Deep Dive Series: Greece’s Evolving CfD and PPA Market

Powering Ahead:
Greece’s Evolving CfD and PPA Market
and the Corporate Energy Transition

Greece’s energy transition is accelerating – with a powerful combination of Contracts for Difference (CfDs) and Power Purchase Agreements (PPAs) pushing the country toward a cleaner, more resilient power system. Amid rising corporate decarbonisation targets and the need for energy cost stability, Greece has positioned itself as a dynamic testing ground for next-generation energy contracting.

The Voice of Renewables’ Deep Dive unpacks the latest developments in CfD and PPA mechanisms, highlighting structural innovations, pricing trends, and strategic implications shaping Greece’s clean energy future.

CfDs in Greece: From Auctions to Industrial Stabilisation

Between 2022 and 2025, Greece has anchored its renewable energy expansion through CfD-backed auctions targeting 4.2 GW of new solar PV and wind capacity under a €2.27 billion budget. These schemes offer developers price certainty while aligning with state objectives for energy transition.

Storage + Solar: Flagship CfD Projects

Two headline projects under the CfD regime – Faethon and Seli – highlight Greece’s innovation trajectory. Featuring molten-salt and battery storage respectively, these solar + storage hybrid sites are expected to generate an additional ~1.2 TWh annually by mid-2025. Combined, they represent a €1 billion investment in resilient, dispatchable green energy.

CfDs for Industry: A 2025 Breakthrough

In August 2025, a new CfD mechanism, approved by the European Commission, was introduced to support heavy industries. It stabilizes energy prices at ~€55/MWh over three years, in exchange for mandatory long-term renewable investments. Half of the energy produced under this mechanism will be remunerated via CfDs, with the remainder available for sale through corporate PPAs – signaling a novel CfD–PPA hybrid approach.

Legal Framework & Market Integration

Expansion to Energy Storage: Dedicated BESS CfDs

Greece has significantly expanded its CfD framework to include stand-alone Battery Energy Storage Systems (BESS), complementing its renewables auctions:

Through NextGenerationEU funds, Greece is auctioning out 1 GW of standalone BESS capacity by 2026. This program blends:
- A construction grant (e.g., €200k/MW in the first round, halved to €100k/MW in the second),
- A two-way CfD on revenues for the first 10 years, benchmark-based rather than project-specific, with a merchant tail thereafter.
Auction mechanics:
- Developers bid for annual €/MW‑year strike levels.
- After 10 years, residual life of storage enters the undriven merchant market-bearing full price risk.

This system secures early revenues while fostering active operations and incentives for competitive bidding applications.

Continuing Battery Storage Tender Rounds into 2025‑2026

The expansion of BESS support is continuing with additional auction rounds:

A third auction targets 200 MW of 4‑hour storage (totaling 800 MWh capacity), with bids due late 2024 and commissioning by April 2026.
Support structure includes:
- CfDs (€/MW‑year),
- A one‑off capex subsidy (currently set at €200k/MW),
- Letters of guarantee required for auction participation.

This marks a consistent evolution of the CfD support model toward balancing supply reliability and market exposure over time.

Solar + Storage Auctions Under Law 5106/2024

From May 1, 2024, Greece’s new Law 5106/2024 enables auctions for renewables that accept higher curtailment ratesand those that integrate energy storage systems:

These auctions are designed to accommodate hybrid projects (e.g., solar paired with battery storage) through adjusted CfD terms and volumes.
Initial deployment awaits European Commission approval before proceeding.

Offshore Wind: Floating Turbine Auctions Ahead

Looking beyond ground-mounted renewables, Greece is preparing for offshore wind CfD-style auctions:

Under the Offshore Wind Law (2022), Greece aims for ~2 GW of offshore wind by 2030, predominantly floating turbines given its deep waters.
Auctions—scheduled for around 2025–2026—will offer sliding Feed-in-Premium schemes closely mirroring the CfD model, providing revenue stability for offshore developers.

Summary: CfD Mechanisms After 2025

Project Type	Contract Duration	Support Instruments	Key Features
Stand‑alone BESS	10‑year CfD + merchant	Capex grants + €/MW‑year two‑way CfD	Secures revenues early; encourages operational activity
Hybrid Solar + Storage	TBD (subject to approval)	CfD-style incentives with curtailment options	Adaptive design for flexible, energy-resilient models
Floating Offshore Wind	Long-term sliding FiP	CfD-like sliding premium scheme	Stable pricing; tailored for high-capital offshore deployment

Key Takeaways

Post‑2025, Greece is firmly extending its CfD-based framework beyond wind and solar, incorporating energy storage and offshore wind into its auction designs—reflecting a commitment to flexibility and grid resilience.
The refined model for BESS auctions combines capital grants with benchmarked CfDs and merchant tails—encouraging both project viability and market integration.
New legislative tools (e.g., Law 5106/2024) are enabling hybrid renewables auctions, setting the stage for more sophisticated project configurations.
Offshore wind is entering the mix via CfD-style mechanisms, making Greece a significant new frontier for floating wind innovation.

