UK seeks industry views on corporate PPA reform

Ronan Lambe, a renewable energy expert at Pinsent Masons, was commenting after the UK government launched an open call for evidence on CPPAs as part of its long-term plan to transform the UK into a clean energy superpower.

The call for evidence, which was announced earlier this month, seeks views from a wide range of stakeholders across the energy industry to help identify how CPPAs can be developed and improved across Great Britain.

The government identified CPPAs as an important priority in its 10-year industrial strategy (PDF 160 pages / 15.6 MB), published last June, saying they were “a potential route for energy consumers to secure more stable electricity prices” and that they could create “alternative routes to market for low-carbon electricity generators”.

The government said the call for evidence would draw on international best practice to “improve competitiveness, increase efficiency” and “remove barriers to growth”. It is seeking views from investors and funders of electricity infrastructure, electricity suppliers, traders and intermediaries and those developing and operating electricity generation projects across Great Britain: England, Scotland and Wales but not Northern Ireland, which is part of Ireland’s electricity market.

Ireland has witnessed a surge in interest in CPPAs to meet the growing energy demand of the country’s many data centres. In the UK, the National Energy System Operator says electricity demand from data centres in Great Britain is projected to rise from 7.6TWh per year to reach between 20TWh and 41TWh by 2035 and 30 TWh to 71TWh by 2050. Since data centres often require long-term electricity supply agreements at scale, the UK government says this could make them potentially “attractive counterparties for CPPA[s]”.

The call also highlights a number of the known challenges to CPPA uptake in Great Britain, including a commitment to purchase electricity at scale, alongside the need to have high creditworthiness and a high level of legal and technical expertise to review and negotiate these types of bespoke contracts.

Negotiations of PPAs can be complex for a variety of reasons, from specific geographical constraints and customer requirement novelties to unanticipated delays due to supply commitments and increased costs. The government says such “complex and resource intensive” processes may be particularly off-putting for smaller firms, but notes that intermediaries and PPA trading platforms that offer standardised PPA and CPPA contract terms could help “support smaller buyers and sellers” that lack in-house expertise specialist knowledge in this field.

Lambe said: “The fact that the government is consulting on this issue is a positive step. It will be interesting to see what steps it takes to remove the many barriers to entry, for developers and offtakers alike. Innovations such as standard CPPA terms have been tried in the past, but with limited success.”

He added: “The attractiveness of the Contract for Difference [CfD] regime for established technologies such as onshore wind and solar is the elephant in the room here, having effectively removed a pool of potential projects which might otherwise have been the subject of CPPAs. Reconciling a desire to remove barriers to CPPA participation while not harming the attractiveness of the CfD regime will be a real challenge for the government.”

Martin McGuinness a regulatory specialist of Pinsent Masons, said: “For a variety of reasons, we’ve seen projects fail to participate or be unsuccessful in the CfD rounds. A reliable alternative route to market for renewable projects would be a significant asset to developers, investors and consumers if it can be done in a workable way. Standardised terms also have a record in other sectors of fast-tracking negotiations, reducing barriers to entry, and increasing transparency for stakeholders, such as lenders, but need momentum to be successful.”

The call for evidence is open until 6 March, after which point it is expected that the government will publish its response and potentially put forward reforms.

However, Lambe said promised reforms to a related area – the electricity licence exemptions regime – have still not taken place, raising concerns that an opportunity to encourage more large energy consumers to purchase electricity directly from generators is being missed. “There was a call for evidence some time back on the Electricity (Class Exemptions from the Requirement for a Licence Order 2001), but very little has happened since and these regulations remain overly complex, vague and not fit for purpose in a decentralised and increasingly digital energy system.”

The government consulted on the electricity licensing exemptions regime in 2020 and published a summary of its responses in July 2023. In January 2026, some updated guidance was added on Class A supply exemptions. This is a small supplier exemption, which applies to persons who do not at any time supply more electrical power than 5 megawatts – of which not more than 2.5 megawatts is supplied to domestic consumers – but no other updates have been issued.

Lambe added that if the government is getting serious about removing barriers to the market then reforming the class exemption regulations would be an excellent place to start. “Reform of those with a view to enabling simpler, clearer means of allowing supply to industry directly from generators would be an obvious example of an impediment which should be removed in my view.”

McGuinness added: “The recent guidance updates do not lighten or remove the regulatory burden for higher generating situations, which still have to consider the rules carefully. This is in part because the consequences of getting the rules wrong are so grave: it is an offence to generate, distribute or supply electricity without a licence unless you are otherwise exempt.”