The UK government has launched a call for evidence on companies’ power purchase agreements (CPPAs), as it takes steps to support businesses with high demand for electricity.
The call for evidence asks how the market for CPPAs in the UK can be developed and improved for industry.
The Department for Business and Trade (DBT) and the Department for Energy Security and Net Zero (DESNZ) are jointly seeking views on the experiences of current and potential market participants, and on approaches that would strengthen the market.
Industrial energy prices in Britain are the highest in the world. In its call for evidence, the government said boosting the CPPA market in Britain could complement other support measures by providing a ‘market-led’ solution.
This will allow companies to secure competitively priced electricity and benefit the net-zero transition, the report said. It also hopes to draw on international best practices. Because Northern Ireland is part of a separate electricity market, the call lies with Great Britain.
Use of CPPAs by data centers: challenges to address
An interesting focus of the call is data centers. With demand for electricity from data centers expected to grow in Britain, the National Energy System Operator (NESO) predicts that electricity demand in the country could reach 41 TWh by 2035 (currently around 7.6 TWh per year).
The government said that while data centers are attractive counterparties for CPPAs, which can sign large-scale, long-term agreements, growing data center participation in the CPPA market could concentrate liquidity among a small number of buyers. This would potentially crowd out smaller companies and increase competition for low-carbon capacity.
More broadly, the call for evidence notes that there is a ‘fair degree’ of competition in the CPPA market across all sectors, but that the CPPA market still accounts for only a small proportion of Britain’s total electricity purchases, meaning it is ‘demonstrably underdeveloped’.
The main reasons for this are given as:
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Companies must commit to purchasing electricity on a large scale to access a CPPA.
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Strict credit requirements for companies to be attractive CPPA buyers.
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A high level of technical expertise is required to negotiate CPPA contracts.
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Aligning schedules is difficult, especially when a CPPA involves the development of new renewable energy generation capacity.
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Greater uncertainty in the electricity market could deter companies with a low risk tolerance.
CPPAs were cited in the government’s conclusion of the Electricity Market Regulations Review (REMA), with the new call for evidence responding to the commitment made in July 2025 to further explore the CPPA market.
On February 3 and 4, our publisher Solar Media will host the Summit on solar financing and investments in Europe in London for industry leaders, investors, developers and policymakers committed to promoting solar energy across Europe.
The agenda will include many discussions on PPAs and CPPAs, including a case study of the major 10-year CPPA signed between Enviromena and the University of Manchester. View the line-up for two-day events And book a ticket to attend.
