A PPA from Encavis
makes ecological and economic sense

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What exactly is a PPA?

Power Purchase Agreements

PPA stands for ‘Power Purchase Agreement’. Basically, a PPA is a long-term supply contract. As the renewables revolution progresses, the demand for green electricity is rising. However, generating green electricity is a complex business that requires intricate planning. A PPA establishes a long-term relationship between the seller and the buyer. The power plant operator (seller) and the electricity consumer (buyer) agree on terms and conditions for delivering an agreed amount of electricity for an agreed price over an extended term.

Your advantage – corporate PPAs with Encavis

Stable terms and conditions

A PPA enables you to avoid price fluctuations and budget more accurately because the kilowatt price remains the same throughout the entire term of the contract.

Achieve your regulatory environmental goals

From an environmental point of view, PPAs are valuable because they account for regional conditions and also include certificates of origin.

Reducing your carbon footprint

Entering into a PPA is a great way of transitioning to planet-friendly green electricity long-term and significantly reducing your carbon footprint.








 TWh power production
per annum


Corporates and utilities

Physical or virtual?

The advantages of a physical PPA

A physical PPA is a contract with a multi-year term. Here we agree to deliver renewable energy directly through the grid from one of our solar parks or wind farms to an end customer. In addition, certificates of origin will generally be issued with a physical PPA. Physical PPAs can be structured in several different ways. The first option is known as a ‘sleeved PPA’. Here, a trilateral agreement is drawn up between three parties, namely, the customer, Encavis and a supply company. Encavis generates the power and delivers it to the customer via the power grid of a utilities company. Another option is an on-site PPA. Here the electricity is delivered directly from an on-site source and not via the public grid, which eliminates the fees for using the public grid. Alternatively, customers can opt for an off-site PPA. In such cases, the electricity generated is accepted on the balance sheet and delivered via the public grid and invoiced via the supply networks involved.

The advantages of a virtual PPA (VPPA)

A virtual PPA, sometimes known as a financial PPA, is a bilateral contract with a multi-year term that does not include the physical delivery of green electricity to the customer. The electricity generated by the solar park or wind farm is traded on an electricity exchange. Customers are free to choose their own supply company and will also ideally purchase their electricity on electricity exchanges. In such cases, the PPA fixes the price for both parties to aid long-term planning. VPPAs can also include certificates of origin where requested.

Infrequently Asked Questions

At the end of the day, the two options are very similar. The primary difference is that electricity is not delivered physically in a virtual PPA. Instead, the customer receives certificates of origin, and each of the contract parties compensates the other financially for the difference between the current market value of the electricity and its value when the contract was signed. This is also known as a CFD (‘contract for difference’).

In essence, a virtual PPA can thus be regarded as price hedging.

Volume and price structures can be negotiated individually in both cases (PPA and VPPA) to optimise the benefits for both contract parties.

A virtual PPA is perfect for hedging prices long-term in cases where the price of the retail contract for physical delivery is tied to the market price. If a customer opts for a PPA without adjusting their fixed price contract for physical delivery, the price hedging effect is limited.

In some cases, the PPA will exactly match the size of the project and your electricity consumption profile. However, in the case of a large project, the volume of electricity sold by a PPA may not cover all your annual electricity requirements. Thankfully, PPAs can be designed very flexibly in such cases, whereby the end result will depend on the customer’s needs and how much risk they are willing to take.

Yes. A PPA will include a period of grace in case the start date is delayed. If the seller is responsible for the delay, the buyer will receive compensation for the delay. If operations fail to begin once the period of grace expires, the buyer is entitled to withdraw from the contract.                                                   

Would you like to enter into a PPA? Here’s how it works.

Contact and project matching

Contact us and tell us about your company. Ideally, you should provide us with details about your annual electricity requirements and your load profile in recent years. Based on your annual consumption and your load profile, we’ll match the volume you require with one or more of the projects in our portfolio. In general, the projects we match you with will still be in the development phase.

Structuring the project

Together we’ll structure a PPA that matches the needs of both parties. This is where we discuss details such as pricing, the start date, and whether the PPA is to be physical or virtual.

Negotiating the term sheet and contract

Once the basic structure is in place, we get down to the nitty gritty and create a term sheet (contract) to finalise our agreement.

Construction and operational phase

Once the construction phase is underway, we’ll give you regular progress reports so you can monitor how the project is coming along. Then, as soon as the plant begins operating, you’ll be given access to the project’s monitoring system where you can also access its production data.

Get in Touch

Do you have any questions?

No matter where you are on your journey to green power, we're here to help.

Martin Scharrer

Head of PPA Origination

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We are Encavis

Encavis, an MDAX-listed company that trades on the Frankfurt Stock Exchange, is an IPP that generates electricity from renewable energy sources. As a leading independent electricity producer, we acquire and operate solar parks and wind farms across Europe. Our parks and farms help to safeguard a reliable supply of clean energy.                                 

We take responsibility for sustainability

Our core business – generating energy from renewable sources – lays the groundwork for a flourishing future. So does our sustainable business approach.

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