How PPAs Shape the Future of Renewable Energy

As the world is on its path toward a sustainable future, the United States stands at the forefront of the net zero transition. One of the key drivers behind the green energy transformation is the widespread adoption of Power Purchase Agreements (PPAs). Patrick Pfeiffer, Head of Statkraft US, discusses the role of PPAs in shaping the renewable energy landscape.

PPAs: A Cornerstone of Renewable Development

PPAs are an established instrument in the US renewable energy market. These agreements provide revenue certainty for new development projects, allowing generators to plan and invest with confidence. But how common are upstream and downstream PPAs, and how have they evolved over the past two years?

“PPAs have been widely used to support revenue certainty for new renewable development projects in the US,” Patrick Pfeiffer explains. “However, recent legislative changes have amplified their importance.”

The Inflation Reduction Act (IRA), passed recently, has ushered in a new era for renewable installations, he adds: “As the demand for clean energy grows, so does the need for credit-worthy hedge providers like Statkraft. We play a crucial role in ensuring that renewable projects receive the necessary long-term certainty, needed to thrive in a competitive market.”

The Net Zero Imperative: Why PPAs Matter

“Renewable energy PPAs provide a pathway to a net zero future,” Patrick emphasizes. “They are essential for generators, end users, and society as a whole.” But why does the US need PPAs to achieve net zero goals? Patrick breaks it down:

a. Enabling Financing for Generators

“For most generators, securing bank financing hinges on having a credit-worthy buyer for the energy they will produce. Statkraft, currently A-rated, fits the bill. PPAs signed by Statkraft allow developers to secure and unlock other traditional project finance avenues necessary to build and operate renewable projects. Without these agreements, investments in renewable energy assets and thus the transition to net zero would face significant hurdles.”

b. Empowering End Users

“To be truly net zero, end users must consume electricity with zero emissions or offset their consumption’s environmental impact – enter the renewable energy PPA. By partnering with Statkraft, end users gain access to clean electricity, allowing them to meet regulatory obligations and fulfil net zero pledges. It’s a win-win scenario for both sustainability and business objectives. Given the often lengthy terms of the transactions, consumers want to be assured they will receive their product—having been around for almost 130 years certainly helps provide the necessary comfort.”

Golden Gate Bridge in front of surrounding landscape

Statkraft in the US: A dynamic player, expanding horizons

Statkraft US LLC, founded in 2015, is a dynamic player in the American energy sector. Our headquarters in San Francisco, California, and our Stamford, Connecticut office drive our mission forward.

To bridge the gap between renewable developers, utilities, and commercial and/or industrial customers, Statkraft in the US offers:

  • Customized Hedges for Carbon and Renewable Projects: At Statkraft, we understand that unlocking financing for projects is critical. That’s why we offer customized hedges tailored to each project’s unique needs. Whether it’s a vanilla or complex offering, our goal is to empower developers and accelerate the transition to clean energy.
  • Focused Expansion: PJM and Beyond: Our eyes are set on the region with the greatest demand: PJM. In 2024 and 2025, we’re committed to expanding our footprint to additional Independent System Operators (ISOs). The energy landscape is evolving, and Statkraft is seeking to actively shape this change.

Our journey in the US

  • Carbon to RECs: Initially focused on North American carbon markets, we expanded our portfolio in 2020 to include Renewable Energy Credits (RECs)—essential for compliance with statutory laws in many US states. 
  • Cap and Trade Influence: SKUS is one of the most active participants in California’s Cap-and-Trade market, one of the key elements in the state’s strategy to reduce greenhouse gas emissions.  
  • REC Transactions Nationwide: Collaborating with renewable energy developers, we facilitate long-term REC purchases. These RECs benefit end users and contribute to a greener future.
  • Power and Gas Trading: Our second office, established in 2021, hosts our shorter-term power and gas trading activities.
  • No Assets, All Impact – While we don’t own physical assets in the US, our influence extends far and wide. Collaborating with generators and market players, we drive toward a cleaner energy future. Looking ahead, Statkraft US is exploring an expansion of the products it transacts to correlated markets in its existing suite, including CA LCFS, RINs, Capacity, and various opportunities under the IRA.

Fostering Talent and Growth at Statkraft US: It’s all about the people

Patrick Pfeiffer captures why Statkraft US was able to grow their activities in such a short time: “Statkraft in the US operates like a nimble start-up within the broader Statkraft organization. This unique structure fosters a collaborative, all-hands-on-deck atmosphere where fresh ideas are not only welcomed but actively encouraged. Our colleagues benefit from this dynamic environment while also enjoying the support and stability provided by the well-established and well-funded Statkraft organization.” 

Employees can be at the forefront of industry developments, contributing to the renewable energy landscape in meaningful ways. Pfeiffer underscores the opportunities for internal mobility and professional development within the organisation: “Recently, one of our SKUS employees was asked to step up and lead the global Statkraft Trading organization. This remarkable feat shows the caliber of talent we nurture and the confidence we place in our team. We’re not just building a business – we are fostering a dynamic ecosystem of talent, innovation, and excellence.”

Patrick Pfeiffer

Patrick Pfeiffer

Head of Statkraft US

Patrick Pfeiffer is Managing Director of Statkraft’s operations in the United States, based in San Francisco, California.