Corporate Power Purchase Agreements

Question 1

1. About this call for evidence

Accepted Answer

The government’s Clean Energy Superpower mission sets out a long-term plan to boost energy security and reduce electricity costs by investing in clean energy. While we undergo this transition, the UK’s Modern Industrial Strategy sets out a range of actions to support our priority sectors and energy intensive industries by reducing our high industrial electricity prices.

This includes the Network Charging Compensation Scheme (NCCS). From 2026, the NCCS plans to increase the level of discount on electricity network charges from 60% to 90% for around 550 of the most energy-intensive firms already benefiting from the British Industry Supercharger.

The government is also conducting a review of support under the Energy-Intensive Industries (EIIs) Compensation Scheme. Furthermore, the new British Industrial Competitiveness Scheme (BICS) will reduce electricity costs by up to £40 per megawatt hour (MWh) for over 7,000 businesses in frontier and foundational manufacturing sectors from 2027.

Recent electricity price volatility, and a rise in British electricity prices linked to our dependence on gas for generation and as a market price reference, has renewed business interest in Corporate Power Purchase Agreements (CPPAs). Developing the Great Britain (GB) CPPA market can supplement the aforementioned measures by providing a market-driven solution. This solution allows corporates to secure competitively priced electricity to enhance competitiveness while making progress towards net zero without increasing fiscal burden.

This is recognised in the Industrial Strategy which includes the commitment to issue a call for evidence on how the market for CPPAs in Great Britain can be developed and improved for industry, including where we can draw from international best practice to:

improve competitiveness
increase efficiency
remove barriers to growth

The Department for Business and Trade (DBT), and the Department for Energy Security and Net Zero (DESNZ), are therefore seeking views on the experience of current and potential market participants, and on approaches that could strengthen the market in the future.

We are particularly interested in approaches that could help commercial and industrial electricity buyers to secure low-carbon electricity supplies at stable and competitive rates and in doing so, support both our industrial competitiveness and our decarbonisation commitments.

This call for evidence applies to Great Britain given Northern Ireland is part of a separate electricity market on the island of Ireland.

This call for evidence is likely to be of particular interest to:

companies using significant volumes of electricity (whether or not they currently have CPPAs in place)
investors and funders of electricity infrastructure
those developing and operating electricity generation projects
electricity suppliers, traders and intermediaries

Question 2

2. How to respond and next steps

Accepted Answer

Responses to this call for evidence are invited for 8 weeks until 6 March 2026.

Officials in the 2 departments are happy to discuss aspects of this call for evidence and can be contacted at the addresses in the ‘How to respond’ section.

Contact us at the email address if we can assist in making this call for evidence available in an alternative format.

2.1 How to respond

We welcome responses in any form. Your response will be most useful if it is framed in direct response to the question posed, and with evidence in support wherever possible, though further comments and evidence are also welcome.

When responding, state whether you are responding as an individual or representing the views of an organisation.

Respond online via Qualtrics.

Email to: cppaevidence@businessandtrade.gov.uk

Write to:

Industrial Energy Unit
Room 1.75
Department for Business and Trade
Old Admiralty Building
Admiralty Place
London
SW1A 2DY

Evidence will be reviewed by the review team. If further information or clarification is required, the review team will be in contact with you.

2.2 Confidentiality and data protection

Information you provide in response to this call for evidence, including personal information, may be disclosed in accordance with UK legislation (the Freedom of Information Act 2000, the Data Protection Act 2018 and the Environmental Information Regulations 2004). Responses may be shared with devolved governments.

If you want the information that you provide to be treated as confidential, tell us, but be aware that we cannot guarantee confidentiality in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not be regarded by us as a confidentiality request.

We are trialling artificial intelligence (AI) solutions to support the delivery of our functions. Unless made expressly clear to you, we will not use AI to either make or inform decisions about you. We will apply effective data minimisation techniques to all such uses of your data.

Your responses, including any personal data, may be shared with a third-party provider, or other government department or organisation acting on behalf of DBT under contract or an equivalent agreement, for the purpose of analysis and summarising responses for us and may use technology, such as AI.

An anonymised version of responses in a list or summary of responses received, and in any subsequent review reports may be published. We may also share your personal data where required to by law. You can leave out personal information from your response entirely if you would prefer to do so.

