The long-term, rigid contracts used to fund green energy projects have become the primary obstacle to actually sharing and using that clean electricity.
March 31, 2026
Original Paper
Power Purchase Agreements are Choke Points for Electricity Trade in Southeast Asia
SSRN · 6480951
The Takeaway
Power Purchase Agreements (PPAs) are designed to provide financial security for renewables, but their 'choke point' nature prevents countries from trading surplus power. In Southeast Asia, these rigid contracts are paradoxically causing clean energy to be wasted while forcing grid operators to keep expensive coal and gas plants running to meet demand.
From the abstract
Cross-border electricity trade is key to grid decarbonization. However, trading often relies on bilateral Power Purchase Agreements (PPAs), imposing operational constraints that potentially compromise system-wide efficiency. Here, we quantify the opportunity costs that these long-term, static contracts pose for Mainland Southeast Asia, a region of 230 million people. Using a high-resolution, multi-sector modeling framework, we show that existing bilateral agreements impose an operating paradigm