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Germany must unleash the potential of power purchase agreements (PPAs) to raise private capital for the fast expansion of its renewable energy system, the national energy agency dena has . “PPAs are key for a cost-efficient energy transition,” said dena head Corinna Enders. PPAs – often long-term agreements directly between an electricity producer and a consumer like a company – would provide businesses with planning security and reduce the state’s costs for renewables expansion, she argued. The new German government should use this opportunity now and create favourable conditions to expand the use of PPAs, Enders said. Achim Dercks, vice leader of the German Chamber for Industry and Commerce (DIHK), said that PPAs could greatly reduce the energy bills of companies. “This makes them a valuable tool for the successful implementation of company climate targets”, especially for energy-intensive ones, Dercks said.

Through an improved market design, greater transparency and new revenue models, the use of PPAs could be strengthened across the country, dena said. State guarantees could minimise investor risks, while a pooling of contracts would also open the format to smaller businesses. Moreover, companies using a high share of renewables should be rewarded for their “system-friendly integration” of new energy sources, an approach that should be considered in the debate about a special industry power price.