A power purchase agreement (PPA) is a long-term contract in which a buyer agrees to purchase electricity, or the financial value of electricity, from a specific generating project at a price set years in advance. The seller usually owns a wind farm, solar park or power station; the buyer is a utility or, increasingly, a large corporation. It exists because power plants are expensive to build and cheap to run: a developer holding a signed offtake can borrow against it, while the buyer gains price certainty and, in most clean energy deals, the right to count the output in its emissions reporting.

The companies that run the largest ad businesses - Alphabet, Meta, Amazon and Microsoft - are also the largest corporate buyers of clean electricity, and their AI systems run in data centres that PPAs increasingly underwrite.

How the contract works

Two structures dominate. In a physical PPA, power is delivered over a private wire or through the grid, often with a utility "sleeving" the volumes into the buyer's account, a common European arrangement. The buyer pays the contracted price per megawatt-hour (MWh).

In a virtual PPA (VPPA), also called a financial or synthetic PPA, nothing physical changes hands. According to the US Environmental Protection Agency (EPA), the generator sells into the wholesale market as usual and the two parties settle the difference between an agreed strike price and the market price, typically monthly. Below the strike, the buyer pays the generator; above it, the generator pays the buyer. The buyer still takes power from its utility; the VPPA hedges that bill.

In an illustrative case, a 100-megawatt (MW) solar farm at a 25% capacity factor produces roughly 219,000MWh a year. With a strike of $60/MWh and wholesale prices averaging $50, the buyer pays about $2.2 million; at $75, the generator pays the buyer about $3.3 million. Corporate contracts typically run 10 to 20 years.

Other clauses allocate risk. A pay-as-produced contract leaves the buyer with whatever the plant generates, while a baseload contract obliges the seller to deliver a fixed profile. Basis risk arises when prices at the project's grid node differ from those where the buyer consumes.

The element that matters most for marketing claims rides alongside the power. Each MWh of renewable generation creates an energy attribute certificate: a renewable energy certificate (REC) in North America, a guarantee of origin (GO) in the European Union. According to the EPA, a customer must own the RECs to claim green power use. Those certificates feed the Scope 2 line of a company's greenhouse gas inventory, which covers emissions from purchased electricity. Since the Greenhouse Gas Protocol's 2015 Scope 2 Guidance, companies have reported two figures: a location-based number using the average emissions of the grid they draw from, and a market-based number reflecting contracts and certificates. A company with enough PPAs can report market-based Scope 2 emissions near zero while its location-based figure stays large.

From PURPA to the hyperscalers

The modern PPA descends from the Public Utility Regulatory Policies Act of 1978 (PURPA). According to the Federal Energy Regulatory Commission (FERC), PURPA created "qualifying facilities" - small renewable plants of 80MW or less, and cogeneration plants - with the right to sell to utilities at the utility's "avoided cost", the incremental cost it would otherwise incur. Those contracts became the template for financing independent power.

Corporate buying arrived three decades later. On July 20, 2010, Google Energy signed a 20-year contract for 114MW from a NextEra Energy Resources wind farm in Iowa, according to TechCrunch. Its 2026 Environmental Report, published on June 30, 2026, counts more than 240 agreements for nearly 35 gigawatts (GW) of net-new clean energy between 2010 and 2025, over 12GW of it signed in 2025.

Deal sizes grew with data centres. In May 2024, Brookfield and Microsoft announced a framework for more than 10.5GW of new renewable capacity. Nuclear followed. On September 20, 2024, Constellation signed a 20-year PPA with Microsoft to restart Three Mile Island Unit 1, renamed the Crane Clean Energy Center, for about 835MW from 2028. On June 3, 2025, Constellation and Meta agreed a 20-year contract for 1,121MW from the Clinton plant in Illinois, starting in June 2027 when the state's zero emission credit programme ends. Eight days later, Talen Energy and Amazon announced a 17-year, $18 billion arrangement for up to 1,920MW from the Susquehanna plant, according to POWER magazine.

