Off-site PPA: how an off-site solar PPA works in the UK
An off-site PPA lets a business buy renewable electricity from a solar farm it does not host. The generator sits elsewhere in Great Britain, and the contract either delivers its output to your meters through a supplier or settles its value in cash. It is the route for estates with no suitable roof, tenants without roof rights, and buyers whose demand is far larger than any roof could meet.
What is an off-site PPA?
An off-site PPA is a long-term contract to buy the output of a renewable generator located away from your premises. In the UK it is usually sleeved — a licensed supplier delivers the farm's output to your meters — or virtual, settling the difference against a strike price while your supply contract stays unchanged. This site's indicative band for the term is 10–15 years.
Key takeaways
- Off-site means the generator is somewhere else; sleeved (physical) and virtual (financial) are the two main UK routes, with private wire a rarer third.
- The offtaker is you — the business contracting to buy the generator's output or its financial value.
- Sleeved units cross the public network, so network charges, BSUoS, policy costs and the Climate Change Levy still apply to them.
- REGOs — one per MWh, issued by Ofgem — must be transferred to you and retired for a market-based Scope 2 claim.
- Off-site deals suit multi-site estates, tenants and large buyers; small buyers rarely recover the fixed cost of the process.
On-site vs off-site PPA: the difference that matters
An on-site PPA puts the array on your roof or land, behind your meter. An off-site PPA buys from a generator somewhere else. That single difference decides what the contract can displace on your bill, which is why the two are priced so differently.
| On-site PPA | Off-site PPA | |
|---|---|---|
| Where generation sits | Your roof, car park or land | A solar farm elsewhere in Great Britain |
| What the solar units avoid | The whole delivered grid unit, including network charges | Only the wholesale energy layer; network, policy and levy charges still apply |
| Indicative year-one price | 8–22 p/kWh behind or in front of the meter | 11–20 p/kWh sleeved; £55–£75/MWh strike on a virtual deal |
| Indicative term | 15–25 years | 10–15 years |
| Needs | A suitable roof or land, and the right to use it for the term | A willing supplier (sleeved) or a treasury function (virtual), plus the credit to support a long contract |
| Best for | Owner-occupiers with strong daytime load at one site | Multi-site estates, tenants and buyers whose demand dwarfs their roofs |
An off-site unit usually costs more per delivered kWh than power made behind your own meter, because it carries the network and policy charges the on-site unit escapes. What it buys instead is reach: one contract can serve hundreds of meters that could never host panels. Many large buyers end up running both — on-site arrays where the roofs allow, and an off-site contract for the demand the roofs cannot cover. The on-site route is set out in full on our on-site PPA page.
Price and term bands are this site's indicative advisory bands (see our PPA tariff guide), not an official statistic.
The three off-site routes: sleeved, virtual and private wire
"Off-site" is the wider bracket, and it is worth separating the structures underneath it before you compare quotes, because they are quite different contracts.
Sleeved is the physical route: a licensed supplier routes the farm's metered output to your MPANs and you receive one bill. Virtual or synthetic is purely financial — the farm sells into the wholesale market, your existing supply contract is left as it is, and the two of you settle the difference between the market price and an agreed strike price. Nothing is sleeved, no supplier needs to be involved, and one agreement can cover meters in different regions; the trade-off is that you take a market-price position rather than fixing a delivered unit rate, as the virtual PPA mechanics set out. Private wire is the third and rarest route: a generator close enough to reach you by dedicated cable rather than the public network. Network charges fall away on those units, but it needs proximity, land rights and a connection design, so it tends to be opportunistic rather than something you can go out and procure.
All three share one financial characteristic: you do not own the asset, so the capital allowances stay with whoever funded it. For an owner, solar is special-rate plant: it does not qualify for full expensing, which covers main-rate plant only. The 100% route is the Annual Investment Allowance, capped at £1m a year, with a 50% first-year allowance available to companies on special-rate spend beyond it. Under any off-site PPA none of that is yours to claim, because you are buying electricity rather than plant — take your own tax advice on your own position.
Choosing between the three is mostly about what you are actually buying. If the priority is a lower delivered unit cost and a single invoice, a sleeved PPA wins. If it is a long hedge and a portfolio-wide claim without disturbing existing supply arrangements, virtual usually does.
