7 Common Pitfalls to Avoid When Signing Power Purchase Agreements (PPAs) in Germany

Are you planning to sign a Power Purchase Agreement (PPA)? Perfect, because PPAs not only offer planning security, but also the opportunity to stabilize your energy costs in the long term and achieve your climate goals. But beware: without thorough preparation, mistakes can be costly.

Here are the 7 most common pitfalls you should avoid:

1. Contract duration and termination rights: Durations that are too short or too long can pose risks. Flexibility and clear termination clauses are crucial.
2. Unclear energy delivery conditions: Precise regulations regarding delivery volumes, schedules, and balancing mechanisms prevent disputes.
3. Pricing structure and market risks: Fixed or variable? The choice of pricing model must match your risk appetite.
4. Regulatory requirements: German laws such as the EEG and the prohibition of double marketing require strict compliance.
5. Technical performance and operational risks: Clear guarantees and maintenance concepts protect you from production outages.
6. Unforeseen events: Force majeure clauses and adjustment rules safeguard you against external risks.
7. Lack of strategy and due diligence: Careful partner selection and clear ESG goals are essential.

Your checklist for successful PPAs:

• Pricing (fixed/variable, price adjustments)
• Delivery conditions (volumes, flexibility)
• Contract durations and termination options
• Securities and guarantees
• Regulations for force majeure and legal changes
• Technical due diligence and performance guarantees
• Compliance with German regulations

PPAs are an opportunity to reduce costs while achieving your sustainability goals. With a clear strategy and well-structured contracts, you’re on the safe side.

Pitfall 1: Problems with Contract Duration and Termination Rights

The right contract duration is a decisive factor for PPAs. Contracts that are too short can jeopardize planning security, while contracts that are too long may tie companies to potentially unfavorable conditions. A thorough assessment is necessary here, taking into account both your own business strategy and market developments.

In Germany, there is a clear trend toward more flexible contract models. While classic PPAs often have durations of 10 to 20 years, many German companies are now opting for shorter durations of 2 to 5 years. This development reflects uncertainties regarding future technology costs and regulatory changes. Such considerations lead directly to the risks associated with long-term contracts. According to a 2023 report by BloombergNEF, the average PPA duration in Europe is decreasing as buyers seek more flexibility in the face of volatile energy markets (source).

Risks of Long-Term Contracts

Long-term PPAs can bind companies to outdated costs, especially if renewable energy prices fall. At the same time, they limit the flexibility needed for changing business requirements. Companies that need to adjust their production capacities may be restricted by inflexible delivery volumes in their PPA.

Rahul Kar, General Manager and Vice President for New Energies at AutoGrid, describes the traditional perspective:

"Long regarded as a crucial driver for institutional adoption of renewables, a PPA provides offtakers with a hedge against risks from future energy fluctuations by entering into a stable 20-year contract for renewable power in which the price for that power is locked in".

However, this stability can become problematic if market conditions change fundamentally. Shorter contracts offer companies the opportunity to benefit from falling renewable energy costs. According to the International Energy Agency (IEA), the levelized cost of renewable energy has dropped by over 80% for solar and 60% for wind since 2010, making flexibility increasingly valuable (source).

In addition to contract duration, the design of termination rights also plays a central role in securing business planning.

Termination Rights and Business Planning

Termination clauses define under which conditions a PPA can be terminated by the contracting parties. Poorly negotiated termination rights can jeopardize both the financial stability and the security of energy supply for a company. PPAs often contain so-called "off-ramp" provisions, which allow the offtaker to terminate the contract in certain events. This flexibility is important, but often underestimated in its complexity.

A common mistake is poor timing regarding expected development costs. Companies should ensure that the buyer is bound by the PPA before significant costs are incurred. At the same time, developers should limit their liability and clearly define the buyer’s remedies—such as delay damages or other specified payments.

Flexibility clauses in PPAs are crucial to minimize risks. These include regulations on curtailments, force majeure, and legal changes. Especially in a dynamic regulatory environment like Germany, such provisions can make all the difference.

