What is PPA (Power Purchase Agreement)?
A PPA (power purchase agreement) is a long-term contract in which a buyer commits to purchase power from a specific generation project, usually for 10–25 years. A signed PPA with a creditworthy buyer is what makes a power project financeable — it typically precedes FID and construction start. PPA announcements name the buyer, the project, and the capacity, making them dense BD signals.
In the power sector, the PPA is the commercial engine of construction: nothing gets financed, and therefore nothing gets built, without a committed buyer for the output. BD teams read PPA announcements the way credit analysts read loan commitments — a long-term contract with a creditworthy offtaker (a utility, a hyperscaler, an industrial user) means the project can reach financial close and FID.
Example: a solar developer announces a multi-hundred-megawatt PPA with a large corporate buyer for a named project in a named county. That single announcement confirms the project's location, capacity, and commercial viability — and starts the countdown to EPC selection, since construction must deliver by the PPA's commercial operation date.
For contractors, PPAs are ranking signals. A queued project with no offtake is speculative; the same project with a signed PPA is financeable and probably eighteen months from mobilization. Data center growth has made corporate PPAs a leading indicator twice over: the power project gets built, and the buyer's load — often a new campus — is usually under development somewhere nearby.