What is a data centre PPA?

A PPA (Power Purchase Agreement) is a long-term contract where a data centre operator agrees to buy electricity directly from a renewable energy generator — typically a wind or solar farm — at a fixed price for 10-25 years. Hyperscalers are the biggest PPA buyers: Microsoft has contracted 19+ GW of renewable energy, Amazon 25+ GW, and Google 12+ GW. PPAs serve two purposes — they lock in predictable power costs (typically $30-60/MWh) and satisfy corporate sustainability commitments. Two structures dominate: physical PPAs (power is delivered directly via the grid) and virtual/financial PPAs (a contract-for-differences hedge where physical delivery is separate). For data centre operators, signing a PPA of 50 MW+ often accelerates utility interconnection because it demonstrates credit-worthy, long-term demand.