North American PPA market will grow at a compound annual growth rate of 16% through 2031, says Guidehouse Insights

Colorado — Guidehouse Insights released a new report that analyzed annual corporate power purchase agreement (CPPA) deals in terms of power capacity (MW) and project deployment spending.

The report focuses on the key market trends in five world regions—North America, Europe, Asia Pacific, Latin America, and Middle East & Africa—and identifies the top 5 markets across those world regions.

Falling renewable energy (RE) technology costs, increasing consumer tariffs, and stringent climate goals have led to the emergence of the power purchase agreement (PPA) market.

In the energy transition, the decentralization of power systems and the unbundling of power system services have enabled new revenue streams for energy asset owners, particularly those with higher RE technologies in their portfolios.

According to a new report from Guidehouse Insights, with its head start in the CPPA market, North America currently leads the global market with an estimated capacity of 18,888.9 MW, which is expected to jump to 72,567.9 MW in 2031 at a CAGR of 16.1%.

“The PPA concept developed when private and public institutions began bypassing the utility companies to purchase energy directly from independent power producers,” says Rohith Unni, research analyst with Guidehouse Insights. “Private organizations have become proactive in reducing their carbon footprints without compromising their business operations. As a result, the role of RE in a company’s energy strategy has been raised from a technical exercise to a strategic and commercial priority.”

As private companies’ primary motivations begin encompassing better economics with long-term price visibility, sustainability through emission reduction, and climate leadership, they have increased their renewable electricity procurement.

Although corporations see the corporate power purchase agreement as a strong alternative for RE procurement, the complex process and non-standardized structure leave them dependent on external sources to understand the risks and rewards involved, according to the report.