Regulatory hurdles limit huge potential of green PPAs in Germany - energy agency

Green power purchase agreements (PPAs) are a key component in Germany's necessary expansion of market-driven renewable energy sources, but regulatory hurdles are keeping them from being fully exploited, according to a new report by the German Energy Agency (dena). In its “Marktmonitor Green PPAs 2021“ survey, dena notes that PPAs offer much greater potential than previously thought. More than 200 stakeholders took part in the survey, focusing on questions about green energy supply contracts. “Climate protection, CO2 reduction and a cost-effective supply based on renewable energy sources are also becoming increasingly important in business and industry,” dena writes. “Around 90 percent of those surveyed generally see PPAs as a future-oriented market model for the German energy market. Half of the companies surveyed already see green electricity as an essential prerequisite for achieving their own sustainability goals.” Dena head Andreas Kuhlmann states, however, that there is a great deal of uncertainty in the market regarding future framework conditions and regulatory hurdles. There is also a lack of centralised political decision-making to pave the way for Green PPAs in Germany, he adds. Kuhlmann is calling on government leaders to make business models possible for industry that rely less on subsidies and are based more on a legal and economic framework. Along with the Renewable Energy Act (EEG), Green PPAs could then lead to greater investments for the energy transition and help achieve targets faster.

While industry leaders have expressed support for PPAs, Germany has continued to lag behind other European countries in embracing such energy supply agreements.