PPAs in Greece: From Niche to Strategic Pillar

Since 2021, PPAs in Greece have rapidly matured from boutique arrangements into essential financing and hedging tools. Greece now supports three core PPA structures:

Physical PPAs – Direct energy delivery at a fixed price.
Virtual PPAs – Financial contracts with strike price settlements.
Merchant PPAs – Flexible agreements with utilities or traders as intermediaries.

While CfDs dominate at the policy level, PPAs are emerging as a crucial corporate decarbonization lever, particularly for energy-intensive sectors.

In Greece, among the three main PPA variants – Physical, Virtual, and Merchant – the Physical PPA is currently the most popular and widely used, especially for large industrial offtakers. Here’s a breakdown of popularity and reasons behind each type’s adoption:

Most Popular: Physical PPAs

Description:

A direct energy delivery contract where electricity is physically supplied to the corporate buyer at a fixed price.

Why They Are Popular in Greece:

Industrial Demand: Greece has many energy-intensive industries (aluminum, steel, cement, paper) with on-site or near-site consumption, making physical delivery feasible and efficient.
Bankability: Lenders and investors prefer physical PPAs due to their lower risk profile, direct settlement, and clear credit structure.
Regulatory Support: Greece’s regulatory framework, including priority grid access for projects with ≥80% contracted capacity, strongly incentivizes physical PPAs.
Infrastructure Improvements: Grid upgrades and corporate sustainability commitments have made physical connections more viable.

Limitation: Smaller corporates and those without sophisticated energy procurement teams may find the regulatory and technical burden of physical PPAs challenging.

Moderately Used: Virtual PPAs

Description:

A financial hedging instrument where the buyer does not take physical delivery but settles the difference between a fixed strike price and the market price.

Why Use Is Limited (But Growing):

Grid Constraints: Many corporates do not have direct access to the wholesale market, limiting virtual PPA feasibility.
Complexity: These contracts require advanced financial modelling, legal advice, and risk management capabilities – barriers for most Greek SMEs.
Corporate Sophistication Rising: As more international corporates enter Greece or local players grow more experienced, virtual PPAs are slowly gaining traction, especially for portfolios or multi-site operations.

Least Used: Merchant PPAs

Description:

PPAs where utilities or traders act as intermediaries, often on a short-term basis or involving merchant risk exposure (i.e., pricing linked to spot markets).

Why They Are Rare in Greece:

High Price Volatility: Greek wholesale electricity markets have seen significant price swings, discouraging risk-heavy merchant models.
Lack of Depth in Trading Ecosystem: The Greek electricity market is still developing its liquidity and hedging tools.
Limited Market Maturity: Most developers and offtakers prefer the predictability of fixed-price contracts, not market-indexed volatility.

That said, some merchant PPAs are used by traders or aggregators balancing portfolio needs – especially in shorter-term, post-subsidy projects.

Summary Table: PPA Variant Popularity in Greece

PPA Type	Popularity	Main Users	Key Advantages	Key Challenges
Physical PPA	🔵 Most Used	Large industrial buyers	Bankable, fixed price, grid incentives	Requires grid access, technical setup
Virtual PPA	🟠 Growing Slowly	Corporates with financial teams	Flexible, no grid tie needed	Complex structuring, regulatory limits
Merchant PPA	🔴 Rare	Traders, some utilities	Market-responsive, flexible terms	High risk, limited predictability

Final Note:

As corporate procurement sophistication increases, and regulatory clarity improves, Greece may see growth in virtual PPAs and multi-buyer frameworks. However, for now, physical PPAs dominate the landscape, especially in deals involving industrial offtakers like Mytilineos, Duferco, and Sofidel.

Latest PPA Transactions: Structure, Strategy, Impact

FARIA Renewables & Duferco Hellas – Faria Nesson Solar Project

Structure: 10-year physical PPA, covering 70% of output (~31 GWh/year).
Timeline: Starts Q1 2026.
Strategic Value: Secures long-term supply for Duferco; enables FARIA’s IPP growth.

