The European Commission’s latest push to remove barriers to power purchase agreements is set to change how developers in South-East Europe plan wind, solar and battery storage projects, from early technical studies through procurement and financing. Adopted on 22 April 2026, the recommendation reframes long-term contracting as a market backbone rather than a niche tool. For Serbia, Montenegro and Energy Community markets, it signals that investment readiness will increasingly depend on contract structures that can withstand price volatility and grid constraints.
Long-term PPAs move to the centre of the investment cycle
The Commission’s position treats corporate PPAs as system-critical for delivering the EU’s 42.5% renewable energy target and at least 55% emissions reduction by 2030. That framing shifts the planning logic for renewable portfolios in the region: project viability becomes tied not only to resource assessments and grid connection studies, but also to the bankability of offtake arrangements. It also places South-East Europe in a more direct role as a supply-side extension of the EU clean power system.
Across Europe, contracted volumes under corporate PPAs have risen from 7.4 TWh in 2020 to 31.4 TWh in 2024, while deal counts increased from 60 to 276 over the same period. Solar photovoltaic has overtaken wind as the dominant technology in these contracting trends, and hybrid structures integrating storage are emerging as a defining feature of the next phase. The implication for engineering schedules is that storage integration is no longer an optional add-on for revenue stability—it is increasingly part of how risk is allocated at contract level.
Cross-border contracting becomes a planning requirement
A key element of the recommendation is explicit support for cross-border PPAs, including those involving Energy Community markets. These contracts—where electricity is purchased across national boundaries—are positioned as a route to integrate neighbouring systems into the EU internal electricity market while unlocking new generation capacity. For developers in Serbia and Montenegro, this raises the importance of cross-border transmission planning and interconnection feasibility work early in project development.
In practice, cross-border contracting links investment decisions to regional price spreads that can make export-oriented generation attractive. That means technical studies for wind and solar projects will need to be aligned with export capability assumptions, not just local demand profiles. It also increases the value of transmission system modelling that can translate corridor constraints into realistic delivery profiles for physical or financial contracting.
Grid modernization constraints affect financial close
The Commission highlights regulatory barriers that must be addressed before cross-border PPA markets scale, including grid access constraints and slow permitting processes. It also points to inconsistencies in accounting rules and the treatment of guarantees of origin, which can complicate both procurement documentation and revenue attribution during operations. In Serbia, transmission capacity expansion at the 400 kV level remains behind project pipelines, turning network readiness into a direct determinant of when projects reach financial close.
Montenegro faces parallel limitations tied to system size and interconnection constraints, which can restrict monetisation of surplus generation through long-term contracts. For operators and EPC contractors preparing execution plans, these constraints influence not only connection works but also sequencing decisions across civil works, electrical installation packages, testing and commissioning windows. Developers may need to revisit design margins if delivery schedules cannot be supported by available transfer capacity.
Offtaker credit risk and contract standardisation remain bottlenecks
Beyond regulation, non-regulatory frictions include buyer creditworthiness, lack of transparency and limited contract standardisation. The Commission notes these issues are acute where large industrial offtakers are fewer than in Western Europe and where balance sheets may be weaker. Without credible counterparties, financing can stall even when wind or solar resource potential is strong—making due diligence on industrial timelines as important as technical feasibility.
This affects procurement frameworks because lenders typically require clear counterparties and enforceable payment terms before issuing funding commitments. It also changes how developers structure negotiation phases: contract drafting timelines may become as critical as permitting milestones. For industrial stakeholders considering participation as buyers or aggregators, credit assessment requirements can shape whether demand aggregation strategies are feasible within project schedules.
Risk mitigation moves toward guarantee-backed structures
To address payment risk, Member States are encouraged to deploy state-backed guarantee schemes coordinated with the European Investment Bank’s 2025 counter-guarantee programme. The goal is to underwrite payment risk for corporate buyers so that multi-gigawatt PPA pipelines can progress where industrial demand exists but is unevenly distributed. For Serbia’s sectors—metals, chemicals and data infrastructure—this could improve bankability for portfolios that depend on long-term industrial off-take.
Montenegro’s smaller industrial base suggests greater reliance on export-linked contracts supported by international counterparties. That distinction matters for engineering execution readiness because it influences whether developers plan around domestic consumption profiles or around delivery assumptions tied to cross-border flows. It also affects how operators prepare balancing arrangements if contracted delivery profiles require shaped output rather than simple production-based settlement.
PPA design details shape bankability and equity returns
The Commission distinguishes between physical and financial contracts, as well as between pay-as-produced and baseload delivery profiles. These choices determine who bears exposure to price volatility, volume fluctuations and balancing costs—factors that directly influence project bankability and ultimately equity internal rate of return. In Serbia, where balancing mechanisms are still developing, shifting away from simple pay-as-produced contracts toward shaped or hybrid structures is already visible.
