The PPA Market’s "Big Repricing": A Critical Look at the EU's New PPA Framework

In 2025, renewable energy crossed a major milestone, accounting for nearly half of all EU electricity generation. At the same time, market data suggests that corporate Power Purchase Agreement (PPA) volumes in Europe declined from 15.3 GW in 2024 to 13.1 GW in 2025. This combination of renewable growth and slowing PPA activity reflects what analysts are calling the “Big Repricing” of the market.

To clear roadblocks and align regulatory frameworks with shifting market realities, the European Commission recently adopted Recommendation (EU) 2026/917. This article analyses the market inefficiencies the EU is targeting, the limits of the Commission’s proposed fixes, and what corporate buyers and developers must do to adapt.

1. Targeted Market Inefficiencies: A Market Under Pressure

The European Commission correctly identifies four primary headwinds currently weighing on the PPA market:

Price Cannibalisation and Negative Prices: As solar and wind capacities saturate the grid, their “capture factors” have fallen sharply in core European markets. Negative wholesale price events are also becoming more frequent. This is eroding the value of traditional pay-as-produced PPAs and slowing deal flow.

The Corporate Divide: The market has become heavily bifurcated. Big Tech hyperscalers continue to dominate clean energy procurement, while Small and Medium-Sized Enterprises (SMEs) remain sidelined by limited creditworthiness, volatile power prices, and complex accounting rules.

The Shift to 24/7 Matching: Upcoming changes to the Greenhouse Gas (GHG) Protocol are expected to push buyers toward more granular tracking and matching of clean energy consumption. This weakens the value of annual volume matching and increases demand for hybrid structures involving Battery Energy Storage Systems (BESS), firming services, and shaped supply.

State Intervention Crowding Out Private Investment: Increased public support through two-way contracts for differences (2w-CfDs) risks cannibalising the private PPA market by offering developers lower-risk, state-backed financing that may outcompete private corporate deals.

2. The EU Position: How the Commission Plans to Reduce the Bottlenecks

Recommendation (EU) 2026/917 lays out a strategic roadmap to reduce these frictions, mainly by lowering access barriers, improving transparency, and aligning PPA markets with flexibility and storage needs. The Commission’s position focuses on four main pillars:

Embracing Flexibility: To address the shift toward more granular matching, the Commission recommends that Guarantees of Origin (GOs) be issued with time granularity down to the market time unit. It also recommends that GOs explicitly apply to electricity provided by storage units and reflect the bidding zone in which generation has taken place.

Democratising Access via Aggregation: To bridge the divide between Big Tech buyers and SMEs, the Recommendation pushes Member States to remove barriers to multi-buyer PPAs and demand aggregation. It also advises using the European Investment Bank’s counter-guarantee lending instruments to help reduce offtaker credit risk.

Harmonising Public Support: The Commission calls for State-backed 2w-CfDs to be designed so they complement, rather than displace, private PPA markets. It also supports mechanisms allowing part of publicly supported capacity to be sold through market-based PPAs.

Clearing Permitting and Accounting Bottlenecks: The framework calls for faster asset deployment by improving permitting processes, adequately staffing permitting authorities, and revising national accounting rules where they penalise companies for signing PPAs.

2.1 What the EU Gets Right

The Commission’s framework usefully modernises the market’s “plumbing” for a more complex, capital-intensive energy system. Granular Guarantees of Origin can provide the regulatory foundation to reward battery storage, flexibility, and more credible clean energy matching. The promotion of multi-buyer PPAs, demand aggregation, and EIB-backed guarantees may also help SMEs overcome market-entry hurdles.In this sense, the Recommendation is a practical step forward. It recognises that the PPA market is no longer only about signing long-term contracts for cheap renewable energy. It is increasingly about building structures that can manage intermittency, credit risk, hourly matching, and public-private interaction.

3. The Limitations of the EU’s Position

While the Commission’s Recommendation attempts to lower administrative and access barriers, it largely treats the symptoms rather than the disease. Several structural limitations remain.

PPAs Do Not Fix Physical Cannibalisation: The assumption that signing more PPAs will stabilise the market ignores physical reality. A PPA, whether physical or financial, reallocates risk between parties; it does not by itself remove the physical oversupply of solar and wind that causes wholesale prices to collapse during peak production hours. In this context, different business models must emerge, including hybrid PPAs that combine diverse energy vectors, generation technologies, battery storage, and flexibility services to offset production variability.

The “Long-Term Market Nothingness” Problem: Academic critiques, including those by Batlle et al., argue that focusing solely on bilateral PPAs misses the broader structural flaw in Europe: the lack of deep, standardised, and liquid long-term risk markets. In short, Europe may still lack a mature financial exchange where companies can easily buy, sell, and trade 10- or 15-year energy risks.

The Cost of 24/7 Complexity: Granular, hourly matching is necessary for more credible decarbonisation claims, and the new GO rules are an important enabling tool. However, GOs alone do not create a complete 24/7 procurement framework. Buyers will still need metering systems, contractual structures, storage, firming services, and portfolio management to match consumption with clean energy on an hourly basis. This raises the quality of the green claim, but it also increases contracting complexity and cost.

The Takeaway

The Commission’s Recommendation is a useful intervention, but it is not a full market-design solution. It improves the legal and commercial infrastructure around PPAs, especially for SMEs and public buyers, but it does not fully address the price-formation and flexibility failures now undermining renewable PPA bankability.

As negative prices, hourly matching, and storage needs reshape the market, buyers and developers will need to move beyond traditional pay-as-produced PPAs toward hybrid, shaped, and flexibility-backed structures. Without stronger incentives for energy storage, demand flexibility, and carefully designed CfDs, PPAs risk remaining a complex, niche instrument for sophisticated buyers rather than a scalable solution for Europe’s clean energy investment needs.

As these regulatory changes take effect and market volatility persists, corporate buyers and developers must adapt their contracting strategies to remain competitive.

Sources

1. Agency for the Cooperation of Energy Regulators (ACER), “2025 Electricity Wholesale Market Integration Report.”

2. Agency for the Cooperation of Energy Regulators (ACER), “PPA Templates Assessment and Template-Gathering Project.”

3. Batlle et al., “Treading Water, but not Drowning.”

4. BDEW, German Association of Energy and Water Industries, “Consultation Response to ACER.”

5. BloombergNEF, “1H 2026 Corporate Energy Market Outlook.”

6. Eurelectric, “Consultation Response.”

7. European Commission, “Recommendation (EU) 2026/917 on Removing Barriers to PPAs and Other Energy Purchase Agreements.”

8. Greenhouse Gas Protocol, “Scope 2 Consultation Materials.”9. Reuters, “Europe’s Solar Surge and Negative Prices.