A PPA (Power Purchase Agreement) is a contract under which a business commits to buying electricity, usually renewable, from a producer for several years, on terms set at the outset. EU law defines it as the contract under which a natural or legal person agrees to purchase electricity from a producer "on a market basis" (Regulation (EU) 2024/1747). It is neither an incentive nor a regulated tariff: it is a private contract, and its value depends on how it is written.
How it works
The producer obtains predictable revenues; the business makes the cost of part of its energy predictable, at a fixed price or under an agreed formula. The rest of the demand stays on an ordinary supply contract, exposed to market prices: the PUN and the market indices help to get one's bearings.
The types
| Feature | On-site | Physical off-site | Virtual (financial) |
|---|---|---|---|
| Where the plant is | At the business's site | Elsewhere, connected to the grid | Elsewhere, even in another bidding zone |
| Energy delivery | Direct to the site | Through the grid and a supplier | None: supply remains separate |
| What is settled | Energy consumed on site | Energy taken, at the agreed price | Difference between the agreed price and the market price (contract for difference, CfD) |
Duration: what the sources say
For bilateral PPAs the law sets no duration: the European Commission describes them as long-term contracts typically concluded between generators and corporate consumers. The Italian figures concern the public instruments.
The Italian instruments as of October 2026
- GME PPA Bulletin Board. In operation (Article 28 of Legislative Decree 199/2021): anonymous, non-binding buy or sell notices, mandatory registration of concluded contracts, Energy Release section.
- PPA Market (MPPA). Provided for by Ministerial Decree no. 152 of 20 June 2025: an organised market with GME as central counterparty and GSE as guarantor of last resort. The design went out to consultation in July 2025; at the date of this update the GME website does not yet list it among the active markets.
- Public guarantees. Decree-Law 21/2026 (Law 49/2026) allows parties contracting through the Bulletin Board to ask GSE for the last-resort guarantee, within the resources (EUR 45 million a year from 2025 to 2027), and provides for SACE guarantees at market conditions. The operating rules require a ministerial decree: the GSE consultation closed on 8 July 2026 and the approval should be checked.
- Energy Release 2.0. Reserved for energy-intensive customers: GSE advances energy for 36 months, returned over the following twenty years by new renewable plants. Expressions of interest closed on 3 March 2025: today it is no longer open.
Regulation (EU) 2024/1747 also requires every PPA to specify bidding zone and exit conditions.
For a business: what to look at
When it is worth considering
When electricity consumption is stable for years, when cost predictability is needed on part of the demand and when customers or the lead company of the supply chain ask for documented renewable energy. For SMEs the critical point is access, which the Commission lists among the barriers to be removed: Decree-Law 21/2026 entrusts Acquirente Unico with demand aggregation and ARERA with guidelines on purchasing groups. Businesses with several sites reason on their PODs as a whole.
What is needed
- the hourly load curves of every POD, not just annual totals;
- expiry dates and clauses of the current supply contract;
- financial statements and credit standing: the producer will ask for guarantees;
- the share of consumption to be covered, decided before asking for offers.
Typical mistakes
- comparing the PPA price with today's market price, rather than with scenarios over the whole term;
- covering the entire demand: if consumption falls, the commitment remains;
- ignoring the profile: a photovoltaic plant also produces in hours when the factory is not consuming, and the contract must say who bears the mismatch;
- failing to regulate assignment of the contract, site closure and early exit.
What can and cannot be claimed
The energy of a PPA can be claimed as renewable only if the contract also transfers the guarantees of origin, which do not automatically follow the energy, and these are cancelled for the business: the effect concerns Scope 2 calculated with the market-based method of the carbon footprint. A virtual PPA without guarantees of origin is a price hedge, not proof of renewable consumption. The topic is part of the energy sustainability of the business.
If you want to understand whether a PPA is consistent with your company's consumption and contracts, IPGS ENERGY assesses it as a consultant, without selling energy: Request a conversation.
Sources
- EUR-Lex — Regulation (EU) 2024/1747 (accessed 10 October 2026)
- European Commission — Commission recommendation to facilitate Power Purchase Agreement take-up (accessed 10 October 2026)
- GME — PPA Bulletin Board (Bacheca PPA) (accessed 10 October 2026)
- GME — PPA consultations, document no. 1/2025 (accessed 10 October 2026)
- MASE — Decree no. 152 of 20 June 2025 (accessed 10 October 2026)
- Normattiva — Legislative Decree no. 199 of 8 November 2021, Article 28 (accessed 10 October 2026)
- Normattiva — Decree-Law no. 21 of 20 February 2026, Article 4 (accessed 10 October 2026)
- GSE — Consultations (accessed 10 October 2026)
- GSE — Energy Release 2.0 (accessed 10 October 2026)
Informational content by IPGS ENERGY. Information is reviewed as of the stated update date and does not replace a contractual, tax or regulatory assessment specific to an individual business.
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