Wherever possible avoid including any additional personal data in free-text responses beyond that which has been requested or which you consider it necessary for DBT to be aware of.

We will process your personal data in accordance with all applicable data protection laws. See our privacy policy. If you have any complaints or concerns about the way this call for evidence has been conducted, email bru@energysecurity.gov.uk.

2.3 Next steps following the call for evidence

Ideas generated in response to this call for evidence will be carefully reviewed and we may follow up to discuss further details. Any policy development will be accompanied by future consultation.

Question 3

3. Introduction

Accepted Answer

This document is designed to guide you from the wider CPPA policy context through to the specific issues on which we are seeking views. It begins by defining Power Purchase Agreements (PPAs) and identifying the types of CPPAs that are in scope.

The next section provides an overview of the current GB CPPA market, including typical contract structures and recent examples, before exploring the potential benefits these agreements can offer to businesses and electricity generators.

The document then examines the challenges that may be limiting CPPA uptake, such as credit requirements and contract complexity, and considers the role of data centres as major electricity consumers. We also look at how CPPAs interact with existing market support schemes, such as Contracts for Difference (CfDs), and summarise previous consultations and government actions in this area.

Finally, we review approaches taken in other markets and identify lessons that could inform UK policy. The document concludes with a set of questions where we invite evidence and views from stakeholders.

3.1 Power Purchase Agreements (PPAs)

Power Purchase Agreements (PPAs) are a long-term electricity purchase agreement between a generator and a buyer. The buyer can be a utility, supplier or trader (who then goes on to resell it to a wide customer base), or a business who uses the electricity for their own needs.

Utility Power Purchase Agreements (UPPAs)

In a UPPA, a utility, supplier or electricity trader is the buyer of electricity from one or more electricity generation projects, aggregating the electricity and managing the onward delivery of the electricity to end user customers via more standard supply contracts.

UPPAs typically focus on low-carbon electricity. This is partly because developers and funders of capital-intensive low-carbon projects value the security of income PPAs offer (which underpins their own amortisation of investments). UPPAs also support the utility’s ability to offer a variety of ‘green’ tariffs to electricity buyers who choose to specifically support low-carbon electricity.

Corporate Power Purchase Agreements (CPPAs)

If the buyer is a business, the PPA becomes a CPPA. There are 3 categories of CPPA.

Sleeved and unsleeved CPPAs

If the electricity purchased through a CPPA is transmitted through the grid from the generator to the buyer, a third party (usually a utility) is often required to manage a ‘sleeving’ arrangement.

The third party manages the process of grid access, administrative payments of access charges and levies, and potentially other ancillary services in exchange for a fee. The third party will often also be the ‘backup’ supplier to the electricity buyer, and sometimes manages the ‘topping up’ of electricity if the generation asset (or assets) cannot deliver the amount needed.

A smaller set of agreements are ‘unsleeved’ and only involve the electricity seller and the buyer, with one of them typically managing these wider aspects themselves.

Onsite and private wire CPPAs

As businesses seek to manage their electricity costs, and improve the environmental and efficiency credentials of their premises, a growing number are investing in a physical connection to an electricity source, often low-carbon. These can be on the premises (for example, solar panels on rooftops) or near-site agreements where a nearby generation project is connected directly to the buyer via private infrastructure.

These arrangements involve some capital investment in infrastructure, but can be cost effective for electricity buyers, as their ‘behind-the-meter’ nature reduces business exposure to the levies and costs associated with electricity network use and connection and supply is under their direct control.

Virtual CPPAs

Some CPPAs are ‘virtual’ (also known as synthetic, or financial). These are financial contracts rather than physical energy delivery agreements, aiming to offset mutual exposures to a particular type of market movement. No actual electricity purchasing arrangement is in place between the 2 parties.

A corporate buyer and a generator (who may not even operate in the same electricity market) typically agree to a pricing benchmark for electricity, with funds changing hands between the 2 parties as and when the market deviates from the agreed benchmark, effectively hedging against price volatility.

Focus of this call for evidence

This call for evidence focuses on sleeved and unsleeved CPPAs as the core model of physical PPAs between businesses and generators, as well as onsite and private wire CPPAs. These arrangements are central to our objective of helping businesses secure stable, predictable electricity prices through market-based solutions.

