Call for evidence outcome

Government response to the Corporate Power Purchase Agreements call for evidence

Updated 7 July 2026

Rationale for the call for evidence

Corporate Power Purchase Agreements (CPPAs) are a long-term electricity purchase agreement between a generator and a corporate electricity user. They can provide businesses with secure low-carbon electricity supplies at stable prices, helping to manage exposure to electricity price volatility and support investment planning and budgeting. They can also provide generators and developers with greater revenue certainty, supporting project financing and delivery.

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 set out actions to grow the economy by reducing high industrial electricity prices for priority sectors and energy intensive industries.

This includes the British Industrial Competitiveness Scheme (BICS), which will reduce electricity costs by up to £40 per megawatt hour (MWh) for over 10,000 manufacturers across frontier industries in the Industrial Strategy’s growth sectors, as well as foundational industries that supply important inputs. We increased support for energy-intensive industries currently supported by the British Industry Supercharger package, with the discount offered by the Network Charging Compensation Scheme (NCCS) increasing from 60% to 90% in April 2026. In total, this will save currently supported businesses up to £420 million per year. We intend to review both the British Industry Supercharger and the Energy-Intensive Industries (EIIs) Compensation Scheme this year.

Recent price volatility in relation to the Middle East conflict, alongside our dependence on fossil fuels for electricity generation, has renewed business interest in CPPAs as a route to price stability. In this context, a developed Great Britain (GB) CPPA market will complement and reinforce wider electricity market reforms and existing support mechanisms. It will do this by delivering 2 main priorities – economic growth and energy security – both for:

• corporates: CPPAs can provide a market-driven approach to securing long-term, competitively-priced energy contracts, driving business resilience
• generators: CPPAs provide an attractive, alternative route to market for low-carbon generation, driving UK energy security

Our Modern Industrial Strategy included a commitment to issue a call for evidence on how the GB CPPA market can be developed and improved for industry, including where international best practice could help to improve competitiveness, increase efficiency and remove barriers to growth. The Department for Business and Trade (DBT) and the Department for Energy Security and Net Zero (DESNZ) therefore sought views on the experience of current and potential market participants, and on approaches that could strengthen the market in the future. This call for evidence applies to Great Britain; Northern Ireland is part of a separate electricity market on the island of Ireland.

Summary of the call for evidence

The call for evidence was published jointly by DBT and DESNZ. It ran from 9 January 2026 to 6 March 2026 and received 125 responses from a range of stakeholders, including:

• electricity buyers
• generators
• suppliers
• traders
• advisers
• representative bodies

Not every question was answered by all respondents.

The government sought views on:

• whether CPPAs are attractive for industrial and commercial electricity consumers
• whether CPPAs support the development of new electricity generation capacity
• what actions government could take to support growth in the GB CPPA market
• which approaches are working in comparable markets

All responses have been carefully analysed and considered, and this document provides a full government response. Each individual response submitted has equal standing, regardless of whether this was received on behalf of a trade body or an individual company.

All responses were analysed using qualitative thematic analysis. For each question, analysts identified recurring themes and recorded how frequently each theme arose. In summarising evidence, the government uses the following descriptors:

• “the majority” indicates more than 50% of responses
• “several” indicates between 26% and 50%
• “some” indicates between 10% and 25%
• “a few” indicates less than 10%

Quality assurance was carried out to test the robustness of the thematic analysis.

This government response sets out the main evidence received.

Summary of findings

Respondents’ overall sentiment toward CPPAs is cautiously positive. Many see CPPAs as valuable in principle, but emphasise that market barriers, pricing dynamics and the immaturity of the GB CPPA market limit uptake. The most commonly cited benefit is long‑term price certainty, which is valued as a strategic hedge against wholesale volatility and a tool for budgeting and investment planning. Several respondents also identified sustainability targets as a main driver, noting that CPPAs provide a direct contractual link to a named low‑carbon asset that can be more credible than unbundled certificates for corporate reporting.

