Unlocking the potential of renewable energy PPAs in the EU

Power purchase agreements have gained growing attractiveness for supporting the development of renewable energies.

Businesses are able to advance their sustainability agenda while at the same time being able to better manage their cashflow with reduced exposure to energy price volatility. 

However, their full potential is felt to have remained untapped due to both regulatory and non-regulatory barriers, while market dynamics, such as the rise of negative prices, and public support for clean generation also have emerged as issues. 

For example, regulatory barriers identified have included accounting rules on the treatment of PPAs, the impact of regulations and member states’ implementation of the guarantees of origin framework on the sustainability policies of corporate buyers. and the general regulatory obstacles to deploying renewable energy, such as grid access rules or lengthy permitting. 

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Non-regulatory barriers include the credit worthiness of prospective buyers, lack of knowledge and other difficulties among small and medium sized consumers with regard to signing PPAs with large energy generation assets, limited transparency of PPA markets, lack of standardisation of PPA contracts and limited use of PPAs by public buyers. 

The removal of barriers to PPAs was foreseen in the European Commission’s renewable energy directive and the electricity regulation to facilitate the financing of new clean energy installations. 

A long list of recommendations starts with member states setting out the conditions for quickly deploying renewable energy generation and storage assets. 

Efficiency and flexibility

When putting in place policies promoting the uptake of PPAs, member states should encourage contracting parties, in particular public bodies and large energy consumers, to consider the combination of PPAs and cost-efficient demand-side measures for energy efficiency and flexibility. 

And when necessary to reach European objectives, they should plan and implement support schemes for electricity generation in such a way that they complement and enable PPAs. 

Member states should ensure that there are no barriers to developing market platforms for PPAs and that their use by market participants remains voluntary. To promote access to PPAs for smaller buyers, they should ensure that there are no barriers to multi-buyer PPAs. 

Public entities should consider procuring their energy consumption through PPAs and should put mechanisms in place that can facilitate such procurement, as well as integrate PPAs with energy efficiency services.  

Anchor clients

Public entities also should be allowed to act as anchor clients, bringing smaller buyers to multi-buyer PPAs. 

For electricity, member states should ensure that their designated competent bodies allow guarantees of origin to be issued and transferred, in line with standard CEN 16325:2025. 

To facilitate the tracing of renewable gases subject to a purchase agreement, Member States should implement the technical adaptations necessary to enable the integration of their national databases or national registries of guarantees of origin with the Union database. 

Finally, member states should ensure that the design of their public support schemes does not create barriers to the cross-border trade of biomethane and they should ensure that local heating and cooling plans are developed to map available sources of clean heat and cold and establish derisking schemes for waste heat and cold and for renewable heating and cooling, in particular for district heating and cooling. 

The recommendations draw on a four-week call for evidence.