Virtual CPPAs are financial hedging instruments rather than physical supply contracts so similarly fall outside the scope of this call for evidence. By concentrating on these types of CPPAs, we aim to understand how we can encourage agreements that provide attractive, long-term pricing structures and help businesses improve competitiveness while aligning to decarbonisation goals.

Table 1: scope of PPAs

Type of PPA	Description	In scope?
Utility	A utility or electricity supplier purchases electricity from a generator and resells it to end users through standard supply contracts.	No
Sleeved and unsleeved	Electricity is delivered via the grid. In a sleeved agreement, a licensed supplier manages grid access and charges, while unsleeved agreements involve only the buyer and generator who handle these responsibilities themselves.	Yes
Onsite and private wire	A business sources electricity directly from a nearby generator via a private connection, often located on or near its premises.	Yes
Virtual	A financial contract between a buyer and a generator that hedges electricity price risk without physical delivery.	No

Question 4

4. Corporate Power Purchase Agreements (CPPAs) in the GB electricity market

Accepted Answer

CPPAs are a small but significant part of the GB power market. Few formal statistics are available, however they are believed to represent 2.5% to 5% of the GB power trading market^{[footnote 1]}. They tend to be based on low-carbon electricity, with wind and solar projects typically featuring in reported agreements, and have evolved with Britain’s wider low-carbon electricity sector.

A notable early CPPA was agreed in 2008, with Sainsbury’s purchasing electricity from a 6 megawatt (MW) wind farm for 10 years. More recent agreements have been considerably larger – for example Tesco’s deal with the Cleve Hill solar project exceeds 200 MW.

The way pricing will evolve over the life of the contract is negotiated between buyer and seller, and is typically indexed to inflation measures like the Consumer Price Index (CPI), though agreements can also include fixed annual escalators. Typical terms are 10 to 15 years, though some agreements run for longer.

There are choices on the volume-settlement model used to bridge mismatches between the electricity produced and the electricity the buyer needs. A particularly common commercial structure that is well suited to variable low-carbon electricity projects is ‘pay-as-produced’ (or ‘pay as generate’), where the buyer agrees to purchase all (or a defined percentage) of the electricity produced at a specific generation project. This will (in practice) only cover a portion of the buyer’s overall electricity consumption, and then ‘tops up’ their use with a separate ‘standard’ grid supply arrangement.

There are other models. The electricity generator can commit to delivering a pre-determined volume or profile of electricity within a specific time interval (‘baseload’ contracts). Here, the generator bears the volume risk, as they must ensure consistent delivery regardless of actual electricity output. This structure typically leads to higher pricing to reflect the increased risk and operational complexity for many low carbon generators in adhering to more specific electrical output profiles.

There is limited public information on the use of volume-settlement models in the GB CPPA market, although industry commentary suggests the pay-as-produced model is the most widely used, particularly for variable low-carbon sources, while fixed-volume or load-following commitments are less common owing mainly to their higher risk and complexity for electricity generators.

Renewable Energy Guarantee of Origin (REGO)

Some CPPAs bundle the electricity with associated Renewable Energy Guarantee of Origin (REGO) certificates. REGOs provide certification for electricity generated from renewable sources. The scheme was originally designed to help suppliers and purchasers report the share of renewables in their electricity mix. They also provide some support for the development of renewable capacity.

The interplay between REGOs and PPAs can be complex. REGOs can be traded separately from the electricity whose production they originally certified, with lengthy trading windows that mean their pricing does not reflect real-time availability of certificates.

As the share of electricity produced from renewable sources has grown the certificates tend to trade at relatively low value. This means the electricity produced from renewable sources has only a small impact on either renewable investment decisions, or the pricing of CPPAs. However, because of their low price, to some businesses, REGOs present a more cost effective alternative to showcase their environmental credentials affecting the competitiveness of CPPAs.

