Overcoming Secrecy in the Energy Transition
Transparent, accountable, and performance-oriented energy contracting is not just good governance — it is essential infrastructure for an equitable energy transition.
By (OGP) and Rushaiya Ibrahim-Tanko
Affordable and reliable energy is essential to economic growth. When energy becomes scarce or expensive, growth slows, inflation rises, and productivity typically declines, which can negatively impact industrial competitiveness and economic resilience.
Governments often sign long-term contracts with energy providers to get more electricity. These contracts influence not only price, but also the type of energy from coal-fired power plants to solar or hydro. A common contract type is the Power Purchase Agreement (PPA). PPAs set the long-term financial and operational conditions for how energy is supplied, influencing the viability of renewable energy projects, grid stability, and cost structures for businesses and governments alike.
To be effective, such agreements must be transparent and subject to public oversight. People must be able to see where their energy comes from, how much it costs, and whether it’s delivering on reliability and environmental commitments. Given the speed of change, ensuring affordable, transparent, and effective long-term energy projects will be critical.
Yet in many parts of the world, energy contracts are secret, raising concerns that they may not serve the public interest or meet the challenges of our time. In the spirit of Earth Day, this article explores the two main barriers to improving the performance of PPAs: secrecy and the lack of performance-based incentives.
Barriers to Transparency in the Energy Transition
Secrecy
Despite energy access being critical for public welfare, many countries’ energy contracts remain opaque — shielded by confidentiality clauses, non-disclosure agreements, and a lack of standardized reporting. This has social, economic, and environmental costs.
So, if this is the case, why are so many contracts kept secret? Sometimes, it’s linked to a legitimate national security issue, such as in Ukraine. But often, contractors claim commercial confidentiality to avoid disclosing the details of contracts. Lenders or borrowers may also require the terms of a contract to be secret, and contracting authorities agree, knowing that the terms of a deal might be unpalatable to voters. Of course, secret contracts can enable kickbacks and self-dealing as well.
Let’s look at Ghana as an example. Ghana is the highest producer of electricity in its region, yet has some of the highest tariffs for electricity globally. Though external shocks have played a role, the secrecy of its PPAs has led to imbalanced energy generation contracts and underinvestment in energy transmission and distribution, which result in a higher cost of energy.
Yet Ghana has begun to shift its policies around energy contracts through its membership OGP. In its current OGP action plan, where the government commits to reforms that increase transparency, civic participation, and public accountability, Ghana has begun to publish its PPAs, produce quarterly reports of PPA payments, and update related laws and regulations. Now that contracts are public, officials and the public can evaluate their financial and performance terms to determine if contractors are providing enough energy at an affordable rate. What people have learned from this is that many of the contracts do not pay for performance, but rather a flat rate. For the average Ghanaian, this means that they might be overpaying.
Performance Incentives
Even when PPAs are procured transparently, contracts require clear, public incentives to make sure that utilities perform well along different dimensions such as cost, reliability, and environment. Those incentives must also be public and understandable.
Standard contracts can result in an inefficient energy market and unnecessary construction projects, which can make the energy supply less accessible. Specifically, by focusing on “rate of return,” standard contracts can incentivize “gold plating,” which is when a power company tries to minimize costs for delivery and maximize expenditure on capital improvements. Some experts argue that formulas for setting prices are regularly manipulated to generate “excess profits.”
Innovations in how PPAs are written can help unlock new efficiencies, drive better investment signals, and enhance accountability. From dynamic pricing structures and grid-responsive contracts to performance-based clauses that reward reliability and emissions reductions, the next generation of PPAs should do more than stabilize supply — they should actively shape the energy transition in a way that delivers value to the public.
There are a broad range of approaches that fall under “performance-based regulation” (PBR). PBR is a bundle of different policies that aim to move beyond cost recovery, aiming to reward or penalize utilities based on their performance against specific outcomes such as resilience, equity, customer satisfaction, and carbon intensity. (For more information, see our overview of performance incentive mechanisms here.)
Contracting for an Energy-Rich Future
This year, Earth Day calls for united action to triple clean energy generation by 2030. As the global economy moves towards more intense energy usage, due to electrification and new digital technologies, governments must work to ensure energy availability and affordability. Transparent, accountable, and performance-oriented energy contracting is not just good governance — it is essential infrastructure for an equitable energy transition.
The next generation of PPAs must go beyond price and procurement. They must be tools for aligning public and private interests, managing risk, and accelerating progress toward national and global climate goals. Doing so requires not only innovation in contract design, but also a reinvigoration of public oversight. Open government approaches — disclosure, participation, and accountability — can help close the gap between energy contracting and energy justice. And with more countries updating procurement systems, climate strategies, and utility regulation, now is the moment to build openness into the rules of the grid.
