPPA).

Over the last decade, Yorkshire and the Humber has become home to an increasing number of renewable energy projects.

This is an exciting development for the region and presents a real opportunity for businesses in Yorkshire to not only find a greener source of power, but also partner with a local project.

So, what exactly is a CPPA?

Simply put, it’s a contract between a business and a renewable electricity generator to buy power.

Under the contract, the business purchases electricity generated by a specific renewable energy project, such as a wind farm or a solar farm.

This is different from the traditional method by which businesses normally buy power, through a licensed electricity supplier who will in turn source that power from a vast portfolio.

A CPPA establishes a direct contractual relationship between a business and a renewable energy project and is typically a much longer agreement than an arrangement with a licensed supplier, allowing for price certainty over a longer term.

So, why should Yorkshire businesses consider a CPPA?

CPPAs offer an element of price stability.

Businesses can agree on a fixed price for a portion of or all total energy demand, providing more certainty on outgoings and shielding the business from future price hikes over the term of the contract, which often spans 10 or 15 years.

CPPAs are also an opportunity for a business to boost its green credentials by supporting the development of a renewable energy project.

With increasing regulatory and reputational pressures to disclose and reduce carbon footprints, purchasing power directly from renewable energy projects can reduce a business’s energy related emissions.

There are different ways to structure CPPAs, depending on the commercial drivers for the arrangement, business needs, and the type of project that is providing the electricity.

At Freeths, we’ve seen a range of businesses embrace CPPAs including manufacturing businesses, logistics providers and international retailers.

I’d encourage CPPAs as an option for Yorkshire businesses looking for long-term price certainty and a way to align their energy use with sustainability commitments.

Deborah Harvey is Clean Energy Partner at national law firm Freeths