Money to burn? Why some CPPAs never make it past the lawyers
- lauradelooze
- Feb 27
- 3 min read
Corporate Power Purchase Agreements (CPPAs) are widely promoted as a cornerstone of corporate Net Zero strategies. By enabling organisations to contract directly with renewable generators over long time horizons, CPPAs can offer price certainty, carbon additionality, and a compelling sustainability narrative.
This has driven growing interest across the UK and Europe, particularly among energy intensive businesses seeking to reduce Scope 2 emissions, meet supply chain requirements and manage exposure to volatile wholesale markets. Yet despite this momentum, many CPPA discussions fail to progress beyond early legal and commercial stages.
Why CPPA’s Are So Hard to Close
CPPAs are bespoke, long-term contracts designed to support the financing of new renewable assets. Tenors typically range between 5 to 15 years and must allocate a wide range of risks between buyer and generator, including construction delays, operational performance, regulatory change, and termination events.
These risks have direct implications for renewable assets that have project finance, meaning contracts are heavily scrutinised by lenders as well as legal advisers. With no commonly approved legal framework, negotiations can become protracted due to the complexity, even for experienced counterparties.
Credit Risk and Integration Reality
Buyer creditworthiness is the least visible barrier to CPPA execution. Developers and lenders typically require investment grade rated counterparties and in the absence of such demand substantial financial security. For many organisations including prominent brands sector wide, credit mitigation requirements often prove unviable due to liquidity constraints and the opportunity cost of capital.
Compounding this, corporate buyers cannot physically integrate the power directly from a renewable asset into their supply position without the agreement of their licensed supplier. CPPAs transacted through independent generators therefore rely on Sleeving Agreements and /or non-standard supply contracting arrangements, adding further contractual and operational complexity. Generators typically want to sell their power ‘as produced’ meaning buyer and licensed supplier must contend with reaching commercial agreement on the treatment of balancing risk. There are cases where individual businesses have bilaterally executed CPPA with a generator only to discover after the event that their incumbent supplier was unwilling to integrate the renewable energy into their supply position as the exposure to balancing risk meant they couldn’t support the required supply and settlement structure.
Time, Cost, and No Outcome
Taken together, the protracted legal process, credit requirements, and supply integration challenges can result in months and even years of work with no signed agreement achieved. Legal and advisory costs accumulate, buyer momentum is lost, and sustainability ambitions stall.
What Successful Buyers Do Differently
Organisations that successfully execute CPPAs take a more structural approach. They obtain a clear board mandate for their risk appetite upfront, identify the key considerations of both parties for the lawyers to prioritise under tight remit and recognise the importance of understanding both the capability and appetite of their incumbent supplier to support the CPPA at the outset. Working with a supplier that has proven CPPA experience, established contracting frameworks, and the operational capability to integrate complex agreements can significantly reduce legal cost and time to delivery.
Understanding the Barriers Is the First Win
CPPAs remain a powerful decarbonisation tool, but they are not a universally accessible. Their complexity reflects the realities of financing and delivering new renewable generation. For corporates, understanding these barriers early enables informed decisions, clearer expectations, and faster, more cost-effective progress towards Net Zero.
The Mutual Benefit
It’s not just customers who stand to gain. Generators also see better returns when their output is linked directly to demand through well-structured agreements. That encourages more renewable projects to come online, which strengthens the wider energy system and makes future access easier for all. This shared value is what makes CPPAs more than a transaction. They are a mechanism for progress for businesses, for generators, and for the transition to clean energy.
The Cost of Inaction
The danger is assuming that waiting will somehow make things easier. The reality is the opposite. Regulation is tightening, scrutiny on ESG is rising, and investor expectations are only going one way. Energy will remain a major cost line for businesses, and locking in a renewable supply is one of the few ways to gain control.
Looking Ahead
CPPAs can feel intimidating, but they don’t have to be. With the right support, they can be a realistic, effective tool for any business serious about both sustainability and resilience. What was once seen as the preserve of only the biggest corporates is becoming more accessible. And for those who act early, the rewards extend well beyond cost savings. They secure credibility, stability, and a stronger position in the race to net zero.
Find out more about how we help our customers unlock access to renewable energy solutions here.
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