Capital allowances: HMRC — HS252 Capital allowances and balancing charges (2026) and GOV.UK — Annual Investment Allowance. Verified 10 Sep 2026.
Who is the offtaker in an off-site PPA?
The offtaker is the party that contracts to take a generator's output — or, in a virtual deal, its financial value. In an off-site PPA that is your business. The generator finances its farm against your promise to buy for the term, which is why your credit standing shapes the price you are offered as much as the solar resource does.
A sleeved deal adds a wrinkle. Legally, the licensed supplier buys the power from the generator and sells it on to you under an amended supply contract, so the supplier sits between you. Commercially you are still the offtaker the deal was built around: the volume, the term and the credit case all start with you, and the generator will usually want to see your accounts before it signs with the supplier.
Two neighbouring terms cause confusion. An offtake contract is any agreement to buy a producer's output in advance — the term is used for everything from minerals to biomethane. A power purchase agreement is the electricity version of it. And a VPPA is simply a virtual PPA: the financial form described above, with no physical delivery at all.
What a generator looks for in an offtaker is set out on our page covering off-taker covenant strength.
What stays on your bill when the power is off-site
The most common mistake in off-site business cases is to compare a generator's price with a delivered grid price as if one replaced the other. It does not. When a sleeved farm's output reaches you it is metered at your connection like any other import, so every charge that attaches to demand stays on the bill.
- Distribution charges for the local network, set by your regional network operator.
- Transmission charges, where most of the demand charge has been a fixed daily amount per site since April 2023 — it does not shrink when your import volume does.
- Balancing charges (BSUoS), recovered solely from final demand.
- Policy costs recovered through suppliers, and the Climate Change Levy at £0.00801 per kWh from 1 April 2026.
A virtual PPA changes none of these either, because it changes nothing on the bill — it settles alongside it. The only layer an off-site deal replaces is wholesale energy. That is still worth doing: it is the part of the unit price that swung hardest in 2022, and a long-term contract takes it off the table. But the saving has to be measured against that layer, not against the whole delivered rate. Each cost line is unpacked on the sleeved PPA page.
Sources: NESO — Transmission Demand Residual guidance; NESO — BSUoS charges; HMRC — Climate Change Levy rates. Verified 26 Sep 2026.
REGOs, additionality and your Scope 2 claim
For many buyers the renewable claim is the point of the exercise, and off-site deals are where it is easiest to get wrong. The currency is the REGO: Ofgem issues one Renewable Energy Guarantee of Origin for each megawatt-hour of eligible renewable output, and in Great Britain its primary use is fuel mix disclosure — the rule that suppliers tell customers where their electricity came from.
Under the GHG Protocol's Scope 2 guidance, companies report purchased electricity two ways: location-based, using the average emissions of the grid, and market-based, using the contractual instruments they hold. An off-site PPA only supports a market-based renewable claim if the REGOs from the contracted farm are transferred to you and retired against your consumption. A supplier offering unspecified certificates from an unnamed source is not offering the same thing as the REGOs from the farm you contracted.
Additionality is the second test. A long-term offtake that helps finance a newly built farm adds generation that would not otherwise exist; re-papering the output of an operating farm does not. Both can carry REGOs, but only one changes what gets built, and sustainability reviewers increasingly ask which you bought. How the claim flows into reporting is covered on our Scope 2 emissions page.
Sources: Ofgem — REGO scheme; GHG Protocol — Scope 2 Guidance. Verified 26 Sep 2026.
What you need before asking for off-site PPA prices
Getting an off-site deal priced in the UK is a procurement exercise, and desks quote better numbers to buyers who arrive prepared. Before anyone can price you properly they need a data pack, and assembling it is usually the longest part of the process.
- Twelve months of half-hourly consumption data for every MPAN in scope — your current supplier or data collector can release it
- Your MPAN list with contract end dates, so the deal can be timed to a renewal rather than a termination fee
- Latest filed accounts, and the identity of any group guarantor
- The volume and term you can genuinely commit to — a share of load, not necessarily all of it
- Your claim requirements: whether REGOs must be transferred and retired, and whether additionality matters to your reporting
- Whether you will take firm (shaped) or as-generated volume
Credit is the second gate, and it catches buyers out. A ten-year offtake is financed against your balance sheet as much as against the solar resource, so the tariff you are offered is partly a function of your covenant. A weaker or unrated buyer is typically asked for a parent company guarantee, a letter of credit, or a shorter term at a higher price.
