Neil Garland, Head of Origination at Evolve Energy
Why are Corporate Power Purchase Agreements (CPPAs) becoming more relevant to UK businesses right now?
Demand for CPPAs in the UK is growing rapidly as businesses face tougher ESG reporting rules, volatile energy prices and rising energy demand across industries from data centres to pharmaceuticals and retail. Traditionally, CPPAs were the preserve of large energy companies and multinationals with the resources to navigate their complexity. Today, the landscape is shifting. CPPAs are becoming more accessible, opening the door for a far wider range of industrial and commercial businesses to access secure, traceable renewable power. For many businesses, CPPAs now represent a strategic opportunity to stabilise costs, reduce emissions and strengthen their long-term competitiveness in an increasingly challenging energy market.
What’s driving this surge in interest?
A combination of environmental, regulatory and market factors has fuelled this surge. ESG reporting requirements, such as the EU Corporate Sustainability Reporting Directive, now mean companies must prove their own energy use and that of their supply chains are sustainable. Scope 3 emissions, linked to these rules, have become critical in competitive tenders and compliance with initiatives like the Science Based Targets initiative.
At the same time, energy price volatility is hitting hard. In January 2025, UK wholesale electricity prices soared to £250 per megawatt hour. Europe’s gas reserves are also under strain, standing at 56.6% in June 2025 compared to 75.5% a year earlier. Falling CPPA prices and record renewable generation in 2024 are now driving businesses toward long-term price stability.
Despite this demand, why are CPPAs still difficult for many industrial and commercial businesses to access?
The barriers to entry remain high. Developers of new renewable projects typically seek long-term contracts of 10 to 15 years to secure financing. For many businesses, this horizon doesn’t align with their energy planning cycles.
Competition from the government’s Contracts for Difference (CfD) subsidy scheme also plays a role. CfDs guarantee generators’ revenues, making them reluctant to offer shorter, more flexible CPPA terms and often pushing prices higher.
Credit is another challenge. Many developers only work with investment-grade buyers. Others require cash collateral or Letters of Credit, which can tie up significant capital. CPPAs are also complex legal agreements, requiring extensive review and sleeving arrangements with licensed suppliers to integrate renewable energy into existing supply contracts. The process can take months or even years, discouraging smaller businesses from participating altogether.
What changes are needed to make CPPAs more accessible and affordable?
Simplification is key. The CPPA market needs to reduce both complexity and cost if it is to attract a broader range of businesses. Standardising terms and conditions would make agreements easier to understand and faster to negotiate, helping to cut down on lengthy legal processes and associated costs.
Lowering credit barriers would also be transformative. Many businesses cannot meet the current credit requirements, and alternative structures are needed to give them a fair chance to participate. Finally, licensed suppliers and generators need stronger incentives to collaborate, so renewable power can flow smoothly from generator to buyer without excessive contractual hurdles.
Are there any examples of how the market is already evolving in this direction?
Encouraging signs are emerging. Renewable energy consortiums are one example, enabling companies to pool demand and share the benefits of a CPPA without bearing all the risk individually. This goes beyond simply purchasing Renewable Energy Guarantees of Origin certificates, offering genuine time-matching between renewable generation and consumption.
Some CPPAs now use supply licence exemptions, such as Class A, allowing smaller generators to supply up to 2.5 megawatts per half-hourly settlement period when matched directly to demand. This avoids certain government policy and social costs, making renewable energy more affordable for both sides.
Looking ahead, what needs to happen for CPPAs to become mainstream across the industrial and commercial sector?
Traceable green energy is becoming a critical requirement as businesses face mounting pressure from regulators, supply chains and their own net zero commitments. The rewards of a mature CPPA market are clear: greater transparency of emissions, accelerated carbon reduction and long-term price stability.
To achieve this, the current system must give way to a more open and standardised model. Generators need to align on common terms and conditions, making contracts simpler and quicker to finalise. Making renewable power affordable and accessible will not only accelerate the energy transition but also give UK businesses the tools they need to thrive sustainably in a competitive global market.
This article appeared in the Nov/Dec 2025 issue of Energy Manager magazine. Subscribe here.
