To encourage investment in the electricity industry, in July 2024 the European authorities published Regulation 2024/1747, encouraging operators to sign Power Purchase Agreements (PPAs), i.e. "bilateral purchase agreements between producers and purchasers of electricity that are concluded on a voluntary basis and are based on market price conditions without regulatory intervention in price setting". Companies operating in the electricity market had not waited for the green light from Brussels to sign PPAs. A report published by the Commission de Régulation de l'Energie (CRE) in March 2025 outlines the development of these contracts in France between 2019 and the summer of 2023 to finance renewable electricity generation assets.
Parties to the contract
The CRE report is based on a survey carried out during the summer of 2023 among signatories of PPAs with a duration of 10 years or more concerning new renewable electricity generation assets located in mainland France. A total of 47 companies responded to the survey, representing 116 contracts and 162 installations (141 photovoltaic farms, 18 onshore wind farms and 3 cogeneration or waste heat recovery facilities). As the companies surveyed were not obliged to respond, the data collected cannot be considered statistically significant. However, the responses reveal some interesting insights.
Firstly, the PPAs mainly concern solar energy. Out of a total of 3,160 GWh of annual production expected from these installations (the generating capacity), three quarters concern photovoltaics and only 25% onshore wind power. Secondly, the buyers are mainly large-scale electricity consumers. Retail electricity suppliers (who buy for resale) account for just 10% of the generating capacity contracted by PPA, and only for photovoltaics. Why is solar so dominant over wind power, and why is there so little interest from suppliers in these renewable electricity PPAs?
The vagaries of wind power
There's no single explanation for the reluctance to sign PPAs for energy from wind farms. On the producer side, the advantages of public subsidies (green electricity purchasing obligation, now replaced by additional variable remuneration) and, on the supplier side, the ARENH system probably play a dissuasive role. An additional explanation that should not be overlooked is the irregularity and unpredictability of wind events. An industrial consumer or a supermarket can live with alternating day and night deliveries of electricity, since it is closed at night. For them, a photovoltaic PPA is therefore an acceptable source, even if on certain days cloud cover forces them to make larger-than-expected additional purchases. On the other hand, whereas the purchaser of a PPA signs up to escape price fluctuations on the wholesale market, a wind PPA introduces a quantity hazard into his supply that needs to be covered. This is even truer for a retailer committed to supplying electricity to its portfolio of customers. The need for guaranteed supply probably explains why most respondents to the CRE survey only use renewable PPAs for up to 20% of their needs.
Opportunism of the parties to the contract
How do PPAs fit in with the wholesale electricity market? All contracts serve to stabilize the exchanges of the signatory parties, in particular to prevent the parties from jumping at momentary opportunities to make profits outside the contract. In the case of a PPA, if the hourly price on the wholesale market is very low, the buyer will prefer to source from there in its entirety. This is particularly the case during negative price episodes, when the buyer is remunerated for his electricity consumption. But since a negative price on the wholesale market means a possibility of remuneration outside the PPA, it may be in the mutual interest of the parties to suspend execution of the contract so that the buyer purchases energy on the wholesale market and pays financial compensation to the producer. Half of the PPAs examined by CRE contain a clause of this type. There are also clauses stipulating that maintenance of the installations covered by the contract must be carried out during periods of low wholesale prices.
Ancillary products
Another incentive for buyers to sign renewable PPAs may be the certification associated with electricity from renewable sources. Most of the PPAs examined by CRE stipulate that the delivery of energy is accompanied by the transfer of guarantees of origin and capacity guarantees to the buyer. For retail suppliers, the acquisition of capacity guarantees in proportion to their customer portfolio has been a legal obligation since 2017 in France. As for consumer buyers, thanks to guarantees of origin, they can present themselves as developing a Corporate Social Responsibility policy, and even sell the certificates.
Despite these advantages, the renewable electricity APP market is still underdeveloped in France, and is likely to remain so as long as direct and indirect public subsidies to electricity producers and suppliers persist.
