Our data show that most virtual PPAs (vPPAs) are being signed in Spain, but are gradually emerging in other regions. Challenges around accounting and regulatory frameworks are still holding back their wider adoption.
According to Pexapark data, the share of vPPAs increased from an estimated 7% in 2021–2022 to over 10% in the past three years. In 2025 YTD, around 17% of PPA announcements have been virtual, mostly comprising solar deals.
Source : Pexapark (2025), based on publicly disclosed deal information
Companies with experience in the United States, where financial PPAs are the standard structure, are also more likely to enter into financial PPAs in Europe. Two examples are Microsoft with a 230 MW financial PPA with Repsol (2024) and Thermo Fisher Scientific with a 127 MW vPPA with ib vogt (2023), both of which being among the largest deals in Europe.
Spain is leading the European scoreboard, with more than 1 GW of vPPAs publicly disclosed in 2024 and already 289 MW YTD. Over the last five years, the Spanish PPA market has accounted for more than 58% of virtual deals in Europe. Unexpensive solar combined with cross-border PPAs opportunities created appetite from corporates to access GoOs relatively easily.
Source : Pexapark (2025), based on publicly disclosed information between 2018 and 2025
Poland leads the Eastern Europe region with 966 MW of virtual capacity contracted across 17 deals involving a diverse range of offtakers and sellers. Emerging markets are also showing notable activity, such as Romania, which reported nine deals totaling 287 MW over the past two years, including several cross-border agreements with Czechia and Slovakia.
Elsewhere in the region, Croatia has concluded two vPPAs out of a total of four PPA deals recorded in the country, while Bulgaria has recorded one virtual transaction out of six, and Greece one out of 18. What stands out is that vPPAs have been closed in relatively low-liquidity markets, and in contrast, more mature markets such as Germany and France have yet to report any vPPA activity.
Enabling geographically flexible decarbonisation for multinational corporations remains vPPAs’ main selling point. The renewable asset and the offtaker can be located in different price zones and/or countries, broadening the pool of buyers for renewable developers and the project options for offtakers. This has made vPPAs particularly attractive for multinational corporations looking to decarbonise geographically dispersed operations under a centralised procurement strategy.
A corporate can more easily aggregate demand from multiple locations (e.g., production sites across different countries) and procure the volumes under a single virtual PPA contract. This is also possible in physical PPAs, but the interaction with multiple supply agreements would make the process significantly more complex and lengthy. In a vPPA, all the corporate needs to do is estimate its volume needs and how much of it it wants to offset with green power. Recent examples include large manufacturers and healthcare corporates like ArcelorMittal or GSK, which have turned to vPPAs to decarbonise their operations across multiple sites.
For sellers, the pool of buyers extends significantly, which could help them reach their contracting objectives sooner. For instance, Romanian sellers were able to sell power to international telecommunication companies outside the country through cross-border arrangements. For buyers, so is the respective pool of projects or sellers. For example, a large industrial offtaker in X market may not have enough quality local projects to choose from, so they could leverage the ability to look for assets all over Europe.
However, when contracting a virtual cross-border PPA, parties should be aware of basis risk i.e., the residual price difference that can arise when the PPA price (typically financially settled in the producer’s price zone) does not align with the pricing environment in the market where the offtaker consumes the energy. This mismatch can lead to financial volatility, particularly if the price correlation between the two markets is weak, with limited additional tools to hedge the residual risk. Additionally, legal and regulatory risks — such as changes in local energy laws or market structures — may affect one side of the agreement more than the other.
Going further, vPPAs are effective tools to structure multi-buyer contracts through aggregating demand of several companies, enabling corporates to collaborate on their power procurement strategy. In early 2025, four pharmaceutical companies came together under the Energize Program, a pharma industry initiative enabling renewable energy adoption and contracting, to sign a 10-year contract for 245 GWh of solar production from the Lorca project in Murcia.
Virtual PPAs remain underrepresented in several key European markets. In Germany, for instance, the “Strompreiskompensation” (SPK) scheme incentivises physical delivery by requiring companies to source at least 30% of electricity through unsubsidised renewable PPAs — including Guarantees of Origin (GoOs) bundled with physical power—to qualify for compensation on indirect CO₂ costs. In France, the “Garantie Electricité Renouvelable”, a guarantee scheme aimed at mitigating creditworthiness concerns for smaller companies to stimulate the PPA market, is only eligible for physical contracts.
Accounting practices remain a key concern. Unlike physical PPAs, vPPAs must be accounted for as financial derivatives, which introduces complexity around mark-to-market accounting under IFRS or GAAP guidelines. The fact that financial PPAs require the accounting of unrealised values leads some companies to hesitate in signing such contracts, to avoid fluctuations in their financial results.
A common concern among corporate buyers regarding vPPAs is the potential for “greenwashing,” as Guarantee of Origin certificates are purchased through the PPAs, but separately from the physical electricity. However, from a European Union legal perspective, this concern is addressed by key frameworks like the EU Taxonomy and the Corporate CSRD, which recognize electricity backed by origin certificates as renewable, even if the electricity and certificates are from different sources.
The EU Taxonomy also acknowledges renewable energy generation as a significant climate contribution, allowing vPPAs to be considered environmentally sustainable. Additionally, vPPAs are recognized in voluntary sustainability reporting frameworks such as the Greenhouse Protocol and RE100 as a valid source of green electricity. However, even though this concern may be unfounded, the fact that sustainability reporting frameworks are continuously evolving can still be unsettling for some companies entering long-term agreements primarily for ESG purposes.
Notes:
(1) vPPAs, also known as financial PPAs, operate as Contracts-for-difference (CfD) between a renewable energy producer and an offtaker. The generator sells electricity on the wholesale market, while the two parties exchange the difference between the market price and the agreed strike price. More can be read here.
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