EU Pushes to Scale Up Long-Term Electricity Deals
The European Commission has unveiled new measures to boost the use of long-term energy contracts, aiming to give businesses more stable and predictable electricity prices.
These agreements—known as power purchase agreements (PPAs)—allow companies to buy electricity directly from generators at fixed prices over many years. In simple terms, a business agrees to pay a set price for power from a specific project, such as a wind or solar farm, providing price certainty for the buyer and stable revenues for the generator.
For example, a large manufacturer could sign a 10–15 year contract with a solar developer, locking in electricity prices and helping finance the construction of that project. In return, the developer gains a guaranteed income stream, making it easier to secure investment.
PPAs have grown rapidly in recent years, particularly after the sharp energy price spikes in 2022, as companies looked for ways to reduce exposure to volatile markets. However, the Commission says their full potential remains untapped due to regulatory and market barriers.
These include limited access for smaller businesses, complex contract structures, and challenges around financing and risk. The new recommendation sets out steps to remove these barriers, including improving access to guarantees, simplifying rules, and encouraging wider participation.
By expanding the use of PPAs, the EU aims to support new renewable energy projects while offering businesses greater price stability, helping reduce exposure to future energy shocks and accelerate the transition to clean energy.