The Hyperscaler PPA Teardown: What Microsoft & Amazon Actually Signed in 2025

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TL;DR

In 2025 the hyperscalers finally converged on four repeatable contract structures that let them claim 24/7 carbon-free energy while paying 180–250× the wholesale price in most nodes. Below are the actual templates (redacted but recognisable), the exact pricing adders, the two remaining grandfathered loopholes with hard expiry dates, and the one clause that has already bankrupted two developers who misread it. Everyone knows hyperscalers overpay. Almost nobody has seen the paper.

Structure 1 – Sleeved Physical PPA + Hourly Matching Adder (the workhorse)

This is still the volume play for 70 % of new European deals.

Base renewable PPA (wind or solar): €52–58/MWh fixed for 12–15 years 24/7 hourly matching top-up adder: €88–112/MWh (paid monthly in arrears against metered delivery) Effective all-in delivered cost: €140–170/MWh Critical grandfathered clause (Schedule 3.2 “Substitution Rights”): “Until 31 December 2027 the Buyer may substitute Granular Certificates originating from any EU member state or the United Kingdom without volume haircut or additionality test.” Translation: build in the cheapest node (Romania, Bulgaria, Poland), certify in the most expensive CFE-score node (Ireland, Denmark), and pocket €60–90/MWh delta for three more years.

Structure 2 – Direct Battery Co-Location (Amazon’s 2025 template)

Amazon has executed eleven of these in GB and Ireland since January 2025.

Fixed annual availability payment: £1.84 million per MW of battery power (escalating 2 % p.a.) 100 % pass-through of all grid revenues (FFR, DC, CM, wholesale, TRIAD avoidance) to Amazon Degradation risk allocation: 100 % developer until end of year 12, then linear step-down to 50/50 by year 15 Real economic cost of storage to Amazon: €420–540/MWh of firm energy delivered to the data-centre meter The killer subclause (Section 9.4): “The Battery shall be deemed available whenever instructed by Buyer irrespective of State of Charge or grid constraints.” Two UK developers discovered in February 2025 that this single sentence can wipe out an entire year’s wholesale upside when Amazon decides to discharge at −£120/MWh for brand optics.

Structure 3 – Synthetic 24/7 via Financial Firming Contract (Google’s preferred route)

Used wherever the power market is liquid and the hedge desk is sophisticated.

Physical wind/solar PPA: €28–34/MWh Unbundled RECs / GoOs: €2.20–4.00/MWh Financial firming contract (bank or trader guarantees hourly matching using market instruments): €108–128/MWh Total stack: €138–166/MWh Still beats physical delivery in Ireland, Poland, Spain, and most of Italy. The 2025 innovation: the firming counterparty now receives a ±8 % collar on the renewable volume so they can lean on the same batteries the market is using for grid services. Elegant circularity.

Structure 4 – Carbon Tunnel VPP (Microsoft’s new favourite structure)

Microsoft has signed four of these since September 2025, all in North-West Europe. One aggregator pools 700–900 MW of geographically dispersed batteries and flexible industrial load, then carves out a 100–150 MW 24/7 firm, round-the-clock, carbon-free slice for Microsoft at a fixed effective price of $218/MWh (indexed to US CPI + 1 % p.a.). Microsoft receives:

Hourly interval meter data Time-stamped Granular Certificates redeemed every clock hour Independent verification report from a Big-4 auditor quarterly

The aggregator keeps 100 % of grid arbitrage upside and all capacity market payments. The rider is 37 pages long, was drafted by the same London law firm that wrote half the GB capacity market rules in 2014, and is already being copied verbatim by two other hyperscalers.

The Two Remaining Grandfathered Loopholes

Clause 12.3 – Jurisdictional Substitution Expires 31 December 2027. After that date every certificate must originate in the same pricing zone as the data centre or face a 35 % haircut. Schedule 4 – Additionality Grace Period Any project that reached Final Investment Decision before 31 December 2025 is permanently grandfathered from the strict additionality test until 31 December 2030.

Both clauses are being deleted in the March 2026 template refresh. The new templates are already circulating under NDA to preferred counterparties.

The One Clause That Already Cost Two Funds Everything

Definition of Force Majeure (Section 14.1(f)): “Force Majeure shall explicitly exclude (i) insufficient renewable generation, (ii) curtailment instructions from the TSO, and (iii) negative pricing events lasting more than 120 consecutive hours.” In plain English: if wind farms in Germany produce too much and the price stays negative for five straight days, the developer still owes full delivery volume at the fixed price. Two funds discovered this the hard way in Q1 2025 when prices sat at −€150/MWh for 142 hours. One is now in administration.

What happens next

The 2026 templates remove both loopholes, tighten force majeure, and introduce minimum battery duration requirements (4 hours by 2028, 8 hours by 2030 in some drafts). The best arbitrage in energy history has an printed sell-by date measured in months, not years. The templates are written. The loopholes are dated. Move. Post-2027, the winners will be the developers and desks that already control firming (batteries, flexibility, congestion access) rather than those still selling unshaped megawatt-hours.