However, several respondents highlighted substantial barriers to wider participation. Respondents argued access constraints – including credit requirements, collateral, bespoke negotiation and the need for specialist advisers – mean CPPAs remain concentrated among large, creditworthy buyers. In addition, several respondents note that non‑commodity costs (network charges, balancing, and policy levies) can comprise a significant portion of electricity bill charges. Because these are typically unchanged under grid‑delivered (sleeved) CPPAs, there is a perception that non-commodity costs limit the economic incentive to invest in additionality.

Across CPPA structures, private wire and onsite arrangements are seen as the most cost competitive, but some respondents note that they are difficult to deploy at scale due to proximity, land and tenancy constraints. Sleeved CPPAs are seen as the dominant and most accessible structure in GB, but some respondents say they can involve hidden costs and complexity. Some respondents also highlighted virtual or financial CPPAs as flexible products common in other markets, and call for policy to better recognise and address barriers to their use (including accounting and collateral barriers).

Respondents’ recommended actions to grow the GB CPPA market cluster around:

• credit and risk‑mitigation tools
• standardisation and documentation
• improving the treatment of non‑commodity costs and policy levies where this supports additionality
• enabling aggregation and broader participation
• improving transparency, guidance and regulatory certainty (including on reporting, grid connections, and interaction with Contracts for Difference (CfD))

Respondents emphasised the role of CPPAs should be considered within the context of the wider electricity market framework, including ongoing reforms to network charging, connections and market arrangement.

Detailed evidence received through the call for evidence

This section summarises evidence received through the call for evidence. The government has aimed to reflect the breadth of views expressed without seeking to capture every individual point.

Response to question 1

‘Question 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, please consider different types of CPPA and what makes each type more attractive.’

Question 1 received 87 responses. Responses across the dataset were broadly cautiously positive, with the majority of responses classified as broadly positive with caveats. Only a small minority expressed strong opposition. Most respondents were developers, advisers and large corporates, meaning the overall picture may differ across the wider business population.

The majority of respondents identified long‑term price certainty as the primary attraction of CPPAs, contrasting 10 to 15-year fixed or indexed pricing with the shorter horizons available through standard retail contracts. Several respondents cited sustainability targets as a significant driver, noting that CPPAs provide a more credible link to low-carbon generation than unbundled Renewable Energy Guarantees of Origin (REGOs) or standard green tariffs. However, several respondents highlighted access barriers, including stringent credit requirements, bespoke negotiation and reliance on specialist advisers. Several respondents also raised the importance of non‑commodity costs and some pointed to market information failures, sectoral differences and risks associated with long‑term pricing lock‑in.

On CPPA types, several respondents described private wire and onsite arrangements as the most cost‑competitive due to avoided network charges and levies, but difficult to deploy at scale because of proximity, land, planning and tenancy constraints. Several respondents described sleeved CPPAs as the dominant model in GB, although hidden costs and tri‑party complexity were raised by some as limitations. Some highlighted virtual and financial CPPAs as flexible products common in other markets and argued that barriers to their use in GB should be better understood and addressed.

Response to question 2

‘Question 2: To what extent can CPPAs support the development of new electricity generation capacity? In your answer, please consider different types of CPPA.’

Question 2 received 87 responses. The majority of respondents argued that CPPAs can support the development of new electricity generation capacity by providing long-term revenue certainty that underpins project finance and reduces exposure to merchant risk. Within this, the majority emphasised that CPPAs provide a route to market and reduce exposure to wholesale price volatility for developers, while several highlighted their value as a hedging tool for offtakers and their contribution to bankability. A few respondents noted that CPPAs can broaden the buyer pool beyond utilities, provide organisations seeking additionality with a direct link to new renewable projects, and, in some cases, allow aggregated or multi-buyer structures to bring projects to market.

Respondents also highlighted more targeted roles for CPPAs. Some argued that CPPAs can support repowering and life extension of existing renewable assets exiting subsidy regimes, support smaller-scale projects that may struggle to access CfD auctions, and in a few cases support battery storage through hybrid structures that improve firmness and bankability. Some respondents identified private wire CPPAs as particularly strong in supporting new generation where projects are co-located with demand. Some highlighted virtual CPPAs as an important route to supporting new capacity, especially for multi-site buyers.

