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Big Tech Firms Face Losses from CfD-Based Green Power Deals Amid Tariff Dip

Meta, Amazon, and Microsoft are facing rare short-term losses on their renewable energy power purchase agreements (PPAs) in India due to falling real-time tariffs. These PPAs are structured using the Contract for Difference (CfD) model, which is designed to manage pricing risk. Under this model, when market prices fall below the agreed strike price, buyers must pay the difference to developers—resulting in an average loss of around Rs1 per unit for these companies.

The unusual drop in tariffs—below Rs1/unit during some solar hours in May 2025—is stressing these long-term contracts. For instance, Amazon’s AEI New Energy Trading Pvt. Ltd. holds a 20-year PPA at Rs12.72/unit, while Microsoft inked a deal last year for 437.6 MW of green attributes. Falling average market clearing prices (MCP), now at Rs12.2/unit during solar hours compared to Rs13.5/unit last year, have impacted returns for buyers.

Experts indicate this price dip is likely temporary, and such CfD mechanisms still serve as valuable long-term risk mitigation tools for corporates aiming to secure stable power prices and meet carbon credit goals. As the market adjusts, prices may rebound, allowing companies to offset their short-term losses over the rest of the fiscal year.