An interesting model is multi-buyer PPAs, which offer additional flexibility and risk mitigation through networked approaches. They provide advantages such as economies of scale and broader risk diversification compared to traditional models. Future Bridge NetZero Events highlights this advantage:

"Transitioning to renewable energy poses daunting financial, capability, and policy challenges for any individual business. However, through collaborative multi-buyer PPAs, companies can access economies of scale and risk mitigation".

The challenge with multi-buyer structures, however, lies in differing expectations, budget cycles, and risk appetites among the participating companies. German companies should therefore ensure clear alignment among stakeholders and transparency to avoid potential conflicts. For a deeper dive into multi-buyer PPA structures, see Utility Dive.

Pitfall 2: Unclear Energy Delivery Conditions

After looking at the contractual framework, it’s now important to precisely define the details of energy deliveries to minimize potential risks. Unclear delivery conditions can lead to disputes and financial burdens, as vague agreements on delivery volumes, schedules, and balancing mechanisms create uncertainties in energy supply and costs. German companies often underestimate the complexity of such contract clauses and their impact on business operations.

In Power Purchase Agreements (PPAs), key points such as the origin of the electricity, the delivery profile, the supplied quantity, and the balancing group settlement should be clearly regulated. If these definitions are missing or incomplete, this can lead to costly renegotiations or even legal disputes. It becomes especially challenging when agreed electricity volumes are not met and alternative balancing mechanisms must be applied—a situation that brings both financial and operational additional burdens.

To avoid such risks, companies should involve all relevant stakeholders. Topics such as climate goals, electricity consumption, contract durations, and the origin of the electricity must be clarified together.

Defining Minimum and Maximum Delivery Volumes

A clear definition of delivery volumes requires a thorough analysis of your own energy needs and available generation capacities. Risks regarding volume and prices should be contractually regulated. In “pay-as-produced” models, the buyer bears part of the volume risk, while in monthly guaranteed quantities, the seller is responsible.

It is equally important to contractually specify guaranteed availability and the handling of underperformance. Other essential delivery conditions include the schedule for electricity delivery, penalties for underdelivery, and payment terms. These clear regulations provide the foundation for reliable energy supply.

Various instruments are available to reduce risks: Financial hedging mechanisms such as proxy revenue swaps, collar options, or virtual PPAs offer protection against unforeseeable price and volume changes. Weather derivatives can provide additional security by covering weather-related production outages. In addition, diversifying energy sources and locations helps balance seasonal fluctuations and minimize the impact of local weather events. These measures create a solid basis for further improving cost control and energy management. For more on risk management tools in PPAs, see Norton Rose Fulbright.

Cost Control and Impact on Energy Management

Delivery flexibility must be precisely matched to energy needs and budget. Companies should carefully analyze their load profiles and incorporate this data into contract negotiations to avoid costly over- or underdeliveries. Insufficient alignment between agreed delivery volumes and actual needs can cause significant additional costs.

Experience with performance contracting projects shows that savings are often higher than expected: In a Greek study, savings were 44% above forecasts, and 72% of projects in the NAESCO database exceeded guaranteed savings. These figures highlight the potential in well-structured energy contracts (source).

Modern technologies play a key role in risk minimization. Probabilistic forecasts, real-time monitoring, and machine learning algorithms enable more precise predictions of prices and energy production. Hybrid PPA structures and the use of energy storage systems provide additional flexibility, as surplus energy can be stored and used when needed. The integration of digital tools is increasingly seen as best practice in energy management (McKinsey).

Pitfall 3: Pricing Structure and Market Risks

Once the delivery conditions are clarified, the choice of pricing structure takes center stage. This decision is crucial, as unfavorable models can result in significant financial burdens for years. German companies must carefully weigh predictability against flexibility, as this will significantly impact the economic success of a PPA.

Pricing is not only a core point for risk distribution between the contracting parties, but also the basis for evaluating the economic profitability of a project. Especially in times of high market volatility, the importance of a well-thought-out pricing structure becomes clear. Below, the differences between fixed and variable pricing models are explained in terms of risk and flexibility.