At the same time, respondents emphasised that the extent of this support depends heavily on the wider market framework. The majority highlighted the interaction between CPPAs and CfDs as a major issue, widely describing CfDs as the dominant route to market for large-scale renewables and an important reference point in CPPA pricing. The majority also identified barriers to CPPA uptake, including several respondents who:

• pointed to contract and permitting complexity
• noted limited attractiveness to some offtakers under current market conditions
• highlighted the difficulty of securing contracts of sufficient length
• referred to grid constraints that delay or weaken project viability

Response to question 3

‘Question 3: What actions could support growth in the GB CPPA market and make CPPAs a better option for: a) Electricity buyers? b) Electricity generators? If relevant, please reference specific business level barriers your organisation has encountered when attempting to enter into a CPPA.’

Question 3 received 99 responses. Respondents’ recommendations of actions to support growth in the GB CPPA market fit into 3 main themes:

• CPPA market interventions
• the provision of information and guidance
• regulatory and policy reform

Market interventions

The majority recommended the provision of a government‑backed CPPA credit support or guarantee scheme, under which the government would take on a portion of generator counterparty risk. Respondents argued this would improve bankability for generators and allow market participation by a broader range of electricity users. They also argued that, if structured on risk‑based fees, this could be fiscally efficient. 

Several recommended exemptions from generation-related policy levies for CPPAs supporting additionality, most commonly from the CfD Supplier Levy Obligation, with some extending this to Renewables Obligation, Feed in Tariff and Climate Change Levy. A few called for similar exemptions for CPPAs supporting life extension or repowering of operational generation assets. Respondents argued this would reduce CPPA prices for electricity users and address what respondents describe as a “double charge” for additionality.

For smaller electricity users, minimum volume requirements and transaction costs remain a significant barrier. Several respondents recommended greater support for demand aggregation through multi‑buyer or pooled CPPAs. They argued aggregation could lower transaction costs, diversify counterparty risk for generators, and improve CPPA market liquidity by enabling small and medium-sized enterprise (SME) participation. These benefits are tempered by concerns of increased governance complexity and the risk of state-backed aggregators having an unfair advantage over existing commercial aggregators.

A few respondents emphasised the role of CPPAs in supporting post‑subsidy low-carbon assets, particularly those exiting the Renewables Obligation from 2027. They suggest CPPAs could provide revenue stability for operational assets, supporting life extension or repowering at competitive prices.

A few respondents proposed the creation of a central CPPA marketplace or registry to reduce search costs, improve transparency and increase market liquidity. They argued centralisation could make it easier for buyers and generators to connect. A few respondents warned that government‑backed platforms risk distorting competition and crowding out existing merchant providers.

Weak forward market liquidity was identified as a constraint on CPPA pricing. A few respondents recommended reforms to encourage longer‑term trading, including changes to the CfD reference pricing or enabling more tradeable long‑term positions. They argued these measures could improve price discovery and reduce bid‑offer spreads. However, they noted risk in undermining the stability underpinning existing CfD arrangements.

Information and guidance

Beyond market structure, respondents highlighted the importance of information and transparency to supporting growth in the GB CPPA market. The majority recommended the publication of voluntary standard CPPA terms to reduce legal costs and negotiation times. Some call for improved access to public price data and long‑term forecasts to support:

• buyer decision‑making
• stable and predictable policy and regulatory frameworks to support long‑tenor contracts
• targeted guidance for new market participants to lower technical and procedural barriers

Regulatory and policy

Several respondents called for reform of the Renewable Energy Guarantee of Origin (REGO) scheme and broader carbon reporting frameworks to better recognise CPPAs, including time‑matched certificates, recognition of storage, and clearer differentiation from unbundled certificates in carbon reporting. They argued these reforms could strengthen the value proposition of CPPAs. Some highlighted barriers to private wire CPPAs, recommending clearer guidance on supplier licence exemptions to unlock scalable onsite generation. A few recommended continued support for local energy markets building on existing code modifications, though high transaction costs remain a concern.

