LDES Council Report Highlights Potential for New Type of Power Purchase Agreement to Accelerate Decarbonization of Electricity Consumption

10 May 2022 - Brussels — Today the released a report identifying a new mechanism with the potential to intensify emissions reduction efforts. Widespread adoption of so-called 24/7 clean Power Purchase Agreements (PPAs) would enable power producers to reduce the need for fossil fuels in balancing supply and demand, and thus accelerate decarbonization efforts by global producers and consumers of electrical power. “24/7 clean PPAs provide a form of time-matched clean power, a highly desirable commodity for corporates looking to reduce their Scope 2 greenhouse gas emissions,” the report declares.

“This latest report is critical to share with organizations responsible for bringing clean energy technologies to consumers,” said LDES Council Executive Director Julia Souder. “24/7 clean Power Purchase Agreements are integral to how we get to net zero decarbonization targets in the future, and long duration energy storage is positioned to be at the forefront of successful adoption of 24/7 clean PPAs. There’s opportunity for hybrid renewable and storage implementation to bridge the reliability gap, leading to a more resilient and reliable clean energy future.”

The LDES Council is a global executive-led organization formed to accelerate worldwide decarbonization through the deployment of long duration energy storage technologies. Today’s report is the exploring the various challenges involved in decarbonizing the power sector and the investments and technologies required to resolve them.

Corporate PPAs are legally-binding long-term contracts between a seller and a buyer, or off-taker, that define all the commercial terms for the purchase of electricity.Renewable PPAs have helped to unlock private investment into new clean generation capacity by ensuring bankability of generation plants and helping off-takers meet emission-reduction targets.

The new report, however, shows that today’s pay-as-produced renewable PPAs, which account for supply and demand on an annual basis, only achieve 40–70% decarbonization of the off-taker’s actual electricity consumption while exposing off-takers to market price risks stemming from renewables variability.

The report details how 24/7 clean PPAs could offer a more precise means of matching supply and demand as renewables contribute an increasing share of global generation capacity. Measuring electricity consumption and greenhouse gas emissions by the hour creates a basis for using hybrid energy sources to balance the power system. The use of renewables and energy storage is a prime example of a hybrid energy source. Adoption on a large scale could eliminate the need for marginal fossil fuel plants to fill gaps in power supply created by the inherent variability of wind and solar power.

Current barriers to wider adoption of 24/7 clean PPAs include higher cost compared to average power market prices and a lack of agreed standards. But the report says these can be overcome. On cost, it says

The report suggests measures to accelerate adoption, including the establishment of a global, standardized quality assessment framework allowing for different levels of decarbonization. This would establish a pathway to 24/7 clean PPAs with increasing levels of clean supply-demand matching.

Quality ratings would be officially certified by an independent organization based on up-front assessment on transparent criteria and then, potentially, validated on an ongoing basis based on the actual level of supply-demand matching. Other measures to drive wider adoption would include optimization of the technology mix, and the development of a more transparent data ecosystem for real-time tracking of clean electricity consumption.

“While there are many obstacles to overcome, the key message of this report is that this is an entirely feasible task, that long duration energy storage is a key enabler, and that the prize of effective power decarbonization is well worth the effort,” the report concludes.

LDES Executive Director Julia Souder will moderate a panel on clean PPAs at the Clean Energy Buyers Association (CEBA) Spring Summit May 16-18 in Detroit, Michigan. LDES Council members on the panel include Breakthrough Energy, Malta, Microsoft, and Ørsted.

A webinar on the report will be held on Thursday May 12, with two times available to register:

APAC/EMEA-friendly session, 10:30-11:30 CET, Thu 12th May

Americas/EMEA-friendly session, 15:30-16:30 CET, Thu 12th May


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About the LDES Council

The LDES Council is a global, executive-led non-profit membership organization, comprising technology providers, equipment providers, renewable energy companies, utilities, grid operators, investors, and end-consumers. It strives to accelerate decarbonization of the energy system at lowest cost to society by driving innovation, commercialization and deployment of long duration energy storage. The LDES Council provides fact-based guidance and information to governments, industry and broader society, drawing from the experience of its members which include leading energy companies, technology providers, investors and end-users. To learn more: .

Media Contact:
Larissa Fair, Director of Communications, North America
lfair@ldescouncil.com