Budget certainty in an uncertain market: The strategic case for CPPAs in 2026

During the first week of March the US-Israel-Iran conflict brought significant volatility across UK wholesale energy markets. Gas contracts saw sharp movements during peak trading sessions, and forward power prices rose across multiple delivery periods.

Headlines often frame such events as prices “skyrocketing,” but as recent commentary highlights, how organisations interpret and respond strategically to price volatility is key.

What is the context?

Gas remains the marginal price setter in the UK electricity market, which means global gas movements can quickly impact UK power pricing.

For organisations on flexible or short‑term supply arrangements events like the US-Israel-Iran conflict can create challenges.

Forecasting under volatility

Short-term movements can rapidly undermine financial forecasts. Procurement teams may need to revise projections multiple times in a quarter, and finance teams can struggle to make confident budget decisions.

When markets shift due to geopolitical events, organisations may find themselves delaying purchases – sometimes increasing exposure to further risk.

Budgeting implications

Volatility affects cashflow planning, internal approvals and multi‑year budget cycles. If prices swing unexpectedly, organisations can face unplanned cost increases or need to buy in unfavourable conditions simply because contract cycles or seasonal requirements force a decision.

This is where flexible procurement – while still highly valuable for capturing dips – can be challenging during unpredictable global events.

What are Corporate Power Purchase Agreements (CPPAs)?

A Corporate Power Purchase Agreement is a 10–15‑year contract between an organisation and a renewable energy generator. While often viewed through the lens of sustainability, CPPAs deliver substantial financial and strategic advantages.

Why a CPPA could be an effective energy procurement option?

In an environment where energy prices can shift dramatically, organisations need procurement strategies that balance short-term responsiveness with long-term stability.

CPPAs offer the latter – providing predictable pricing, reduced exposure to volatility, and direct access to renewable generation.

CPPAs typically include structured pricing – fixed rates, collars, floors, or indexed mechanisms – that create predictable energy costs over many years.

This allows procurement and finance teams to forecast more accurately, build long-term investment cases, and reduce exposure to short‑term market volatility.

In periods like early March 2026, this degree of certainty can become a significant competitive advantage.

Strategic risk management

CPPAs function as a long-term hedge, diversifying an organisation’s procurement portfolio. A CPPA can:

• Reduce reliance on wholesale markets during volatile periods.
• Provide predictable cost structures.
• Support energy and sustainability targets with traceable renewable generation.
• Complement rather than replace flexible procurement strategies.

A carefully considered procurement strategy is crucial

CPPAs are not a replacement for flexible procurement. Instead, CPPAs form part of a balanced, diversified energy procurement toolkit;

Flexible strategies excel when agility and short-term optimisation are prioritised, while CPPAs excel when long-term budget stability and strategic risk management matter the most.

How has a CPPA helped other organisations?

Here are some examples where a CPPA has been an effective part of an organisation’s energy procurement solution:

• University of Manchester: A solar CPPA covering up to 65% of electricity demand, supporting The University’s 2038 zero carbon ambition.
• Five UK Co-operatives: A 10‑year CPPA sourcing roughly 53 GWh annually from the London Array offshore wind farm.
• VIRTUS Data Centres: A tri-party CPPA securing 31 MW of renewable capacity to support its net zero targets.