Renewable power purchase agreements (PPAs) explained

What is a PPA?

A power purchase agreement (PPA) is a contract between energy buyers and sellers for a set amount of energy generated by an existing or planned renewable asset, such as a solar or wind farm. PPAs are typically signed for long-term periods between 10 – 15 years.

PPA benefits

PPAs offer Vodafone long-term, cost-effective solutions for sourcing renewable electricity. Contracts are signed directly with suppliers – usually operating solar farms or wind power plants – and provide us with long-term certainty around things like energy output and pricing.

Supporting renewables

PPAs help us support the development of renewable energy generation in the markets where we operate. Where possible, we focus on signing deals with renewable energy generators that own, or are planning to build, physical assets (solar panels, wind turbines) in those markets.

The benefit for renewable energy generators is that we, as a credible long-term customer, provide income certainty for the duration of the contract. This can help generators secure finance to develop their projects, which in turn should lead to more renewable energy projects being implemented. This is known as ‘additionality’ – where a company supports the development of truly new renewable energy sources.

The path to net-zero

We are committed to fully abating carbon emissions from our own activities, and from the energy we purchase and use, by 2030 (Scope 1 and 2). In that time frame we will also aim to halve carbon emissions from Scope 3 sources, including our joint ventures, supply chain purchases and business travel. By 2040, we will have abated our Scope 3 emissions completely and reached net-zero across our entire carbon footprint.

In Europe, 100% of the grid electricity we use is matched with renewable energy certificates. We are working to achieve the same in our African markets by 2025. PPAs are a central pillar of that strategy – by 2030, we aim to procure 20 – 40% of our total renewable electricity consumption through these contracts.

An emerging solution

While PPAs are becoming more commonplace in corporate renewable electricity challenges, they are still an emerging solution, and some markets are further ahead than others in terms of their ability to deliver them.

For example, we have signed significant PPA deals in the UK and in Spain. These have been complemented with on-site renewable power generation (e.g. solar panels installed at Vodafone sites).

‘Smartflower’ solar solutions have been installed at our sites in Spain and the UK

The situation is more complicated in other markets, such as Egypt and South Africa, where we are engaging with regulators and others in the energy market to begin establishing renewable power agreements.