Fixed vs. Variable Pricing Models

Whether a fixed or variable pricing model is chosen depends on the company’s risk appetite, energy needs, and long-term strategy. Fixed PPAs guarantee a constant energy price over the entire contract term. This ensures price security and planning certainty. Models with inflation adjustments or escalation clauses adjust prices to economic changes. The main advantage of fixed PPAs is the stability of payments—regardless of short-term market fluctuations. This stability can often be guaranteed for up to 20 years.

Variable PPAs, on the other hand, usually offer a discount on the market price and enable savings during periods of low energy prices over terms of 12 years or more. While fixed PPAs are particularly suitable for companies that value a stable budget, variable models can benefit larger organizations that sell a significant portion of their generated energy. These companies benefit from energy market fluctuations. Between 2015 and 2017, around 7 GW of virtual or physical PPAs were already concluded—a testament to the growing importance of these models (Reuters).

With rising energy prices, the attractiveness of fixed-price PPAs may decrease. As a result, hybrid models are coming into focus. These combine fixed and variable elements or use market-following models, which often provide a minimum price floor and discounts below the market price. They offer more flexibility while reducing risk. Dynamic adjustment mechanisms are crucial here to respond to market changes. For a comprehensive overview of PPA pricing models, see S&P Global.

Price Adjustment Mechanisms

Price adjustment mechanisms are a response to market volatility, regulatory changes, and technological uncertainties. Price escalation clauses, which regularly adjust the energy price based on agreed criteria, ensure that producers’ revenues keep pace with rising costs—such as inflation or higher operating expenses. This is particularly important for long-term contracts in the renewable energy sector (15–25 years).

Other protective measures include so-called price collars and floors in VPPA contracts. These set upper and lower limits to restrict extreme price fluctuations. At the same time, upside-sharing mechanisms allow both parties to benefit from favorable market conditions while sharing the risk of adverse price movements. Renegotiation clauses and change-in-law provisions allow contracts to be adapted to new regulatory frameworks and, if necessary, renegotiated or prices adjusted.

Regular reviews and renegotiations are crucial to ensure the long-term stability of a project. Companies should seek experienced legal advice to ensure their PPA contracts include comprehensive provisions for dealing with regulatory risks. The combination of fixed tariffs, market-indexed prices, and hybrid models can help combine price security with the necessary flexibility for market fluctuations. For more detail, see White & Case.

Pitfall 4: German Regulatory Requirements

In addition to contractual and market-specific risks, compliance with German regulatory requirements plays a central role in implementing PPAs. German energy regulation is a complex web of laws and regulations that is often underestimated. Many companies focus heavily on commercial aspects and overlook how important compliance is. Failure to consider these requirements can have legal and financial consequences that jeopardize the entire PPA.

Since the introduction of the EEG in 2000, Germany has taken a leading role in renewable energy. However, this pioneering role comes with a demanding regulatory landscape that includes both national and EU requirements. Violating these regulations can have far-reaching consequences beyond simple fines. In the worst case, a company’s entire energy strategy can be thrown off course. For a summary of the EEG and its impact, see Clean Energy Wire.

German Energy Law Requirements

A particularly important point is the so-called prohibition of double marketing. This ensures that plant operators cannot receive both EEG subsidies and guarantees of origin for the same electricity. This regulation has a direct impact on the availability of guarantees of origin: In 2023, only 37 TWh of guarantees of origin were issued in Germany, even though the production of green electricity was around 250 TWh. Overall, the share of renewable energy in gross electricity generation was 51.8% (source).

The importance of this regulation is also evident in the market for guarantees of origin. In 2023, German consumers claimed guarantees of origin totaling 185 TWh, with about 75% of these certificates imported from Norway. This discrepancy between domestic generation and available certificates underscores the importance of including guarantees of origin early in PPA planning.

Long-term contracts can also pose risks if there are unfavorable price developments. In addition, compensation obligations arise if the agreed electricity volumes cannot be delivered due to fluctuating production. In such cases, the plant operator must compensate either financially or physically. These examples illustrate how strongly regulatory requirements influence contract design.

