PPA: what it is and what is negotiated

What a PPA is

PPA stands for power purchase agreement, an agreement to buy and sell electricity. It is a long-term contract, with a set price and term, under which a producer sells renewable energy to a buyer: an end consumer or an intermediary. The GSE describes it as a tool that makes it possible to stabilise prices and manage market volatility.

The European Union too, in its 2024 electricity market reform (EU 2024/1747), asks Member States to promote their use “in order to ensure price predictability” and to make available guarantees against non-payment by buyers.

It is a different route from the GSE dedicated withdrawal scheme, where the price is not negotiated: the GSE pays the hourly zonal price of your zone, every month but two months later, net of administrative costs and imbalance charges. The item-by-item comparison is in the guide Dedicated withdrawal or open market?

Physical or financial: the forms

The GSE distinguishes three forms of PPA:

• Physical, on-site: the plant is built on the consumer’s premises, and the consumer uses the energy directly, at the PPA price.
• Physical, off-site, known as sleeved: the plant can be far away; the energy enters the grid and is delivered to the buyer at the PPA price.
• Financial, or virtual: the buyer does not consume that energy, which is sold on the grid at market prices; the parties then settle between them the difference from the fixed PPA price. That is why the GSE likens it to contracts for difference.

For producers the difference is concrete: in a physical PPA the energy goes to a specific buyer; in a financial one you sell it on the market as usual, and the settlement with the counterparty brings you back to the agreed price.

The legislation: Article 28 and the PPA Board

Article 28 of Legislative Decree 199 of 2021 required the GME to set up an online board to bring together those who want to sign long-term renewable energy contracts, with the obligation to register their data. It is the Board for long-term contracts for the purchase and sale of electricity from renewable sources, known to all as the PPA Board (Bacheca PPA), in operation since 26 April 2022. It has three sections:

• Listings: sellers and buyers publish anonymous, non-binding listings; the contract, if one comes about, is signed outside the Board.
• Contract registration: the seller registers the signed contracts, with counterparty, term, profile, price, quantity and plants. If you sell through a PPA, registration falls to you.
• Energy release: the allocations of the energy that the GSE transfers under Ministerial Decree 341 of 16 September 2022.

For the Board, a long-term contract is one with physical delivery of the energy.

The PPA Market and the GSE guarantee

The same article provides for a second step: an organised market platform, with voluntary participation. The guidelines were set by Ministerial Decree no. 152 of 20 June 2025 of the Minister of the Environment and Energy Security, which calls it the PPA Market (MPPA):

• contracts with standard features, lasting between 5 and 10 years;
• the GME as central counterparty, with guarantees provided by buyers and sellers;
• on the sell side only owners of renewable plants in operation or authorised, on the buy side only holders of withdrawal points, with the requirements set by the GSE;
• if a party defaults, the GSE steps in as guarantor of last resort, up to €45 million a year from 2025 to 2027.

The PPA Market’s regulations are approved by Ministerial Decree when it starts: before relying on it, check on the GME website where it stands.

What is negotiated: the clauses to check

A PPA lasts for years, and every clause carries weight for its entire term. Before signing, check at least these items:

• Price: fixed for the whole term or linked to an index, such as the zonal price; and what happens if the market moves far away from that price.
• Term and start date: when the contract starts, and what happens if a new plant comes into operation late.
• Profile: the PPA Board distinguishes baseload, peakload, pay as produced and others. It matters whether you sell the output as it is or a fixed profile, and who covers the hours when the plant is not producing.
• Imbalance: who acts as the plant’s dispatching user and who pays its imbalance costs.
• Guarantees of origin, the electronic document certifying that a quantity of energy has been produced from renewable sources: whether they pass to the buyer, how and at what price. We cover them in the guide on guarantees of origin.
• Payment guarantees: what the buyer offers to cover payments, for the whole term.
• Withdrawal and termination: when you can get out, with what notice and what penalties; and what happens if the regulations change.
• Metering and invoices: which meter readings the energy fed in is calculated on, who invoices and within how many days payment is made.

What EKA does

Every year since 2017, we put the energy of the producers we work with into an RFQ, request for quotation, to traders: the same terms for everyone, and the choice stays yours. We check the reliability of buyers, review the contract to protect the producer and, after signing, check the feed-in invoices. Under the new schemes (FER X, contracts for difference) balancing may remain the producer’s obligation: it is checked case by case, before signing. How we work: the service for producers.