Draghi says PPAs are good for EU competitiveness: all EU rules must reflect that

24 October 2024

Battery regulation risks undermining the corporate renewables procurement market
Corporate renewable energy buyers call for a consistent and supportive approach to corporate renewable power purchase agreements (PPAs) across the EU policy framework
The recent Draghi Report names PPAs as a key tool for Europe’s industrial competitiveness

Europe must leverage the significant potential for private financing stemming from PPAs. The recent “Draghi Report” on the EU’s competitiveness and economic security singled out PPAs as a key tool for strengthening the EU’s industrial resilience. PPAs have significant benefits: they enable European companies to procure clean energy at competitive and predictable prices. They increase companies’ energy autonomy and security. They help accelerate the roll-out of much-needed renewables. In short: PPAs can be a key driver of the EU’s Clean Industrial Deal.

However, the EU’s institutions must have a consistent and supportive approach to PPAs to facilitate these benefits. The EU must create incentives across all EU policies for corporates to sign PPAs and other procurement tools.

Despite the recently adopted EU Electricity Market Design revision, which mandates Member States to promote PPAs, the European Commission is currently undermining the sustainable growth of PPAs. The Commission is drafting rules to determine the carbon footprint of Electric Vehicle batteries which would ban the use of PPAs and green energy certificates to demonstrate reduced emissions.

With this approach, the EU would be giving with one hand and taking with the other by promoting PPAs in one policy, and building in disincentives in another. This is hugely problematic as we know that the EV battery rules will be copy-pasted for other policies. The incoming European Commissioners have been instructed by the Commission President to draw on Draghi’s report in their work – this includes his recommendation to promote PPAs as a tool for industrial competitiveness. Dan Jørgensen, the Commissioner-Designate for Energy & Housing has also been instructed to unlock private financing. PPAs tick this box

— Annie Scanlan, Director at RE-Source Platform

2024 is set to become another record year for the European PPA market, with 10.7 GW signed already this year. Europe needs to accelerate this positive advancement in the energy transition. Corporates stand ready to finance new wind and solar assets – for the benefit of all society. Give them the policy framework which will help them do more, not less!

Fortunately, the methodology for the carbon footprint of EV batteries is still in a drafting phase – meaning the EU can still act to stop this hugely damaging approach to PPAs being set in EU law.

PPAs, alongside green energy certificates, are part of many critical EU energy decarbonisation policies, therefore a consistent and supportive approach is critical to support PPAs, as a route to market for new wind and solar which uses private financing for the transition to net zero. An ambitious regulatory framework in the EU will spur renewables development globally, given that imported products would also have to follow these rules.

About RE-Source

RE-Source Platform accelerates corporate renewable energy procurement through growing the pool of corporate buyers in Europe, via removing barriers and promoting tools like, but not limited to, PPAs, onsite generation, and renewable energy certificates. We make it easier for corporates to procure and use renewables. This mission intends to support corporate decarbonisation, in support of Europe’s renewable energy and net neutrality targets. The Platform pools resources and coordinates activities to promote a better framework for corporate renewable energy sourcing at EU and national level.