PPAs for all!

For some time now, the world of energy has been watching the emergence of a new reference acronym: ‘PPA’. These three letters, often complemented with attributes such as ‘Corporate’, ‘Renewable’ or even ‘Long-Term’, seek to represent the future of the competitive development of carbon-free energies worldwide.

However, our understanding of these three words, ‘Power Purchase Agreement’, is that this kind of contract designates the large family of contracts where at least one of the parties purchases electricity. Therefore, we are a bit perplexed when we read in the specialized energy press that some problems could arise when developing PPAs in France (even nuclear power is often considered as the one to blame).

Apparently, when Jean-Louis Bal, Chairman of the Renewable Energy Association, says ‘In France, we have a real PPA competitiveness problem’, and despite the fact that many consumers in France can purchase electricity at prices that are among the lowest in Europe, it means that, in this context, PPA does not only refer to electricity purchase agreements, but to a more specific contractual form.

In light of this misunderstanding, it seems clear that some work needs to be done to define this term.

We have found an interesting definition in Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources (Article 2):

Renewables power purchase agreement: a contract under which a natural or legal person agrees to purchase renewable electricity directly from an electricity producer;

Therefore, this definition  does not only eliminate any contract with an electricity end customer (only a supplier holding ad-hoc ministerial authorisation may sell electricity to an end customer), but also the famous ‘Exceltium’ contract – one which is nonetheless remarkable, representing a volume of 148 TWh over a period of 24 years – but that involves nuclear electricity…

On the other hand, all of EDF facilities under obligation of purchase contracts, or facilities under additional remuneration contracts, do fall under this definition, along with a vast amount of types of supply contracts.

Another relevant and more targeted definition is given to us by Voltalia in its press release of 26 June 2019 announcing the signature of the first very long-term direct power purchase agreement for approx.  150MW in France:

Power Purchase Agreement:

a contract under which a company agrees to purchase electricity directly from a renewable energy producer’s plant, either solar or wind, especially built for this purpose, and made possible by the extended term of the agreement.

Here, the restriction of this definition to only solar or wind power plants excludes, perhaps arbitrarily, biomass, biogas and hydropower (and, of course, nuclear power).

In fact, these definitions do not fully reflect the underlying spirit of this scheme, that being:

    • Competitiveness in terms of market prices
    • The lack of public support or subsidies (State Aid)

Competitiveness: actually, this can only be measured objectively along the liquid market horizon, that being three years, and such visibility is not yet available for the capacity component (certainly weak when it comes to solar power). The long-term vision, for its part, will very much depend on the ability of solar development to erase the still-persistent marginality of fossil generation tools during sunny hours. Even when taking into account that the evaluation of the sale of solar energy on the markets is currently showing a premium with regards to average prices (in the region of €2/MWh), the prices of the latest calls for tenders organised by the French Energy Regulatory Commission (CRE) still reveal a gap in competitiveness with respect to market prices: last August, the average price for successful tenderers for large solar farm facilities was €59.5/MWh. There may be some tenderers who, for the most part, will eventually contribute to the ‘energy transition’ special allocation fund (CAS), rather than receive additional remuneration. As debtors of the Contribution au Service Public de l’Electricité[1] (CSPE), we are grateful to them… while still noting that the multi-year energy programme (PPE) does indeed provide for a global increase in the costs for supporting renewable energies over its period (up to 2028).

State Aid: if the mechanism of ‘PPAs’ resulting from CRE calls for tenders is indeed considered as state aid, this aid is governed by European regulations and guidelines (Commission authorisation SA.46552 dated 29/09/2017) which impose constraints that may weigh on their competitiveness (treatment of negative prices, balancing responsibility, contractual duration). These constraints don’t necessarily exist in the same form in private ‘PPAs’.

Whatever the case may be, the PPE essentially (if not exclusively) provides for the development of renewable energies through CRE calls for tenders and it doesn’t seem likely that another State body should be in charge of supplementing this deployment with parallel procedures. In this context, the emergence of private initiatives, which would again  leave investment decisions resting solely on the shoulders of market mechanisms (‘the world of yesterday’, as EDF Chairman Jean-Bernard Levy recently referred to) could represent a ‘Back to the Future’ situation that is as sympathetic as it is unexpected.

[1] Public service levy on electricity paid by final consumers to cover the over cost of ENR.

Philippe Boulanger

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Céline, a young and dynamic person, had a first experience in the tourism sector as a community manager at Loups du Gévaudan, in Lozère. She joined HES team in November 2021 to diversify her knowledge: learning about the energy sector, specialising in marketing strategies in order to improve the company’s customer relations and, at the same time, developing her skills in coordination and project management.


Céline graduated in Spanish and English Language, Literature and Civilisation at La Sorbonne IV (2018). She also holds a master’s degree II in cultural projects and establishments management, with a special focus on international tourism. She also studied abroad at the University of London (England) and Universidad de Morón (Argentina).

Céline Haya Sauvage

Marketing Responsible


Investment Advice

“Decarbonization of the Energy and Transport sectors is arguably today’s main economic driver for the industry.”

Profesional Experience

His career started in civil engineering as a Project Manager in France, Martinique and Australia. Afterwards, he became the General Manager of a subsidiary in Venezuela. In 1992, he established Dalkia in Germany (district heating, cogeneration, and partnerships) and represented Véolia in Thailand. In 2000, he opened the commercial office of Endesa in France to take advantage of the liberalized retail market. From 2006, as a development Manager at Endesa France, he led Endesa’s plan for Combined Cycle generation in France and developed the wind and PV portfolio of Snet at the same time. Philippe Boulanger worked for 3 years at E.ON’s headquarters coordinating the company´s activities in France. He was strongly involved in the French hydro concession renewal project. As a Senior Vice President – Project Director at Solvay Energy Services from April 2012 to February 2014 he was in charge of the H2/Power to gas and European direct market access deployment projects. Philippe has been an HES expert since 2014.


Philippe Boulanger holds engineering degrees both from the Ecole Polytechnique and the Ecole Nationale des Ponts & Chaussées (France) and has a combined experience of more than 25 years in energy and infrastructure. In addition to English, Mr. Boulanger is fluent in French, German & Spanish.

Philippe Boulanger

Electricity Expert


“The world is changing. New investors pay particular attention to the energy sector while historical actors adapt their position to the market.”

Profesional Experience

Antonio started his career in the electricity sector in 1991 working as a member of staff for the General Manager of Sevillana de Electricidad (Spain). In 1997, he was in charge of the commercial regulation at Endesa Distribution. In 2000, he joined Endesa’s European M&A department. He was appointed CEO of Endesa Power Trading Ltd in 2003. He became Head of Energy Management for SNET, France, in 2004 and was appointed CEO of this company in 2008. In 2009, he held the position of Head of Corporate Development for E.ON France. In 2011, he founded Haya Energy Solutions (HES), a consulting firm which assists companies in optimizing their value chain: from strategy definition to day-to-day operations, based on a strong experience and understanding of the energy industry. From 2015 to 2018, Antonio was Chairman and CEO of 2 French CCGTs (2x410MW), owned by KKR. At the end of 2018, he joined Asterion Industrial Partners, a dedicated infrastructure investment fund, as an Operating Partner.


Antonio graduated from the Escuela Técnica Superior de Ingenieros of Seville (Spain) and holds an MBA degree from Deusto University (Spain).

Antonio Haya