Guarantees of Origin (HkRNDV) Compliance

The Guarantees of Origin and Regional Proof Implementation Ordinance (HkRNDV) regulates how companies must handle guarantees of origin. The German Environment Agency explains:

"Guarantees of origin make the source of electricity from renewable energies transparent. They provide consumers with the necessary reliability."

For PPA contracts, this means: Energy producers who want to issue guarantees of origin must generate electricity from renewable sources such as hydro, wind, solar, biomass, or geothermal. At the same time, they may not claim feed-in tariffs or market premiums under the EEG. This requirement excludes many subsidized plants from issuing guarantees of origin.

Registration in the Guarantees of Origin Register (HKNR) of the German Environment Agency is mandatory for all market participants. It not only ensures the reliability of electricity labeling but also the verification of international systems. For more information, visit the German Environment Agency.

A practical approach for PPA contracts is the so-called "optional coupling." Here, guarantees of origin are only purchased if the electricity is also sourced directly from the plant operator. This regulation creates a clear link between physical electricity and the guarantee of origin, thus strengthening the credibility of green electricity supply.

According to § 42 of the German Energy Industry Act (EnWG), electricity suppliers are required to cancel guarantees of origin for designated green electricity. Companies must therefore ensure that their PPA contracts contain clear regulations on the issuance, transfer, and cancellation of guarantees of origin. Transparent documentation of additional information in the guarantee of origin also helps to reflect different qualities and willingness to pay in the market.

Pitfall 5: Technical Performance and Operational Risks

After considering contractual and regulatory risks, the technical performance of the plants now comes into focus. Many companies underestimate how complex technical risks can be and what consequences they have for long-term energy supply. Technical risks in a PPA include, among others, the reliability of the plants, efficiency in energy generation, grid availability, and downtime due to maintenance. Fluctuations in wind, solar, biomass, or hydropower systems make clear performance guarantees and safeguards indispensable.

The challenge is that renewable energy plants are heavily influenced by changing weather and operating conditions. These fluctuations require clear guarantees and solid methods for risk assessment.

As Folker Trepte, Partner at PwC Germany, explains:

"PPAs offer a reliable way to decarbonize electricity-consuming and -producing companies, so they should be considered in every sustainability strategy. They have great potential for climate protection."

However, this reliability crucially depends on the technical performance of the plants used.

Performance Guarantees and Maintenance Requirements

Buyers usually require the seller to guarantee that the project meets certain performance standards. If electricity production does not meet the standards specified in the PPA, the seller must cover the resulting costs. Such guarantees can include availability guarantees or performance curve guarantees.

The guaranteed availability specifies what percentage of the contractually agreed volume must be delivered. A typical example would be an availability guarantee of 95% of annual production—meaning the plant must deliver at least 95% of the planned electricity quantity, otherwise compensation mechanisms apply.

Testing procedures play a central role in objectively verifying compliance with performance criteria. The results of these tests should be certified by an independent engineer. This independent verification strengthens trust between the contracting parties and minimizes disputes.

Furthermore, contracts must contain clear regulations for penalties and compensation if production does not meet the agreed targets at the Commercial Operation Date (COD). These performance indicators are crucial for systematically assessing technical risks.

Methods for Technical Risk Assessment

Thorough technical due diligence is key to the success of PPAs, as it identifies potential risks in plants and operations early on. Technical due diligence helps understand and minimize risks before companies commit to an energy project. This review includes document analysis, site visits, and inspections.

The document review should include, among other things, wind measurements, energy yield forecasts, wind and solar park design, performance curves, cost assumptions, permits, grid connection, and maintenance records. During plant inspections, main components, commissioning inspections, monitoring during commissioning, and performance verifications should be checked.

A risk assessment identifies potential hazards, analyzes their impact, and defines control measures. A risk method considers both the consequences and the likelihood of a risk.

Construction and operational risks can jeopardize on-time delivery and project returns. Strategies to mitigate these risks include availability guarantees, continuous monitoring, and clearly defined construction schedules with agreed delay penalties. Technical risks can be reduced through guarantees, warranties, insurance, and coordinated organizational agreements among the main stakeholders. For more on technical due diligence, see DNV.