BloombergNEF (BNEF) reported on February 19, 2026 that corporations signed 55.9GW of clean power deals in 2025, down 10% from the previous year's record. Four technology buyers took 49%, and Meta and Amazon together signed 20.4GW, including 4.7GW of nuclear. "Corporate clean energy buyers are operating at two different speeds," said Nayel Brihi, the BNEF analyst who led the report.

Why advertising has a stake

The first link is cost. Ad revenue funds the AI build-out, and power is its scarcest input. Meta's Prometheus campus in Ohio, targeted at more than 1GW, would use roughly the energy of 750,000 homes. In February 2026 Meta broke ground on a 1GW, $10 billion-plus site in Lebanon, Indiana, pledging to match its use with clean energy. It reports having contracted over 15GW of new clean energy globally. PPC Land's examination of AI infrastructure costs cited International Energy Agency projections of 945 terawatt-hours (TWh) of data centre demand by 2030. In Europe the grid is the constraint: in the Netherlands, more than 11,900 businesses were waiting for connections.

The second link is measurement: media carbon tools estimate emissions per impression from the electricity factors of data centres and networks. A September 2025 white paper from IAB Italia put the internet's share of global electricity at 10%. Scope3 measurement reached buyers through Adform in March 2024 and became the default in Teads Ad Manager in June 2024. The Global Media Sustainability Framework (GMSF), launched by GARM and Ad Net Zero in June 2024, underpins IAB Europe's OpenGHG tool. Scope3 aligned its model with GMSF version 1.2 from October 1, 2025. Whether PPA-backed market-based factors or grid averages enter those models changes the result, including for TikTok, which aims to source 100% renewable electricity by 2030.

The third link is claims, since "powered by renewable energy" is advertising copy. Directive (EU) 2024/825 has applied since September 27, 2026 and bans claims that a product has a neutral, reduced or positive climate impact based on offsetting, according to Climate Focus. The separate Green Claims Directive stalled on June 20, 2025, when the Commission said it intended to withdraw it, according to De Brauw. In the UK, the Competition and Markets Authority published its Green Claims Code in 2021 and can now fine up to 10% of global turnover under the Digital Markets, Competition and Consumers Act, according to Weil.

Disputes over what a PPA proves

Annual versus hourly matching. Most "100% renewable" claims match a year of consumption against a year of certificates, though a solar PPA produces at noon and a data centre also runs at 3am. Google set a goal in September 2020 of running on carbon-free energy every hour by 2030, according to CNBC, yet its 2026 report still leads with annual matching, achieved for a ninth year.

Reported versus grid emissions. A Guardian analysis in September 2024 estimated that 2022 emissions from the in-house data centres of Google, Microsoft, Meta and Apple were about 7.62 times higher on a location-based basis than reported, according to Impakter. For Meta, 273 tonnes reported became 3.8 million tonnes. Jay Dietrich, research director of sustainability at the Uptime Institute, said location-based accounting "gives an accurate picture of the emissions associated with the energy that's actually being consumed."

Additionality. A contract with an existing plant adds no new clean megawatt. Constellation chief executive Joe Dominguez framed keeping Clinton open as a way to "stop taking steps backwards"; sceptics count it as no new supply. Restarts such as Crane sit in between. Co-location raised grid-cost concerns: FERC rejected an expanded interconnection arrangement for Amazon's Susquehanna campus in November 2024, and the deal was restructured to run through the grid, according to POWER. PPC Land also noted that Indiana's substantial coal generation raises questions about Meta's Lebanon matching pledge.

Not the same as

REC or guarantee of origin. A tradable certificate for 1MWh of renewable generation. A PPA usually bundles certificates with a price contract.

Carbon credit. An offset for a tonne of emissions avoided or removed elsewhere, outside Scope 2 accounting.

Utility green tariff. A shorter retail product in which the utility, not the customer, holds the project contract.

Hyperscaler and inference. A hyperscaler operates cloud-scale data centres and is often the buyer; inference is the AI workload whose electricity the contracts cover.

