CPPAs in 2035: shorter contracts, simpler structures and wider access

By 2035, we’re likely to see CPPAs:

• Become more standardised in their terms and structure
• Become more accessible to mid-sized and smaller buyers
• Continue to shorten to meet demand, as buyers seek flexibility and lower approval barriers

Contract lengths

Over the past few years, we’ve seen average CPPA tenors come down from the 15-year-plus contracts that were once more common.

As we’ve explored, shorter contract lengths help reduce the approval complexity for corporates. They make it easier to manage price over a timeframe that better aligns with internal planning cycles. Shorter contracts also increase opportunities for generators that have existing assets, particularly where they’ve already fully or partly repaid the project finance. This trend looks set to continue and become the norm as markets mature. In 2026, RWE has signed separate 5-year CPPAs with both Network Rail and Lidl.

Contract structures

Today, many CPPA contracts remain bespoke and lengthy – financial negotiation, risk allocation and the requirement for board-level sign-off can often contribute to complexity. But as the market matures, simplified contracts are likely to become more common.

Suppliers could offer standardised contract templates – particularly for the shorter-tenor, lower-risk CPPAs – which could help reduce legal complexity and make the product more attractive and accessible to a wider range of buyers.

Industry consolidation could also simplify some route to market. Consolidation refers to when suppliers own the generation assets, which we’re seeing more and more suppliers doing. As well as working with generation assets at Drax, we also own a number of assets, such as Galloway, a run-of-river hydroscheme in south-west Scotland. This results in a more integrated route to market, greater simplification and lower risk for the buyer.

Greater accessibility for a wide range of buyers

CPPAs have traditionally been the preserve of large, credit-worthy corporates. But that’s beginning to change. Today, CPPAs are becoming relevant to a wider range of buyers – including smaller and mid-sized organisations that may previously have found it difficult to meet structure, scale, or credit requirements.

Both reduced tenors and simplified contract structures will make CPPAs more attractive and accessible to smaller buyers. Multi-buyer PPAs – where one asset supports multiple buyers could also help open the market, By allowing buyers to share the output from one asset, they can reduce the volume commitment required from any single organisation.

A more accessible route to renewable power

The main opportunity for the growth of the CPPA market is accessibility. More and more renewable assets are connecting to the Grid every day. This means there’s more opportunity for corporates to access a CPPA as part of their procurement strategies.

We’re likely to see a popularity rise in CPPAs following the passing of Clean Power 2030 deadlines. The Government’s likely to announce awards for successful projects in allocation round 8 (AR8) – the last Contracts for Difference (CfD) auction ahead of the CP2030 target – in late 2026 or early 2027. As we’ve discussed, this could see a ‘decoupling’ of influence between CPPAs and CfDs – and enhanced demand for the former.

The opportunity of risk management remains for organisations that haven’t already secured a CPPA. CPPAs remain the only energy products able to provide long-term, fixed-cost certainty.

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