What Is a Power Purchase Agreement (PPA)?

The PPA is the contract that gets clean energy projects financed. A creditworthy buyer — a utility, or increasingly a corporation — commits to purchase a project's output at a fixed or indexed price for a decade or more. That committed revenue stream is what banks lend against; without an offtake agreement, most utility-scale projects cannot raise construction capital.

Corporate PPAs have become a defining force in US development, with hyperscale data center operators the largest buyers: Amazon, Microsoft, Google, and Meta together hold the overwhelming majority of tracked corporate clean energy contracts. Physical PPAs deliver actual power; virtual PPAs (VPPAs) are purely financial, settling the difference between contract and market prices while the buyer keeps the RECs.