Category: Mechanics
Virtual PPA vs On-site PPA: When Each Wins
Virtual (synthetic) PPAs and on-site PPAs solve different problems. Decision framework with example p&l for each.
Two products with the same name, different problems
On-site PPA: generator builds solar on your roof. Virtual PPA: financial contract referencing a wholesale price. Both called "PPA" — totally different mechanics.
When on-site wins
- Single site with 200kWp+ of useable roof
- Long site tenure (15+ years)
- Simple business — single-site SME, regional manufacturer
- Want directly-attributable kWh savings
- Strong daytime load profile
When virtual wins
- Investment-grade corporate, >£10m annual electricity spend
- Multi-site or geographic mismatch with solar resource
- Treasury sophistication (IFRS 9 hedge accounting capability)
- Want pure financial hedge against wholesale prices
- Need REGO certificates separate from any specific site
Side-by-side
| On-site PPA | Virtual PPA | |
|---|---|---|
| Physical kWh delivery | Yes | No |
| Site survey | Required | Not relevant |
| Year-1 tariff | 9-18 p/kWh | £55-75/MWh strike |
| System size | 50kWp-5MWp | 10MWp+ typical |
| Counterparty | Local SPV | Wholesale generator |
| Term | 15-25 years | 10-15 years |
| Accounting | Operating expense | Hedge accounting (IFRS 9) |
| Roof rights needed | Yes | No |
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