Currently, the majority of UK businesses buy their energy through an outdated wholesale market that leaves them facing hidden fees, volatility, poor service, and no guarantee of renewable energy. It’s no wonder, then, that businesses are finding new ways to source their power!

So, what alternatives to the wholesale energy market are available for businesses looking to support the renewable energy transition today?

An obvious solution is to transact directly with renewable generators themselves. You’ve probably heard of Corporate Power Purchase Agreements (PPAs), which let businesses set up contracts directly with clean energy producers. But because these agreements come with high upfront costs and complex negotiations, they’re only really an option for the biggest companies with the biggest budgets (think Amazon and Google) and don’t work for 99% of British businesses today.

Here we’ll dive into Corporate Power Purchase Agreements – how they work, their limitations, and how RED offers a simpler, more affordable way for businesses to access clean energy directly.

What are Corporate Power Purchase Agreements?

A Corporate Power Purchase Agreement (CPPA) is a long-term contract, typically drawn up between a business and a renewable energy generator, such as a wind or solar farm. 

In this agreement, the business agrees to purchase its electricity directly from the generator at a fixed price for a set period of time, which can be up to 20 years.

Large, energy-intensive corporations are among the biggest users of CPPAs, especially those aiming to reduce their carbon footprint and meet sustainability goals. Examples include Google and Amazon. 

What are the benefits of Corporate Power Purchase Agreements?

Power Purchase Agreements come with some great benefits for businesses. They let companies lock in electricity prices for the long-term, helping them avoid price fluctuations in the energy wholesale market and see overall cost savings.

What’s more, by buying energy directly from a generator, businesses can be sure that the energy they are using truly is renewable. Plus, PPAs allow businesses to actively support renewable energy projects and be a part of the clean energy movement.

However, these benefits are usually more accessible for larger companies since CPPAs can be complicated to set up and involve a much bigger financial commitment than regular energy contracts from a utility company.

What are the drawbacks of Corporate Power Purchase Agreements?

Because CPPAs are such a big commitment, we’re talking 10-20 years of energy supply! These agreements often run to hundreds of pages, take months to negotiate and can be difficult for businesses to navigate without legal and financial expertise.

Setting up a CPPA can also be very expensive, in some cases costing hundreds of thousands of pounds, which can be a barrier for smaller businesses.

What’s more, because the business needs to be able to buy all of the energy that a generator produces, it only works for really large businesses with huge amounts of energy usage. And even then, it’s very difficult to match a single business’s consumption with a renewable generator’s output exactly.

This is fine if you’re a megacorporation with big energy consumption and deep pockets – but what about the other 99% of businesses? 

Most businesses don’t have the resources to navigate the maze and are often left with no options for accessing true renewable energy sources. After all, net zero cannot be solely the responsibility of global corporations; it should be and must be a task for all.

How is Renewable Energy Direct different?

Renewable Energy Direct (RED) is an alternative to buying and selling energy through the wholesale market, offering improved prices for businesses, with up to 25% savings, and putting more money into the pockets of renewable generators too. 

You essentially get the renewable energy certainty of a Corporate Power Purchase Agreement, but with no upfront costs, more flexibility, more predictability and it's available to businesses of any size.

So, how does it work? 

Well, it’s all down to the RED matching engine, which creates a personalised energy profile for a business based on its historic usage.

It then takes this information and evaluates trillions of possible matches within our portfolio of generators to find their optimal energy match.

Unlike CPPAs, this isn’t a peer-to-peer transaction. Instead, any one business can be matched with multiple different generators. For example, a business on RED might be powered by a combination of anaerobic digestion, wind, or solar energy sourced from various locations across the UK. We call this many-to-many matching.

And we don’t stop matching after a business joins. With every new business or generator that enters the RED platform, our matching engine automatically re-optimises and re-matches businesses with the generators available – getting them even better matches and a better energy balance without needing to do anything. 

However, the price businesses pay and generators get is fixed throughout their contract, so there’s no risk of energy price hikes. Just a flexible, affordable way for businesses of any size to access renewable energy directly. 

A bright RED future

Renewable Energy Direct (RED) reduces costs on every energy bill, makes it possible to trace every half-hour of energy purchased and see every step of your energy transaction.

At the other end, RED also puts more money back into the pockets of renewable generators, incentivising investment in the sector. You can calculate exactly how much of your money is going to renewable generators, and exactly which generators it is going to.

At tem., we're committed to enabling any business to run on affordable renewable energy that is traceable down to the kilowatt-hour. If you are ready to switch to RED, get started here today.