15 December 2023
RE-Source Platform welcomes this week’s agreement between EU negotiators on the revision of the EU’s electricity market design (EMD). Energy buyers and suppliers have been enthused by the positive recognition from policymakers on the pivotal role of power purchase agreements (PPAs) as a key route to market in the deployment of renewable energy in Europe.
2023 has seen a record-breaking surge in PPAs[1], with approximately 8 GW of new renewables capacity contracted by corporate energy buyers. This noteworthy achievement underscores the growing demand for renewable energy sourcing solutions. The market design reform is critical to consolidate the corporate PPA market and open access to PPAs for new corporate buyers.
RE-Source strongly supported the call to immediately end the emergency measures, adopted in response to the crisis, particularly the market revenue caps. Energy buyers and suppliers are therefore pleased to see that the revenue caps have not been institutionalised in legislation. Energy buyers need a stable regulatory environment in order to sign long-term renewable power deals, which typically are contracted for 8 to 15 years. The reformed electricity market design therefore rightly focuses on creating a long-term, stable framework which will enable corporates to put forward capital to help fund the energy transition.
Enabling corporate PPAs to play a larger role in the EU energy transition is critical for achieving the ambitious targets set for 2030
Through the reformed electricity market design, Member States are empowered to help more corporate energy buyers to sign PPAs. This will mean that corporate renewable energy procurement can play a bigger role in supporting building new wind and solar farms which Europe needs to reach the 2030 energy targets.
Alongside the recently adopted EU Renewable Energy Directive (REDiii) and the European Commission’s Action Plan for Grids[2], we can unlock greater investments in new wind and solar farms, accelerating industry decarbonisation and reaching the EU renewable energy target of 42.5% by 2030.
Corporate renewable PPAs are becoming a key driver for investments in new renewable energy installations in Europe and the achievement of the EU’s climate-neutrality target. This relies on a predictable regulatory environment which supports investment. We look forward to working with national decisionmakers and stakeholders as the reform is implemented.
[1] RE-Source 2023 marks 7.8 GW PPA record but industry urges for barriers to be removed to reach EU net zero objectives – https://resource-platform.eu/news/re-source-2023-marks-7-8-gw/
[2] Corporate energy buyers: use EU Action Plan for Grids to unlock more wind and solar power plants funded by corporate offtakers – https://resource-platform.eu/news/corporate-energy-buyers-use-eu-action-plan-for-grids-to-unlock-more-wind-and-solar-power-plants-funded-by-corporate-offtakers/