Pitfall 6: Lack of Protection Against Unforeseen Events

The analysis of technical risks clearly shows that external factors can also pose a significant threat to PPA contracts. Unforeseen events beyond the control of the contracting parties can seriously jeopardize contract fulfillment. Nevertheless, many German companies underestimate these risks and fail to equip their PPAs with appropriate protective clauses.

In addition to technical and market-related risks, contracts should also be prepared for unforeseen external developments. German energy law is in constant flux to promote the use of corporate PPAs. This dynamic legal framework requires forward-looking contract design. Below are specific measures that can help companies protect themselves against such risks.

Force Majeure Clauses: Protection Against Unforeseeable Events

A well-considered force majeure clause is essential to protect against unforeseen events. It releases a party from its performance obligation if an event occurs that is beyond its control and cannot be avoided. It is important to define exactly what is recognized as force majeure. According to the International Chamber of Commerce, force majeure should be clearly defined to avoid disputes (ICC).

An effective force majeure clause should clearly distinguish between excuses (which release a party from its performance obligation) and risks (which are assigned to a party). This differentiation is crucial as it determines which party bears the financial consequences.

An example illustrates the importance of precise contract wording: In September 2008, Hurricane Ike led to massive power outages in the Houston area and caused financial losses for wholesale electricity buyers. Courts in New York and Texas relied strictly on the exact wording of the contracts in such cases (Lexology).

Clear clauses should also distinguish between recognized and unrecognized force majeure events. For example, the EEI and ISDA Power Annex explicitly state:

“Force Majeure shall not be based on (i) the loss of Buyer's markets; (ii) Buyer's inability economically to use or resell the Product purchased hereunder; (iii) the loss or failure of Seller's supply; or (iv) Seller's ability to sell the Product at a price greater than the Contract Price.”

Termination rights in the event of prolonged force majeure events should also be regulated in the contracts.

Dealing with Regulatory Changes

While force majeure clauses protect against natural disasters and other external crises, specific adjustment clauses are necessary for changing legal frameworks. German companies face particular challenges here, as energy policy is continuously evolving. For example, new financial hurdles for plants operating under the “market premium” model may arise when entering into a corporate PPA in Germany (Clean Energy Wire).

Changes in the prohibition of double marketing (multiple marketing ban) under the Renewable Energy Sources Act could further influence the PPA market. In addition, the German government is examining how existing subsidy regulations, including contracts for difference (CfDs), could be adapted to further develop the market (PV Magazine).

Since such changes in the legal framework are a frequent risk for PPAs, contracts should include mechanisms that regulate the impact on the tariff in the event of legal changes and allow for automatic adjustment. Flexibility is key here: Contracts must be designed to respond to future developments or deregulation of the electricity market without jeopardizing the company’s long-term energy goals.

Expert legal advice is essential to assess the specific risks of a project and incorporate them into the PPA contract. Given the rapidly evolving legal situation in Germany, this is especially important.

The ongoing transformation of the German energy industry shows how important long-term planning security is. Protective measures like those above are a central part of a well-thought-out PPA strategy and make well-structured contracts an indispensable tool for companies.

Pitfall 7: Inadequate Due Diligence and Lack of Strategic Alignment

Protection against unforeseen events is only part of the recipe for success with PPA contracts. However, many companies already fail when selecting their partners or strategically aligning their PPAs. It’s important to understand that PPAs are not standardized solutions. Rather, they are complex projects that must be tailored to local regulations, market conditions, and strategic goals—a task that requires in-depth know-how.

Even technically sound projects can fail due to poor partner selection or lack of strategic planning. Long-term PPAs require a well-thought-out strategy that goes beyond simple price comparisons. Below, we take a closer look at the key criteria for evaluating partners and projects.

Criteria for Partner and Project Evaluation

Choosing the right PPA partner is crucial to the success of the entire project. An important aspect is the partner’s financial stability and creditworthiness. Comprehensive due diligence that examines the financial situation, credit rating, and previous successes of the contracting partner is indispensable to ensure they can meet their obligations.

Companies should also assess potential partners for their experience in renewable energy, their network, and their ability to develop customized solutions. Support from experienced legal and financial advisors specializing in renewables and PPAs is also essential.