Table 2: examples of CPPAs

Offshore wind	• Amazon’s 473 MW Moray West wind farm (with ENGIE) in combined with the 159 MW East Anglia THREE offshore wind farm totals a CPPA of 632 MW • Google is one of several businesses to have concluded an electricity purchase agreement with the Moray West offshore wind farm, for 100 MW (which has PPAs covering at least half of its output – alongside some of its output being covered by a CfD) • In October 2025, Co-op signed a 7-year deal with RWE for a total volume of 33 gigawatt hours (GWh) annually from the Gwynt y Môr offshore wind farm
Solar	• Tesco’s CPPA for 65% of the output of the 373 MW Cleve Hill solar project is the largest solar CPPA to date in the GB market, and was seen as an important factor in the project progressing to construction • Network Rail reportedly has a 14-year solar CPPA with the Bloy’s Grove project • Transport for London has a CPPA for approximately 20% of the output of the up-to-500 MW Longfield solar project • The City of London in 2020 agreed a CPPA with Voltalia to buy all the electricity produced by South Farm Solar Park in Dorset for 15 years, in the first deal of its kind in the UK to be signed directly between a low-carbon generator and a public authority
Onshore wind	• Sainsbury’s 33.6 MW CPPA for 100% of the output of the Pines Burn wind farm is the eighth wind farm from which Sainsbury’s buys 100% of the energy generated. There is scope for onshore wind CPPAs to grow in the light of increasingly favourable onshore wind consenting environment in England

4.1 Data centres and future demand in the GB CPPA market

Electricity demand from data centres in Great Britain is expected to rise significantly over the coming decades, driven by rapid growth in cloud computing, artificial intelligence, and digital services.

Current demand is estimated at 7.6 TWh per year, but projections suggest this could increase to 20 to 41 TWh by 2035 and reach 30 to 71 TWh by 2050 according to the National Energy System Operator. This growth will add further pressure to an electricity system already adapting to electrification of heat and transport.

Data centres are considered attractive counterparties for CPPAs. They operate with large, predictable demand, have good creditworthiness, and work to meet environmental, social, and governance (ESG) and net zero commitments. These characteristics enable them to sign long-term agreements at substantial scale, with agreements in this sector frequently exceeding 100 to 200 MW.

However, the growing participation of data centres in the CPPA market could influence market dynamics. Their ability to conclude large-scale, long-tenor deals may concentrate liquidity among a small number of buyers, potentially crowding out smaller businesses and increasing competition for low-carbon capacity.

4.2 Potential benefits of CPPAs

Stable and competitive electricity pricing for businesses

By decoupling electricity costs from wholesale market price volatility, and instead providing pre-agreed pricing and indexation or escalation arrangements, CPPAs can provide predictable electricity prices over extended timescales for both electricity generators and corporate buyers. This provides a degree of revenue certainty for the generator and allows for better budgeting and fiscal planning for the electricity buyer.

A 2025 discrete-choice experiment of 91 corporate buyers in Switzerland (860 CPPA options) found that firms consistently preferred contracts offering price certainty over lower short-term prices.

CPPA electricity costs for businesses can typically be lower than electricity buyers would see under more standard supply contracts, particularly at the time of signing and during periods of market volatility. This is particularly the case for direct or private wire CPPAs (which do not expose electricity buyers to network costs, and linked policy costs) and unsleeved CPPAs which do not have to pay for a third party sleeving services.

There may also be savings for sleeved CPPAs following a ‘pay as produced’ model as the role of third-party intermediaries are typically limited to providing sleeving services, rather than taking on volume or pricing risks, their impact on overall costs can be quite small.

CPPAs also acted as effective hedges during the 2022 energy crisis, helping firms avoid cost spikes. Survey data shows that 92% of European companies signed CPPAs to reduce electricity costs, and large UK firms found them more cost-effective than green tariffs.

Clean electricity sourcing

For businesses seeking to source their electricity in a value-adding way from low-carbon projects, and to demonstrate credible emissions reduction, physical PPAs can be used as evidence.

They can satisfy environmental commitments with a higher degree of demonstrable additionality than more classic approaches such as REGO purchasing. By offering direct links to low-carbon electricity generation, CPPAs can deliver on Scope 2 indirect GHG emissions reporting requirements.

Benefits for electricity generators

For those developing new low-carbon electricity generation capacity, CPPAs may offer an effective alternate route to market to support via schemes such as Contracts for Difference (CfDs) in cases where developers were unable to secure CfDs or where they seek to negotiate different terms and timescales to what is on offer via the CfD.

