PPA (Power Purchase Agreement)

A PPA (power purchase agreement) is a long-term contract — typically 10-20 years — under which a buyer commits to purchase electricity from a specific generation project at agreed prices. Data center operators are among the world's largest corporate PPA buyers, using them to lock in power costs and claim renewable energy for sustainability targets: Amazon, Microsoft, Meta, and Google have each contracted many gigawatts of wind, solar, and increasingly nuclear capacity. Physical PPAs deliver actual power; virtual PPAs (VPPAs) are financial contracts settling against market prices while the buyer receives renewable energy certificates. PPAs also help new generation get financed, since long-term offtake de-risks construction. In the AI era, PPAs extend to firm 24/7 sources — nuclear restarts and geothermal — because data centers need constant, not intermittent, power.