The hybrid Power Purchase Agreement develops the traditional energy sales contract by bundling several assets into a single agreement. Royal Decree 997/2025, of 5 November (BOE-A-2025-22434), simplifies the permitting for hybridising generation plants with storage: where the new module sits on the same site as an existing plant that already holds a favourable environmental impact statement (DIA), it is exempt from a fresh environmental impact assessment and the authorisation timelines are halved. This mainly benefits mid-sized developers, for whom the regulatory burden weighs more heavily than it does for large utilities.
Types of hybrid PPA
A hybrid PPA combines two or more technologies within a single contractual structure to optimise the delivery profile and the project’s economic value. These deals are no longer limited to large corporate transactions and are increasingly found in mid-sized projects. Two types can be distinguished:
- Mixed generation: combines sources such as solar and wind under one PPA to smooth intraday and seasonal variability in output.
- Generation and storage: pairs generation with a battery energy storage system (BESS), storing energy produced at peak times — which might otherwise be curtailed or spilled — and delivering it when prices or demand are higher.
Contractual structure
- Separate contracts per asset: each asset has its own PPA, but the financial flows are unified. This isolates the risks of each PPA and supports project financing.
- Combined contracts: all assets fall under a single PPA with a unified price and delivery profile. This diversifies generation and reduces exposure to generation risk.
- Shaped PPAs: the most flexible model. The delivery profile is tailored to the buyer’s needs, to market price forecasts and to revenue-optimisation strategies, combining fixed and variable price elements.
Advantages of the hybrid PPA
- Mixed generation — seller: a more balanced output, aligned with consumption hours or market prices, can raise the value of the energy and improve bankability by reducing price volatility.
- Mixed generation — buyer: supply is more stable because the intermittency of each technology is offset by the other, reducing exposure to spot-market volatility and aiding planning.
- Generation and storage — seller: shifts sales to higher-price periods and helps meet contractual obligations, reducing the risk of imbalance penalties.
- Generation and storage — buyer: receives a flexible supply adapted to its consumption profile; storage reduces exposure to low or negative prices and to cannibalisation.
Practical considerations in the negotiation
Some issues rarely appear in standard templates and should be addressed expressly:
- Financial or physical PPA: this determines whether the buyer takes a market position or the seller keeps the sale and the representation responsibility, which directly affects how price risk is allocated.
- BESS dispatch curve: who decides when the battery charges and discharges, and how the deviation risk between agreed and delivered energy is shared.
- Settlement party and Guarantees of Origin (GoO): these may be different actors. The contract should state who acts as market representative and who manages the Guarantees of Origin.
- Measurement source: the contract should identify which data governs settlement when estimated and actual production differ. In Spain, Red Eléctrica meter data is usually the reference, which helps avoid later disputes.
Conclusion
Hybridisation can be attractive for either a generation mix or generation with storage, depending on the consumer’s profile, thanks to the benefits of supply stability and/or revenue. But greater benefits also bring greater contractual complexity and risk. It is therefore essential to choose the type of hybrid PPA that fits the client and to design a structure that clearly allocates risks, obligations and settlement.