Axpo & EDF Renewables – Viotia Solar Facilities

Structure: Short-term physical PPA for 102 MW solar output.
Use Case: Portfolio balancing; flexible offtake without long-term hedge.

Cero Generation (Macquarie/Corio) – Corporate Portfolio PPAs

Scope: Targeting ~2 TWh over 2025–2026.
Pricing: €38–45/MWh; forecast to fall to €28–38/MWh post-2030.
Highlight: Features storage components and multi-project aggregation.

Mytilineos & Karatzis – Larissa Solar Portfolio (262 MW)

Structure: Hybrid PPA with 80% of output (~380 GWh/year) sold to Mytilineos.
Status: Operational from Q3 2024.
Significance: Secures long-term clean power for Mytilineos’ industrial load.

HERON & Meton Energy (RWE/PPC Renewables) – Western Macedonia Projects

Structure: 10–12 year PPAs for ~192 GWh/year via Optimus Energy.
Notable Feature: Revitalizes decommissioned lignite sites with solar development.

Financing & Delivery Models: Innovation in Motion

PPA Types

Physical PPAs – Preferred by industries for direct, bankable supply.
Virtual PPAs – Enable financial hedging for non-grid-connected buyers.

Delivery Models

Sleeved PPAs – Utilities act as balancing intermediaries.
Direct PPAs – Offtakers manage grid compliance; higher complexity, lower cost.

Contract Variants

Pay-as-Produced – Buyer accepts intermittency risk.
Baseload PPAs – Seller must firm delivery via storage or market balancing.

Risk Allocation: Contractual Maturity

Today’s PPAs are no longer basic offtake deals – they are multi-layered contracts with dynamic risk-sharing mechanisms:

Risk Type	Typical Allocation
Development Risk	Developer (backed by EPC and permitting guarantees)
Credit Risk	Buyer (credit support required; some use insurance wraps)
Volume Risk	Buyer (mitigated via take-or-pay clauses)
Price & Tenor Risk	Shared; some contracts include indexed escalators
Imbalance Risk	Buyer (direct PPA) or utility (sleeved PPA)
Force Majeure & Regulation	Shared with adaptive clauses

PPA Pricing: Greece in the EU Context

In Greece

2022: €40–50/MWh – Limited buyers and higher project risk.
2024: €62.3/MWh average – Still ~13% lower YoY.
2025: Stabilizing at ~€50.25/MWh, as investor confidence improves.

In Europe

2022–2023: Averaged €73.5–76.8/MWh across key markets.
2024: Softening driven by falling equipment costs and wholesale prices.
Trend: Hybrid PPAs (wind + solar + storage) and multi-buyer deals gaining traction.

Market Outlook: Corporate vs Utility PPAs

Corporate PPAs

Driving market growth due to ESG pressure, long-term hedging, and regulatory incentives (e.g., grid priority for ≥80% contracted capacity).
Backed by increasingly sophisticated financial tools, including credit wraps and synthetic hedges.

Utility PPAs

Still vital for project bankability in early stages.
Generally shorter-term, often linked to market indexation or flexible offtake.

Macro Trends

Greece ranks in Europe’s top five for PPA capacity growth.
Corporate PPAs now account for ~70% of new agreements – mirroring wider EU shifts.
Next-generation models (multi-tech, cross-border PPAs, storage-backed deals) are gaining attention.

CfD vs. PPA: Complementary, Not Competitive

Aspect	CfD (Feed-in Premium)	PPA (Physical / Virtual / Merchant)
Scale	National, policy-driven, multi-GW	Project-specific, tailored to corporate buyers
Purpose	Stabilize RES deployment & energy prices	Hedge price risk, enable corporate decarbonization
Adoption	Fully integrated in auctions and policy schemes	Emerging, but increasingly strategic
Importance	Core to Greece’s energy transition and industrial strategy	Key enabler for private sector climate goals

Conclusion: A Market in Strategic Maturity

CfDs are the backbone of Greece’s energy policy, ensuring market stability and utility-scale development. PPAs, however, are emerging as the strategic currency of corporate energy transition, offering flexibility, price visibility, and long-term impact. Far from rivals, the two mechanisms coexist in a mutually reinforcing ecosystem.

The Greek renewable energy market is entering a new phase of sophistication and scale. With CfDs continuing to anchor national strategy and PPAs driving corporate transformation, Greece is becoming one of Europe’s most promising renewable investment landscapes.

From hybrid financing models to multi-tech contracting, Greece is not just catching up – it’s becoming a trendsetter in structuring clean energy deals.

By The Voice of Renewables – Your lens into the future of clean energy markets.