Power Purchase Agreements: Commission recommendation to facilitate PPA take-up

The Commission has today published a Recommendation on removing barriers to the development of power purchase agreements (PPAs) and other energy purchase agreements. PPAs comprise long-term bilateral contracts typically concluded between generators and corporate consumers. They are a key instrument for large consumers to source their energy directly from suppliers (thereby facilitating the construction of new clean energy installations) and provide consumers with price certainty over time for their energy consumption. This is why, in the wake of the price spikes seen in 2022, it was identified as a means for some businesses to reduce their exposure to energy price volatility. But the full potential of PPAs remains untapped because of existing regulatory and non-regulatory barriers.

Addressing many of the bottlenecks that have been identified, the recommendation cover issues ranging from access for small buyers, guarantees and other risk-reduction measures, accounting rules or guarantees of origin. Although mainly focused on PPAs, the recommendation also covers barriers for purchase agreements for energy carriers other than electricity, such as heat, biogas or hydrogen. This new recommendation document builds on the previous Commission guidance on facilitating PPAs, published in May 2022.

Background

This Recommendation follows a 4-week call for evidence earlier this year, which fed into the Commission's work assessing the regulatory and non-regulatory barriers that hamper the development of PPAs. The removal of barriers to PPAs was foreseen in the Renewable Energy Directive and the Electricity Regulation to facilitate the financing of new clean energy installations, while securing stable prices for consumers. The Commission therefore had a legislative mandate to assess where barriers remain and guide EU countries on their removal.

Related Links

• Commission Recommendation: removing barriers to the development of power purchase agreements and other energy purchase agreements
• Power Purchase Agreements
• Call for evidence