Some projects have proceeded to development on this basis. However, this remains a small market. Relatively few CPPA agreements are understood to have been made that saw new-build projects enter development without other forms of support.

Some projects have also taken an approach of part-CfD, part-CPPA support. Moray West, an 882 MW offshore wind project in north-east Scotland which became operational in April 2025, reportedly secured a CPPA for 52% of its capacity, a CfD covering a further third. The rest of the output is sold on a merchant basis. According to its developer, Moray West is the first UK offshore wind farm to rely primarily on CPPAs for the commercialisation of its output.

Shorter CPPAs can also provide a route to continued stable revenue for older low-carbon capacity after the end of Renewables Obligation (RO) or CfD support agreements.

Over 30 GW of capacity is set to reach the end of support under the RO from 2027 onwards. Some operators may look to secure alternative forms of contractual support, such as CPPAs with timescales of between 1 and 10 years, to underpin investments in the refurbishment or repowering of those assets.

This capacity could increase the liquidity of GB PPA and CPPA markets, while the shorter tenor and lower levels of risk involved in these may make it easier to conclude agreements with a wider range of corporate electricity buyers.

4.3 Challenges to CPPA uptake in the GB electricity market

Britain has a relatively mature CPPA market, with an established contractual model, a safe regulatory environment, and a competitive electricity sector that is open to investment.

There is a fair degree of competition in the various sectors. Several electricity generators actively promote CPPAs to potentially interested purchasers, offering to cover business power demand with low-carbon electricity at fixed prices, while a competitive market of brokers advise and help businesses navigate their procurement options and negotiate CPPAs, and suppliers compete to offer offtake PPAs to independent electricity generators.

One approach to ranking ‘attractiveness’ of CPPA markets, by Ernst and Young, suggests our market is more attractive than the USA and several European markets, but behind Germany, Spain, and France.

Despite a number of high-profile agreements, and success in supporting the development of new-build projects, the CPPA market still only forms a small part of overall GB electricity purchasing, and it arguably remains underdeveloped. There are a variety of barriers that would need to be overcome for it to reach its full potential, particularly from the perspective of businesses purchasing electricity.

CPPAs require a commitment to purchasing electricity at scale

Currently, only businesses able to commit to purchasing a substantial volume of electricity over an extended period are likely to secure a CPPA. The most favourable pricing terms typically apply to organisations that can integrate variable output from low-cost low-carbon sources into their overall electricity consumption under a pay-as-produced arrangement.

Wind and solar have distinct generation profiles that do not closely align with typical business electricity demand. This mismatch can lead to imbalance costs and often requires complex shaping clauses within CPPA agreements.

CPPAs require high credit worthiness

Security of income is important for those financing and developing capital-intensive low-carbon electricity generation infrastructure. However, many electricity buyers have limited credit worthiness, so present unacceptable counterparty risk for a developer seeking to demonstrate security of income to finance a project. This in turn limits the pool of potential CPPA electricity purchasers for longer-term CPPAs linked to new assets to larger corporate and industrial consumers with robust credit worthiness.

Some electricity buyers may be able to purchase credit insurance, for a fee reflecting the degree of risk associated, and so access CPPA markets. Shorter-timescale CPPAs, linked to older low-carbon assets or those not supported by income-stabilising schemes such as the CfD, may be less constrained in terms of requiring investment-grade credit ratings – and so allow a wider range of businesses to make agreements. However, the shorter terms involved could potentially also undermine the long term price stability that is an important benefit from the perspective of the electricity purchaser.

CPPA contract negotiation requires a high level of technical expertise

A CPPA tends to be a bespoke contract, and negotiating it can be resource-intensive process for all parties with timescales of around 6 months not unusual. It can involve relatively specialist knowledge and expertise on pricing structures, indexation options, and risk-sharing mechanisms, coupled with the continued need for a licensed supplier or sleever to route the electricity.

