The European Geothermal Energy Council (EGEC) welcomes the European Commission’s initiative to remove barriers to Power Purchase Agreements (PPAs) and accelerate their uptake as tools to finance new clean electricity assets and provide long-term price stability for consumers. PPAs can help scale renewable generation while giving electricity buyers more predictable costs.
EGEC highlights that geothermal electricity is firm, non-weather-dependent, and flexible, contributing to the security of supply, grid stability, and overall system resilience. These characteristics are increasingly relevant as Europe faces more zero- or negative-price hours and greater flexibility needs to integrate variable renewables and support electrification.
EGEC agrees that PPAs are important for unlocking privately financed renewable energy capacity, but stresses that PPAs alone are insufficient for capital-intensive technologies such as geothermal. High upfront costs and exploration and drilling risks are not addressed by standard PPA structures, which primarily hedge operational market-price risk. To close this bankability gap, PPAs should be complemented by targeted public de-risking instruments, including public guarantees and counter-guarantees to cover payment default risks and improve access to credit.
EGEC also points to persistent non-financial barriers, notably administrative complexity and slow permitting and licensing, and calls for streamlined procedures to unlock project pipelines and expand the PPA market. Regulatory frameworks should also ensure that PPAs can coexist with public support schemes such as Contracts for Difference (CfDs), in a way that supports competition while providing sufficient investment security.
Finally, EGEC underlines the need to develop EU guidance for Renewable Heat and Cold Purchase Agreements (RHCPAs), including dedicated infrastructure financing and full implementation of relevant Renewable Energy Directive provisions, notably Article 23.4 on RHCPAs.
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