Transparency can be understood in three distinct ways, all of which are critical for effective energy markets

1. Transparency as Accountability (a.k.a. the “Sunshine Effect”)

This is what most people think of when they hear “transparency.” It’s about pulling back the curtain to expose what’s happening behind closed doors, for example, who got the contract, how much they’re being paid, and whether the deal makes sense. Organizations like Transparency International (TI) and Extractive Industries Transparency Initiative (EITI) champion this kind of disclosure because, frankly, people behave better when they know they’re being watched.

The idea is simple: If decision-makers know their deals will be scrutinized, they’re less likely to engage in corruption, mismanagement, or wasteful spending. More disclosure means fewer bad deals.

2. Transparency as Market Visibility (a.k.a. Seeing the Full Picture)

Transparency isn’t just about catching bad actors, it’s also about making markets work better. Think about stock markets: they are built around the disclosure of information, like prices, risks, and trends, so that investors can make the most informed decision. That’s how price discovery happens.

Energy contracting should work the same way. If buyers and sellers had a clearer picture of what PPAs typically look like, i.e., what fair pricing is, what contract terms are standard, etc, they could negotiate better deals. Right now, too many energy contracts are negotiated in isolation, leading to inefficiencies, inflated costs, and risks that could have been avoided.

3. Transparency as Market Efficiency (a.k.a Speeding up the Process)

Transparency through standardized contracts or model PPAs speeds up the contracting process. When you finance a house, you don’t negotiate the terms from scratch — it’s a standard agreement. This reduces time, avoids mistakes, and makes the process clearer. It also reduces the chances that you’ll later wind up in court, disputing the contract. Legal wrangling delays and derails power projects all the time, slowing the delivery of energy and blocking the pipeline for the next project.

In emerging markets, where contracts are often negotiated for the first time, relying on open, transparent contracts speeds up the process by avoiding the need to start from a blank page.