It is also worth being clear-eyed about whether the prize justifies the process. Across a 2 GWh-a-year estate, every 1 p/kWh of saving is worth £20,000 a year, which comfortably funds legal review of the imbalance, change-in-law and REGO provisions. On a 200 MWh site the same penny is worth £2,000, and the same legal work is hard to justify. That arithmetic, more than any rule of thumb, tells you whether to run a full process — and if you do, structuring the RFP is the next step.
Is an off-site PPA right for your business?
An off-site PPA earns its complexity when most of these are true:
- Your demand is spread across many sites, or is far larger than your roofs could ever supply.
- You lease your buildings, or cannot commit a roof for fifteen years or more.
- You want a long-term price for the wholesale part of your bill, not just a green claim.
- Your covenant, or a group guarantee, can support a contract of a decade or more.
- For a virtual deal: your treasury team can run hedge accounting and a mark-to-market position.
If you own a building with a strong daytime load, start on the roof instead: an on-site array displaces the whole delivered unit, not just the wholesale layer. And if your annual electricity spend is modest, the fixed cost of negotiating, balancing and certificating an off-site deal will usually swallow the saving — this site's rule of thumb puts that threshold at roughly £100k a year.
The £100k threshold is this site's own advisory rule of thumb, not published market data.
Sources for the figures on this page
| Figure on this page | Value | Source | Verified |
|---|---|---|---|
| REGO issuance | One certificate per MWh of eligible renewable output | Ofgem — REGO scheme | 26 Sep 2026 |
| TNUoS demand residual | Fixed daily charge per site by band, since 1 April 2023 | NESO — Transmission Demand Residual guidance | 26 Sep 2026 |
| BSUoS recovery | Solely from final demand | NESO — BSUoS charges | 26 Sep 2026 |
| Climate Change Levy, electricity | £0.00801/kWh from 1 April 2026 | HMRC — Climate Change Levy rates | 26 Sep 2026 |
| Annual Investment Allowance | £1m a year; full expensing excludes special-rate plant | GOV.UK — AIA; HMRC HS252 (2026) | 10 Sep 2026 |
| Scope 2 reporting | Location-based and market-based methods | GHG Protocol — Scope 2 Guidance | 26 Sep 2026 |
| Price and term bands | On-site 8–22 p/kWh, 15–25 years; sleeved 11–20 p/kWh and virtual £55–£75/MWh, 10–15 years | This site's indicative advisory bands | — |
Frequently asked questions
Who is the offtaker in an off-site PPA?
You are — the business that contracts to buy the generator's output or its financial value. In a sleeved deal a licensed supplier buys the power from the generator and delivers it to you, but the commercial offtaker the generator finances its farm against is still your business.
Is an off-site PPA the same as a virtual PPA?
No. Off-site is the umbrella term for any PPA where generation sits away from your site. A sleeved PPA delivers physical volume to your meter through a licensed supplier, while a virtual PPA settles financially against a strike price and leaves your existing supply contract untouched. Private wire is a third, rarer off-site route.
Does an off-site PPA reduce my network charges?
No. Sleeved units reach you over the public network, so they carry distribution and transmission charges, BSUoS and policy costs like any grid unit, and a virtual PPA leaves your bill untouched. Only generation behind your own meter avoids network charges, which is why on-site tariffs sit lower.
What is the difference between a PPA and an offtake contract?
An offtake contract is any agreement to buy a producer's output in advance. A power purchase agreement is the electricity version: a long-term offtake of a generator's power, or of its value, at an agreed price.
What information do I need before requesting off-site PPA prices in the UK?
At minimum, twelve months of half-hourly consumption data per MPAN, your contract end dates, latest filed accounts or a guarantor, the volume and term you can commit to, and whether REGOs must be retired for you. Without that, desks quote generic indicative rates that rarely survive due diligence.
How long does an off-site PPA last?
This site's indicative band for UK off-site deals is 10–15 years — an advisory guide, not a market statistic. The generator needs a term long enough to finance its asset; you need one that fits your own planning horizon and credit capacity.
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