Category: Structures

Why Are Corporate PPAs Hard for UK Businesses to Sign?

The government's 2026 review found credit, volume and slow bespoke deals keep corporate PPAs with large buyers. What could change, and what to do now.

Corporate PPAs promise an agreed, long-term price for renewable power, so why do so few UK businesses sign one? The government asked that question in 2026. Its call for evidence, run by the Department for Business and Trade and DESNZ from 9 January to 6 March 2026, drew 125 responses, and the answers point to four barriers. Most of them have nothing to do with the electricity.

1. You have to buy a lot, for a long time

The government's own assessment is that, currently, only businesses able to commit to buying a substantial volume of electricity over an extended period are likely to secure a corporate PPA. Typical terms are 10 to 15 years. That suits a supermarket chain or a data centre operator. It is much harder for a business whose demand would fill only a small share of a solar farm's output.

2. The generator needs to trust your balance sheet

A generator building a new solar farm relies on the buyer to pay for years. The call for evidence lists buyers' lack of high creditworthiness among the main barriers, limiting participation to large corporates. Respondents added collateral requirements to the list. Some buyers can buy credit insurance, for a fee that reflects the risk, which is one way in for a business without a strong rating.

3. Every deal is bespoke, and slow

A corporate PPA tends to be a bespoke contract, and the government notes that negotiations of around six months are not unusual. Respondents said the need for specialist advisers is part of what keeps these contracts concentrated among large, creditworthy buyers. For smaller users, minimum volumes and transaction costs remain a significant barrier.

4. The government's own contract competes for the same projects

Large renewable projects can sell to the government through a Contract for Difference instead. Most respondents described the CfD as the dominant route to market for large-scale renewables, and anecdotal reports suggest developers often treat a corporate PPA as the fallback if they miss out in a CfD round. CfDs run for 15 to 20 years, a tenor corporate buyers rarely match.

Sources: DBT and DESNZ, Corporate Power Purchase Agreements: call for evidence (9 January 2026); DBT and DESNZ, government response to the call for evidence (7 July 2026). Read 14 Oct 2026.

What respondents asked the government to do

• A government-backed credit guarantee, taking on part of the generator's counterparty risk. This was the majority recommendation.
• Voluntary standard contract terms, to cut legal costs and negotiation time, also a majority view. For comparison, the EU energy regulators' agency, ACER, concluded in October 2024 that existing PPA templates were sufficient for European market needs, while recognising the difficulty of ensuring consistent access to them.
• Pooled, multi-buyer PPAs, so smaller users can combine their demand.

Other countries have tried the guarantee route. The call for evidence notes that state-backed schemes in Europe typically cover up to 80% of counterparty default risk, and that outside Norway they are still early-stage and have de-risked only a handful of contracts. The government published its response on 7 July 2026 and has said any policy development would be accompanied by a future consultation, so nothing has changed for buyers yet.

Sources: DBT and DESNZ, government response to the call for evidence (7 July 2026); DBT and DESNZ, Corporate Power Purchase Agreements: call for evidence (9 January 2026).

What a smaller business can do now

• Use your own site first. Respondents saw on-site and private wire arrangements as the most cost-competitive structures, and they do not depend on a generator taking your credit risk for a decade.
• Ask about bundled deals. Intermediaries can arrange bundled corporate PPAs that group several buyers, limiting the generator's exposure to any one of them.
• Look at shorter contracts. Over 30 GW of renewable capacity reaches the end of its Renewables Obligation support from 2027, and the government expects some operators to look for PPAs of between 1 and 10 years.

How each structure works, the terms to expect and the deals already on record are set out in our full guide to the corporate PPA.

Sources: DBT and DESNZ, government response to the call for evidence (7 July 2026); DBT and DESNZ, Corporate Power Purchase Agreements: call for evidence (9 January 2026).