Finally, respondents emphasised the importance of broader system reform. Some recommended network and grid connection reform with proposals including prioritisation of CPPA‑backed projects, improved connection queue management, and greater transparency around network charges. Respondents argued these measures could reduce delivery risk and unlock lower CPPA prices. Some called for reform of the Contract for Difference scheme to create space for CPPAs. Recommendations include guidance on CfD‑CPPA hybrid structures, with a few calling for government to allocate a proportion of CfD procurement to the CPPA market. Respondents argued these changes could increase CPPA supply and reduce long‑term generation levy burdens. However, others emphasised the need to avoid undermining the simplicity that has made the CfD scheme successful.

Additional issues raised include reforming public sector procurement frameworks and explicitly recognising virtual CPPAs, while addressing accounting, reporting and collateral barriers that currently limit their use.

Response to question 4

‘Question 4: What best‑practice approaches developed in comparable markets could address the challenges in developing and agreeing CPPAs in Great Britain? Please reference any experience of participation in these markets, and any evidence of how approaches could be adapted to fit the GB market.’

Question 4 received 80 responses. Respondents emphasised how comparable markets demonstrate that no single intervention will unlock widespread uptake of CPPAs in Great Britain, and instead supported a package of complementary measures targeted at key market constraints. Across responses, these themes are framed as addressing frictions, including counterparty risk, transaction complexity and barriers to participation.

The majority of respondents raised the theme of risk and credit mitigation, with respondents pointing to approaches used in comparable European markets, including Norway, Spain and France. Within this, the majority cited state-backed guarantees, including counter‑guarantees and underwriting mechanisms for reducing counterparty risk and enabling broader participation.

The majority of respondents highlighted contract standardisation and documentation, including several referring to reducing transaction costs and complexity, and several to the use of templates and clause libraries. Approaches from European markets and financial CPPA markets in Europe and the United States were cited as reducing legal costs and improving consistency, while retaining flexibility.

The majority of respondents also referred to aggregation, intermediaries and platforms, including intermediaries and buyer aggregation models. Examples from Italy, Spain and the Nordic region were described as improving access for smaller or less experienced buyers, particularly when combined with improvements in credit and contracting.

A majority of responses also highlighted system and regulatory enablers, including grid access, market transparency and certificate and accounting frameworks. Respondents referenced international examples such as grid access arrangements in Ireland, transparent cost structures in Nordic markets, and pricing approaches in markets including the United States, Canada, Australia and New Zealand, noting these can reduce uncertainty and improve comparability.

The interaction between CPPAs and wider policy frameworks was highlighted by the majority of respondents including renewable procurement requirements and support mechanisms in markets such as Germany, Poland, Japan and the United States. Respondents emphasised 2 distinct effects. First, these policies can increase corporate demand for low-carbon electricity, for example through sustainability targets, procurement mandates or incentives such as subsidies and tax credits, which drives demand for CPPAs. Second, they shape how CPPAs operate alongside other schemes, including CfD-type mechanisms, influencing their attractiveness, pricing and overall role within the wider market framework. Several respondents referred to CPPA structures and market design, including alternative contract structures and regulatory frameworks observed in other markets.

Conclusion and next steps

The call for evidence provides a clear picture of the opportunities and barriers for CPPAs in Great Britain. Respondents see CPPAs as a potentially valuable tool for managing electricity price risk and supporting low-carbon procurement, but emphasised that credit constraints, transaction costs, and limited transparency restrict wider participation. Respondents are clear that a developed CPPA market holds strong potential as a business-level route to mitigating the economic impacts of energy price volatility, as well as securing stable, competitively priced electricity.

The government welcomes further engagement with stakeholders on this response to the call for evidence, recognising this as a core action from our energy commitments in the Industrial Strategy, and the current heightened industry interest in energy resilience measures due to the ongoing conflict in the Middle East.