While CfDs are the most attractive route to market in UK solar, EDF's Ross Irvine says that there are opportunities for corporate PPAs.
Why it matters: Stop chasing government crumbs; the real money is in hedging operational assets directly with corporate off-takers who have ESG targets to hit.
The UK solar market is suffering from a bad case of 'subsidy Stockholm Syndrome.' For years, developers have treated the Contracts for Difference (CfD) scheme as the only viable path to bankability. It’s easy to see why: a government-backed floor price is a warm blanket for conservative lenders. But while you're waiting for the next Allocation Round (AR) and praying the strike price doesn't get cannibalized by offshore wind, the real money is moving toward the private sector.
The Cannibalization Trap
Here is the reality that many UK developers ignore: as more solar hits the grid, the 'capture price' during peak generation hours plummets. If you are locked into a generic CfD, you are a price-taker in a race to the bottom. In contrast, Corporate PPAs (CPPAs) allow for sophisticated structures—like pay-as-produced or even baseload-firmed contracts—that reflect the actual value of green electrons to a tech giant or a heavy manufacturer. Companies like Google or Amazon aren't just looking for cheap power; they are looking for RE100 compliance and additionality, and they are willing to pay a premium for it that the government won't match.
Why This Isn't Just a UK Story
We are seeing the same pattern in Germany and Poland. The 'safe' route is becoming the 'low-margin' route. If you have an operational asset in the UK today, staying purely on a CfD or merchant exposure is leaving meat on the bone. Transitioning a portion of an operational portfolio to a sleeved PPA can significantly de-risk your long-term cash flow while capturing the 'green premium' that ESG-starved corporates are desperate for. Stop treating your assets like a utility commodity and start treating them like a bespoke financial product. The N2EX day-ahead market volatility is your friend if you have a corporate partner willing to hedge against it.