Recent developments

Accounting is the open question. The GHG Protocol opened a consultation on October 20, 2025 on requiring hourly matching and deliverability for certificate-based Scope 2 claims, with exemptions for smaller users. Its summary of July 29, 2026 recorded nearly 1,100 responses from 56 countries and low support among companies for both proposals, and the Independent Standards Board sent the approach back for further work. Google backed the changes publicly, according to InfluenceMap; Amazon and Meta, members of the Emissions First Partnership, did not respond publicly.

LevelTen Energy's North American index, published on July 21, 2026, showed solar PPA prices down 4.8% in the second quarter and wind up 17.5% year on year.

Today, Meta's infrastructure chief Santosh Janardhan said the company has contracted 6.5GW of nuclear power through 2035, saying Meta prefers adding generation to the grid and calling it the largest non-government nuclear buyer, a ranking the interview did not source.

Timeline

  • 1978 - Congress passes PURPA, obliging utilities to buy from qualifying facilities at avoided cost.
  • February 2010 - Google Energy wins federal approval to buy and sell power.
  • July 20, 2010 - Google signs a 20-year, 114MW wind PPA with NextEra Energy Resources in Iowa.
  • 2015 - GHG Protocol Scope 2 Guidance introduces dual location-based and market-based reporting.
  • September 14, 2020 - Google sets a 24/7 carbon-free energy goal for 2030.
  • 2021 - UK Competition and Markets Authority publishes its Green Claims Code.
  • February 28, 2024 - Directive (EU) 2024/825 on empowering consumers for the green transition is adopted.
  • May 2024 - Brookfield and Microsoft announce a framework for more than 10.5GW of renewable capacity.
  • June 2024 - GARM and Ad Net Zero launch the Global Media Sustainability Framework.
  • September 2024 - Guardian analysis puts big tech data centre emissions at 7.62 times reported levels on a location-based basis.
  • September 20, 2024 - Constellation and Microsoft sign a 20-year PPA to restart Three Mile Island Unit 1.
  • November 2024 - FERC rejects an expanded interconnection arrangement for Amazon's Susquehanna campus.
  • April 2025 - UK consumer enforcement powers under the Digital Markets, Competition and Consumers Act take effect.
  • June 3, 2025 - Constellation and Meta sign a 20-year, 1,121MW nuclear PPA for the Clinton plant.
  • June 11, 2025 - Talen and Amazon announce a 17-year, $18 billion deal for up to 1,920MW.
  • June 20, 2025 - European Commission announces its intention to withdraw the Green Claims Directive proposal.
  • October 20, 2025 - GHG Protocol opens its Scope 2 consultation on hourly matching and deliverability.
  • January 31, 2026 - Scope 2 consultation closes after an extension.
  • February 19, 2026 - BNEF reports 55.9GW of corporate clean power deals in 2025, down 10%.
  • June 30, 2026 - Google reports over 12GW of new clean energy agreements in 2025.
  • July 21, 2026 - LevelTen reports Q2 2026 solar PPA prices down 4.8% in North America.
  • July 29, 2026 - GHG Protocol publishes its summary of Scope 2 consultation feedback.
  • September 27, 2026 - EU ban on offset-based climate neutrality claims applies.
  • October 11, 2026 - Meta's infrastructure chief cites 6.5GW of contracted nuclear power through 2035.

Summary

Who: Generators and developers on the sell side; utilities and large corporations on the buy side, led by Meta, Amazon, Google and Microsoft. FERC, the GHG Protocol, EU institutions and the UK Competition and Markets Authority set the surrounding rules.

What: A long-term contract, physical or financial, to buy a specific project's electricity or its price exposure at a fixed rate, usually bundled with energy attribute certificates used for Scope 2 emissions claims.

When: Rooted in PURPA in 1978, adopted by corporations from Google's first deal on July 20, 2010, and reshaped by AI-driven demand and nuclear contracts from 2024. Accounting rules remain under revision as of October 2026.

Where: Wholesale power markets in North America, Europe and Asia Pacific, with the US recording 29.5GW of corporate deals in 2025 according to BNEF.

Why: Developers need contracted revenue to finance plants, buyers want price certainty and emissions claims, and ad platforms need power for AI data centres while their sustainability numbers feed advertising carbon tools and green claims rules.