This can make CPPAs a challenge for smaller businesses who:

do not regularly agree CPPAs
may not have dedicated electricity sourcing capabilities
may lack negotiating power

CPPAs may be unattractive to businesses with a low risk tolerance or narrow profit margins

While CPPAs provide price stability, there is clearly a degree of risk involved in committing to a long-term agreement, which may deter some businesses. CPPAs need careful judgements by all parties on how their pricing will fare relative to other electricity purchase approaches, and how they may be affected by future energy system, market, and policy developments – as well as on the detailed provisions for unexpected future events and liabilities.

Aligning generator and purchaser contract timescales can be challenging

Aligning timescales can also be a challenge, particularly for CPPAs involving the development of new-build generation capacity. As an electricity buyer will normally need to have confidence in supply starting to a specific timescale, any delays to the development of a contracted project can cause significant challenges and costs, again adding to the challenges of concluding these agreements.

Summary of challenges to the uptake of CPPAs in the GB electricity market

A summary of challenges includes:

large volume, long-term commitment required to be an attractive counterparty to an electricity generator
many buyers lack required high credit worthiness, limiting participation to large corporates
negotiations can be complex and resource intensive, challenging for smaller firms
long-term electricity market uncertainty may deter companies with low risk tolerance or narrow margins
delays in new-build projects can disrupt supply commitments and increase costs

4.4 Interaction between market support schemes and the CPPA market

The GB electricity market has evolved to support the deployment of low-carbon electricity capacity with significant up-front capital development costs, but low operating costs.

The government-owned Low Carbon Contracts Company (LCCC) is an electricity-purchasing counterparty designed to have minimal counterparty risk, and equipped with standardised, centrally-administered contract terms. The Contracts for Difference (CfDs) scheme offers competitively allocated 15-year CPI-indexed power purchase contracts.

These have reduced the cost of capital for new projects, and provide an attractive route to market that has driven substantial investment by both existing developers and new entrants.

The success of the CfD scheme has sharply reduced market risk and counterparty exposure for developers of capital-intensive low carbon electricity infrastructure. It has also supported very substantial levels of new capacity deployment by both market incumbents and businesses who were new entrants to the GB market. These successes have made the CfD scheme the benchmark for low-carbon electricity project developers.

Corporate electricity buyers looking to agree CPPAs will be under pressure to agree terms broadly comparable to those potentially available to developers under the CfD scheme which can be challenging to achieve.

CfDs generally run for a 15 to-20-year tenor – something corporate offtakers are rarely willing to match. While businesses value long term price stability, they are reluctant to commit to a fixed price over such a long period due to the risk of a fall in wholesale prices.

Furthermore, even large and reputable corporates cannot match the security of a sovereign-backed agreement. A company’s creditworthiness depends on its financial performance, sector exposure, and long-term viability.

Over a 10 to 15-year horizon, these factors introduce considerable uncertainty. If a corporate buyer experiences financial distress, restructures, or changes strategy, the generator could face delayed payments, renegotiations, or even default. This risk is reflected in higher financing costs, making PPAs less attractive for projects that require long-term certainty.

It is technically possible for a generator to sign both a CPPA and a CfD, but it is unlikely in practice. The CfD already guarantees a fixed, inflation-indexed revenue stream for a 15 to 20-year period. An additional CPPA creates administrative complexity without additional upside.

CfDs are arguably more attractive to generators than CPPAs. There is potentially an inverse correlation between availability of CfDs, and interest in CPPAs. Stronger interest is at points where allocation rounds offers limited scope for onshore wind and solar projects, but near-term attention currently focuses on CfD options in view of the high levels of ambition linked to delivering Clean Power 2030 capacity. Anecdotal reports suggest CPPAs are often viewed as the fallback option, if developers fail to secure CfD support in allocation rounds.

Question 5

5. Previous consultation on CPPAs in the GB electricity market

Accepted Answer

The recent Review of Electricity Market Arrangements (REMA) took a fundamental look at the design of our electricity market and the support mechanisms within it, including the potential of CPPAs to drive growth in new low-carbon generation.

In March 2024, as options were progressively narrowed, the second REMA consultation confirmed the intention to maintain a wholesale market based on short-run marginal pricing, with a future-proofed CfD scheme to support low-carbon electricity capacity deployment. It emphasised the role of the CfD scheme and CPPAs in promoting low-carbon generation within existing market structures, and sought responses on how CPPAs could support delivery of net zero, as well as small scale generation.