In addition, a long-term market analysis is required that goes beyond simple electricity price forecasts. The technology used, the local energy mix, and the distribution of risks between the contracting parties should also be considered.

The pricing of PPAs has also evolved. While average monthly or annual prices were often used in the past, companies today increasingly prefer market-oriented pricing structures and innovative hedging models (BCG).

Linking PPAs with ESG Goals

In addition to careful partner selection, linking PPAs with ESG goals (environmental, social, and governance) plays a central role. PPAs offer companies a way to reduce CO₂ emissions in both energy generation and consumption. Therefore, they should be an integral part of any sustainability-oriented corporate strategy. Read more about reducing Scope 2 emissions.

However, it is not enough to view PPAs merely as a “green” measure. They must be closely aligned with the company’s overall strategy, integrated into governance structures, and actively supported by top management. The contractual details of a PPA—such as purchase options or risk allocation—should be aligned with the company’s sustainability and decarbonization goals, energy needs, and risk strategy.

Success stories show how effectively PPAs can be used: In 2019, BT signed a PPA with BayWa r.e. for 100 MW of solar power, reducing operational carbon emissions by 81% since 2016. AstraZeneca was able to reduce Scope 2 emissions by about 60% through a 23 MW wind PPA in the UK. In 2020, Sainsbury’s opted for a PPA with NextEnergy Capital for 70 MW of solar energy, saving around 36,000 tons of CO₂ annually (Reuters).

This strategic approach complements the risk mitigation measures already mentioned. Companies with high energy needs can also use guarantees of origin for renewable energy to achieve their sustainability goals and improve their ratings. However, accounting, tax, and legal aspects should be considered from the outset.

A clear PPA strategy that takes into account local regulations, market rules, as well as corporate and operational requirements, can help companies reduce their carbon footprint while supporting global sustainability goals.

PPA Contract Checklist for German Companies

After choosing a suitable partner and developing a strategy, contract design becomes the focus. This checklist ensures that all important contract components are considered and compliance risks remain minimized. PPAs are complex agreements that require careful planning and negotiation. Companies should rely on legal and economic expertise, especially regarding pricing structures, durations, and risk management.

The following checklist is based on best practices and takes into account the requirements of the German energy market. It helps you address risks in a targeted way and avoid pitfalls. Here are the key contract areas and checkpoints to help you in negotiations.

Required Contract Clauses and Conditions

Pricing and payment terms are the heart of every PPA contract. You must decide whether a fixed or variable pricing model better fits your risk strategy. It is important to clearly define the type of electricity delivery and the contract duration to minimize financial risks.

Another important topic is delivery volumes and flexibility clauses. Since electricity production from renewable sources can fluctuate, contracts should include provisions for over- or underproduction. This way, you can better cushion unforeseen risks. Depending on the energy source, pay-as-produced agreements or monthly baseload clauses may be sensible.

The creditworthiness and securities of the contracting parties also play a central role. The credit rating of the parties should be checked, and realistic security and guarantee conditions help minimize the risk of default.

Termination clauses require special attention. Clear rules should be established here to reduce possible penalties or negative impacts in the event of early termination.

Don’t forget to include force majeure clauses and adjustment provisions in the contract. These help minimize risks from unforeseen events such as natural disasters. Flexibility in the contract also allows you to respond to market changes. Remember to consider your ESG goals when designing the contract.

German Legal and Regulatory Standards

In addition to contractual conditions, you must comply with the legal requirements of the German market. PPAs in Germany must meet the requirements of German energy law, especially regarding the handling and documentation of guarantees of origin. For an overview, see Clean Energy Wire.

Furthermore, PPAs should comply with the EU Electricity Market Directive and the EU Electricity Market Regulation. These European requirements influence national legislation and must be considered in contract design. For more detail, see European Commission.

Your PPA should also meet the requirements of financial reporting. A detailed analysis of individual clauses by various departments is essential during negotiations.

Since the German energy market is subject to constant regulatory changes, regular monitoring of legal developments is crucial. This allows you to plan possible adjustments early on.

It is important to inform your teams about the impact on the balance sheet, especially regarding accounting, taxes, and legal compliance.

