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

• 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”, commented Annie Scanlan, RE-Source Platform’s Director.

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 represents a committed group of corporate renewable energy buyers and energy suppliers driving forward corporate renewable energy sourcing in Europe. Our mission is to make it easier for companies to use more renewable energy.

RE-Source 2024 is being held in Amsterdam on 24-25 October. A record 1,400 attendees, including over 350 energy buyers, are gathering to exchange on renewable energy procurement trends, best-practice, and regulatory insights. More than 400 B2B meetings are scheduled to take place between energy buyers and sellers at Europe’s annual gathering of corporate renewable energy procurement experts.

©Gregory De Leeuw, David Plas Photography