Respondents to the second consultation generally recognised the potential of CPPAs to help meet net zero targets, while noting concerns that the growth of CPPAs might be limited by the high barriers to entry – notably the costs for small businesses to negotiate and sign them.

Some respondents believed there was little further growth potential for CPPAs, commenting that uptake had risen due to electricity prices spiking in 2022, with subsequent settling of prices reducing subsequent demand. Potential zonal pricing approaches under consideration at the time were noted as another limiting factor, as they could limit the size of the CPPA market per zone, with some zones potentially more favoured than others.

The consultation explored how a larger CPPA market could spread the risks and benefits of variable low-carbon electricity across consumers. While some respondents considered that a larger CPPA market would indeed spread the risks of variable generation, others emphasised that CPPAs are generally only entered into by market players who can bear the related risk.

Some suggested that the benefits from an expansion of the market would outweigh any potential downsides to CPPAs, with price certainty being a notable a positive aspect of CPPAs, and suggesting that the more certainty market actors received, the more positively they would react to an expanding CPPA market. The option of ‘partial payment’ CfDs was also explored, with comments that they could work best when combined with PPAs.

REMA also explored the scope for CPPAs and PPAs specifically as a means to drive the deployment of small-scale low-carbon projects. Many respondents felt that CPPAs were not well suited to facilitating small-scale low-carbon deployment in their current form. Reasons included the challenges of credit risk for smaller electricity purchasers, and the administrative complexity for small generators in securing CPPAs, suggesting other support should be in place to encourage small-scale renewable deployment.

A few respondents commented that REMA reforms alongside CPPA and PPA markets would encourage small-scale low-carbon deployment in the near mid and long-term, by improving investment certainty and encouraging small-scale generation projects to locate closer to locational demand.

The conclusions of the REMA process were issued in July 2025, noting that this call for evidence would subsequently explore how the CPPA market can be further developed.

Question 6

6. Approaches taken elsewhere to develop CPPA markets

Accepted Answer

Other countries are moving to support the expansion of their CPPA markets. We welcome evidence on the extent to which these or other approaches might inform potential actions in the GB market.

Standardised terms

Recognising the inherent difficulty for businesses with more limited expertise or resources to commit to devising and negotiating suitable terms that protect their long-term interests, The European Union Agency for the Cooperation of Energy Regulators (ACER) launched a consultation to explore the benefits of an ‘EU recommended’ CPPA model.

In October 2024, ACER concluded that existing templates for PPA contracts were sufficient for European market needs, but recognised the difficulty in ensuring consistent access and committed to gathering and publishing a list of templates on their website. At the time of writing, this includes 3 agreements in 7 languages.

Underwriting and electricity purchaser guarantee schemes

The challenge of potential electricity-purchasing businesses lacking sufficient counterparty strength to enter into CPPAs – and finding that commercial underwriting is unfeasible or negates the potential benefits of CPPAs – is not unique to the GB market. Several European markets are seeking to broaden access to CPPAs with state-backed guarantee schemes.

These function as risk mitigation mechanisms that provide partial coverage (typically up to 80%) of counterparty default risk in CPPA contracts. These schemes are typically structured to be self-financing as they apply risk-based premiums sufficient to cover transaction assessment, administrative costs, and capital remuneration. This has led to them being considered compliant with EU state aid rules.

Their primary aim is to democratise access to PPAs beyond large multinationals by enabling small and medium-sized enterprises (SMEs) and EIIs with weaker balance sheets to secure bankable long-term contracts.

National approaches vary:

Italy uniquely combines guarantees with a centralised trading platform (MPPA)
Norway covers buyer, seller, and lender risk across all renewable technologies^{[footnote 2]}
France limits coverage to onshore wind and solar for manufacturing sectors^{[footnote 3]}
Spain only supports buyers from EIIs^{[footnote 4]}

All share common design principles including:

minimum contract durations
individual transaction risk assessment
stress that public support should complement rather than crowd out private market development.

In terms of success, Norway’s scheme has helped EIIs sign long-term power contracts with renewable generators^{[footnote 5]}. As it was judged not to constitute state aid by the EFTA Surveillance Authority, it could scale relatively smoothly. However, outside Norway, CPPA state guarantee schemes are still in early stages. They’ve demonstrated that the model can work, but so far, they have de-risked only a handful of contracts and have not yet transformed Europe’s CPPA landscape.