For wind farms and solar parks preparing EPC packages and grid connection scopes, this means technical output forecasting must be robust enough to support contract settlement mechanics. Developers may need additional engineering studies focused on delivery shaping feasibility—particularly where battery energy storage systems are used to stabilise output against contractual requirements. The integration approach can affect CAPEX planning by changing how electrical interfaces between generation assets, BESS units and grid connection points are specified.
Negative price hours push projects toward storage-linked solutions
The recommendation also addresses market dynamics driven by rapid renewable expansion, including price cannibalisation and an increase in negative price hours that erode revenues for developers and complicate PPA negotiations. This phenomenon is beginning to surface in parts of South-East Europe during periods of high solar output combined with limited export capacity. As a result, future projects increasingly require integrated solutions combining generation with storage, demand response or flexible consumption agreements.
For battery energy storage system developers and EPC contractors, this reinforces the need for early technical studies on dispatch strategy under constrained exports. It also increases attention on operational delivery planning—how charging windows align with market intervals and how discharging supports contracted delivery profiles during low-price periods. The engineering implication is that BESS design parameters may need tighter linkage to market interval assumptions than in earlier contracting eras.
State support tools must coexist with private PPA markets
The Commission acknowledges two-way Contracts for Difference (2w-CfDs) as a mechanism that can provide price certainty by stabilising revenues while reducing financing costs. However, it warns that poorly designed CfD schemes could crowd out private PPA markets. The recommended approach is coexistence: hybrid models where part of a project’s output is contracted through PPAs while the remainder benefits from state-backed mechanisms.
This blended approach matters for procurement sequencing because it affects how developers split responsibilities across contractual layers during tendering documentation for EPC scope definition and performance guarantees. It also influences investor expectations around revenue stacking during operations—particularly when negative price hours increase uncertainty around merchant exposure. For utilities acting as system operators or market facilitators, clearer coexistence rules can reduce friction between contracted deliveries and balancing responsibilities.
Multi-buyer structures broaden industrial participation
Another structural innovation promoted by the Commission is multi-buyer PPAs in which multiple smaller consumers aggregate demand to match large generation assets. This model is particularly relevant for Serbia where industrial consumption is fragmented across sectors and regions; aggregators such as industrial parks or business associations could create bankable offtake structures that individual companies cannot achieve alone. Montenegro could use similar models to anchor export-oriented projects with combinations of domestic and foreign buyers.
From an execution-readiness perspective, multi-buyer arrangements require careful coordination across industrial timelines—metering arrangements, nomination processes and settlement rules must be aligned before commissioning handover can translate into reliable contracted deliveries. Developers preparing EPC preparation work may need updated interface specifications if aggregated demand changes how output shaping or storage dispatch is planned at commissioning stage. Investors will likely scrutinise whether aggregator governance can maintain credit quality over long tenors.
PPA trading platforms and guarantees of origin reforms reshape value capture
The recommendation supports development of market platforms for trading PPAs by increasing transparency, standardising contracts and reducing transaction costs so PPAs can become more liquid instruments rather than bespoke bilateral deals. For South-East Europe’s limited market depth, regional platforms could help attract international capital by improving comparability across portfolios held by different investors. That shift may influence procurement frameworks by changing how standard contract templates are referenced during tendering.
A separate reform concerns guarantees of origin: moving toward time granularity aligned with market intervals and full cross-border transferability. This effectively ties renewable value to temporal and geographical characteristics while reducing arbitrage opportunities associated with traditional certificate systems. For developers in Serbia and Montenegro, project design needs to account not only for generation capacity but also for delivering power when and where it is most valuable—an operational requirement that can increase the strategic role of storage flexibility.
Long-term contracting expands beyond electricity
The Commission broadens long-term contracting beyond electricity to include hydrogen, biomethane and heating and cooling agreements. While these markets remain nascent in South-East Europe, their inclusion signals direction of travel as industrial decarbonisation accelerates. For integrated energy project planners, it suggests future contracting frameworks may need engineering studies that connect power generation assets with conversion pathways such as hydrogen production or biomethane supply chains.
Broader implications: capital flows follow contracts
Taken together, the recommendation points to a reconfiguration of the energy investment model: long-term contracts between private actors increasingly underpin both financing and risk management while states evolve toward facilitating market conditions with targeted support where necessary. For South-East Europe’s wind, solar and battery storage pipeline planning through permitting stages into EPC preparation readiness, this means contract architecture will increasingly drive schedule certainty alongside grid modernisation progress.
The immediate outcome expected from these changes is acceleration of development pipelines tied to cross-border PPAs—particularly in Serbia where industrial demand plus grid connectivity provide scaling foundations—and more export-focused structuring in Montenegro given its smaller domestic market profile near Italy-linked flows into the broader Adriatic market context. Across both countries, aligning national frameworks on guarantees of origin handling, permitting timelines and risk mitigation mechanisms will determine whether engineering readiness translates into investable projects capable of meeting EU-aligned decarbonisation targets through long-term contracting.