Conclusion: Making Informed PPA Decisions

The examination of the most common pitfalls and the provided contract checklist create a solid foundation for well-thought-out decisions. Power Purchase Agreements (PPAs) not only secure energy supply but also actively contribute to achieving the sustainability goals of German companies. The German PPA market shows impressive growth – in 2023, it increased by 300% to 3.6 GW, ranking second in Europe. However, despite this potential, companies must keep risks in focus through flexible and well-thought-out contract design.

As the seven identified pitfalls illustrate, it is not sufficient to evaluate PPAs solely from a cost perspective. Successful implementation requires a balanced strategy that considers both cost efficiency and risk minimization. An example of successful integration is shown by Siemens Healthineers: The company has committed to becoming climate neutral by 2030 as part of the Science Based Targets Initiative (SBTi). This approach combines strategic decisions with industry-specific requirements and goals.

PPAs offer companies the opportunity to reduce their CO₂ emissions by replacing fossil energy sources with renewable energy. This not only helps achieve sustainability goals but also meets the expectations of internal and external stakeholders. Before signing a PPA, companies should clearly define their key ESG values and specifically look for agreements that support these values and environmental goals. It is also advisable to carefully examine the origin of the energy and the climate neutrality of the project.

Current market conditions in Germany offer both opportunities and challenges. There were 457 hours with negative electricity prices, and ground-mounted photovoltaics achieved average costs of 47.6 EUR/MWh. These fluctuations highlight how important it is to design contracts flexibly and keep a continuous eye on the market.

Another crucial point is the clear linkage of PPAs with the company's ESG goals. Before concluding a contract, one's own sustainability goals should be precisely defined to ensure that the PPA supports them.

The German PPA market is increasingly developing towards smaller, more flexible agreements. More and more companies are opting for renewable energy solutions that go beyond large infrastructure projects. With the goal of obtaining 80% of electricity from renewable energies by 2030 and 100% by 2035, PPAs will play an even more central role in the energy strategy of German companies.

To successfully implement PPAs, thorough preparation, professional advice, and continuous adaptation to market and regulatory changes are essential. Such measures ensure that companies benefit from their PPA decisions in the long term.

FAQs

What advantages do Power Purchase Agreements (PPAs) bring for companies looking to reduce energy costs and achieve climate goals?

Power Purchase Agreements (PPAs) bring numerous advantages for companies in Germany. One of the most important points is long-term price stability. Through contractually fixed conditions, energy costs remain predictable and calculable over a defined period. This not only creates planning security but also protects against the often unpredictable fluctuations in the electricity market. This way, companies gain a degree of financial independence.

Another advantage of PPAs is their role in achieving climate goals. They enable companies to source electricity from renewable energies, which not only contributes to sustainability but also strengthens environmental awareness. At the same time, this can positively influence the public perception and reputation of a company – a real win for all parties involved.

How can companies ensure that their Power Purchase Agreements (PPAs) in Germany are legally compliant and risk-free?

Companies in Germany designing PPAs (Power Purchase Agreements) must ensure that all legal requirements are met. A thorough review of contracts plays a central role in minimizing legal risks and avoiding conflicts.

Some key aspects that should be considered:

• Legally secure contract design: Contracts should be clearly and unambiguously formulated to meet the requirements of German law.
• Regular compliance reviews: Contracts should be continuously reviewed for changes in legislation to stay up to date.
• Transparent risk assessment: Potential risks should be identified early and secured through appropriate measures.

With these measures, companies can not only legally secure their PPAs but also implement them more efficiently and conflict-free.

What criteria should companies consider when selecting PPA partners to successfully implement their ESG goals?

When choosing a PPA partner, you should particularly focus on experience, reliability, and alignment with your ESG goals. A partner you can trust should demonstrate sustainable working practices and be willing to provide you with transparent data for your ESG reporting.

To ensure that PPAs are seamlessly integrated into your ESG strategy, it is crucial that the contractual terms are clearly and precisely defined. This reduces risks and ensures that your sustainability goals are achieved. Close coordination between your corporate goals and the PPA contracts plays a central role in this.