Counter guarantees

In February 2025, the European Commission’s Clean Industrial Deal (Affordable Energy Action Plan) included a €500 million pilot programme for CPPAs with the European Investment Bank taking on counter-guarantees for PPA undertaken by EU companies, preferably SMEs, midcap firms, and EIIs, to support the long-term purchase of electricity generation.

Additionally, the EU launched a ‘Lending Envelope’ in 2025 to provide counter-guarantees to banks and insurers that underwrite CPPA risks across all EU states plus Norway and Iceland. The idea is to amplify private guarantees, not replace them, making it easier to finance CPPAs with weaker offtakers or more complex risk profiles. However, this is extremely new and has no outcome data.

Market design and support scheme approaches

Some countries have recognised the potential for schemes designed to support investment in renewable or low-carbon generation – and in particular those that provide secure forms of offtake, designed to reduce investment risk for these capital-intensive assets whose investability relies on market income – to in effect compete with business users who also wish to be electricity offtakers.

There has been some exploration of how to design support arrangements in a way that incentivises or requires generators carve out a proportion of the electricity they produce for sale to corporate electricity buyers through alternative routes to core government support schemes. In February 2025, the European Commission’s Clean Industrial Deal (Affordable Energy Action Plan) set out a summary of actions and a timeline to bring down the cost of the EU’s electricity supply.

This includes a range of non-fiscal interventions designed to support CPPAs in the EU, including:

the promotion of technologically neutral cross border PPAs
the adoption of new rules to support the further development of European forward markets and increase hedging opportunities
the provision of guidance to Member States on the design of effective CfDs, including their combination with PPAs (expected Q4 2025)

Use of intermediaries and PPA trading platforms

Intermediaries and brokers can, for a fee, help address some of the challenges businesses can face agreeing both PPAs and CPPAs. Route to market traders can offer standardised PPA and CPPA contract terms to support smaller buyers and sellers who do not have the in-house expertise or capacity to deal with the wholesale electricity market.

However, contractual terms still have to be negotiated and need skilled legal advice, meaning transaction costs for smaller industrial and commercial consumers (on a per MWh basis) may still be relatively high. Providers of sleeving services typically manage administrative processes, including payment of system charges and levies, and connection processes. They can have a more active balancing function, managing any imbalances with separate supply arrangements.

Intermediaries can also act as arrangers for bundled CPPAs, that group multiple corporate electricity buyers to form a diversified portfolio manage credit risk by limiting the generator’s exposure to default risk associated with any particular offtaker – and potentially in some cases also helping some smaller purchasers build critical mass as an offtaker.

Arrangers can also bring together multiple generation projects to serve a single larger electricity buyer. However, the relative complexity of such arrangements, and the practical challenges in ensuring equitable spread of risk and cost, and managing timescales for varied businesses, may have limited their development.

Intermediary platform services allow electricity generators to rapidly agree PPAs for their production in an efficient way, based on standard terms and with good visibility of pricing options. These platforms primarily serve shorter-term PPAs (where the electricity sellers are already-operational projects and the purchasers are typically electricity suppliers), rather than more complex longer-term CPPAs linked to the development of new generation projects.

Question 7

7. Questions

Accepted Answer

Answer the following questions online via Qualtrics.

1․ To what extent and in what ways are CPPAs attractive for industrial and commercial electricity consumers compared with other electricity supply arrangements?

In your answer, consider different types of CPPA and what makes each type more attractive.

2․ To what extent can CPPAs support the development of new electricity generation capacity?

In your answer, consider different types of CPPA.

3․ What actions could support growth in the GB CPPA market and make CPPAs a better option for:

Electricity buyers?
Electricity generators?

If relevant, reference specific business level barriers your organisation has encountered when attempting to enter into a CPPA.

4․ What best-practice approaches developed in comparable markets could address the challenges in developing and agreeing CPPAs in Great Britain?

Reference any experience of participation in these markets, and any evidence of how approaches could be adapted to fit the GB market.

Cookies on GOV.UK

Applies to England, Scotland and Wales