AI Vocabulary · 02 AI Infrastructure
What is Power Purchase Agreement (PPA)?
A long-term contract to buy electricity, often from a specific wind, solar or nuclear plant; the main way AI companies buy clean power.
A power purchase agreement, PPA for short, is a contract between an electricity buyer and a power plant, usually over many years. The buyer secures a price and the right to claim the plant's clean electricity; the plant gets a reliable customer, which helps finance new wind or solar farms or keep nuclear plants running.
Tech companies are the largest corporate buyers. According to the International Energy Agency, the tech sector signed about 40% of all corporate renewable PPAs worldwide in 2025. BloombergNEF counts 55.9 GW of corporate clean energy contracts in 2025, about half of them signed by Amazon, Meta, Google and Microsoft.
Why it matters for you
Most claims of 100% renewable AI rest on PPAs and certificates matched over a year. That shows how much clean electricity a company has bought. Whether clean power was available in every hour and on the same grid where the data centre runs is a separate question.
Own it
When a provider says its AI runs on clean energy, ask three questions: annual or hourly matching, same grid or anywhere, and new plants or existing ones. The answers show how much the contract changes on the ground.
Where it comes from
Figures come from the IEA report Key Questions on Energy and AI (April 2026) and from BloombergNEF, reported by ESG Today (February 2026).
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