Sonaura’s CFO, Nick Cole, provides a perspective on risk management and hedging through the use of Private Wire PPAs
Energy volatility isn’t going away and for most corporates, it’s now a core financial risk. Long-term Power Purchase Agreements (PPAs) offer CFOs a practical hedge, fixing a large portion of future electricity costs while supporting sustainability goals. Acting early matters more than perfect timing: in today’s market, speed of funding and contracting directly translates into financial stability and earlier impact.
Many CFOs and finance leaders I speak to have spent increasing amounts of their time over the past few years rethinking their approach to energy risk.
Before 2021, most of us treated electricity as a predictable operating cost, volatile, yes, but within a range one could manage. Then the gas crisis, market shocks, and wholesale price spikes changed that overnight. For many businesses, energy became the single largest source of P&L uncertainty.
Today, the question I hear most isn’t how do we get greener? It’s how do we take control?
Volatility is now structural
Even as prices have settled from their 2022 peaks, volatility hasn’t disappeared, it’s become a feature of the market. Supply-demand tightness, intermittent renewables, policy shifts, and geopolitical risk all add layers of uncertainty that aren’t going away.
In the UK, wholesale power averaged £110/MWh in 2024, up from around £45/MWh in 2019, with peaks above £400/MWh during the crisis.
Most procurement teams are doing their best with short-term contracts, but these offer little protection. Locking in part of your load under a long-term power purchase agreement (PPA) isn’t just about sustainability anymore, it’s a financial hedge.
A PPA is a hedge, not a gamble
When structured correctly, a private-wire solar PPA behaves like a natural hedge. You’re fixing a large portion of your future electricity cost at a stable, predictable rate which is typically 20–30% below retail grid prices, once you strip out transmission charges, supplier margins, and other pass-throughs.²
The principle is familiar to any CFO: you wouldn’t leave your interest rate or currency exposures fully unhedged, so why not do it for energy too, often one of your largest cost lines?
“The biggest missed opportunities we’ve seen are from companies that waited for prices to fall a little further.”
Timing matters more than precision
I often see finance teams hesitate, waiting for the “right” moment to sign. But in practice, it’s impossible to time this market perfectly.
What matters more is locking in while prices remain relatively stable and before demand for PPAs outstrips supply again as it tends to when volatility returns. The window doesn’t stay open for long.
The biggest missed opportunities we’ve seen are from companies that waited for prices to fall a little further. The difference between acting decisively and waiting another year can be millions in lost savings and delayed decarbonisation.
Speed is a financial advantage
At Sonaura, our projects are built on leased land and connect directly to the customer’s site. That structure means we’re not waiting on grid connection queues, which can add years to traditional project timelines.
But even more important is the speed of funding and contracting. Once a PPA is signed and capital secured, we can move a project from design to operation in a fraction of the time of conventionally developed, grid connected projects.
For a corporate buyer, that means earlier price certainty and lower exposure to market risk. In a high-inflation environment, that time saved has a measurable financial value.
The CFO’s role in the conversation
PPAs are no longer the sole domain of sustainability teams, nor should they be. They’re multi-decade financial commitments that affect capital allocation, balance sheet exposure, and investor communications.
As finance leaders, we bring three things to the table:
- Risk framing: treating the PPA as a hedge and embedding it in the wider treasury strategy.
- Commercial discipline: assessing the counterparty, credit, and pricing mechanisms with rigor.
- Execution focus: ensuring the deal closes before conditions shift.
The best outcomes happen when finance is involved early, not just signing off at the end.
Looking Ahead
Locking in long-term power prices isn’t about betting on where the market will go. It’s about reducing uncertainty, protecting margins, and building resilience into your business model.
Energy may be a small line on the balance sheet, but it can have an outsized impact on predictability which right now, is a competitive advantage.
Nick leads Sonaura’s commercial operations and investment and financial strategy. With 20+ years in banking and investment management, he’s deployed over $2bn in infrastructure and renewable energy companies.
¹ DESNZ Quarterly Energy Prices (2024)
² Afry Market Outlook (2024); LevelTen Energy Q2 2024 European PPA Index