Private wire PPA: how a private wire works for UK businesses
A private wire is a direct electricity cable from a generator, such as a solar farm or wind turbine, to a nearby consumer, bypassing the public grid. A private wire PPA is the contract that sells the power down that cable. Because the electricity never crosses the public network, the two sides can share the grid charges, levies and supplier costs it avoids.
What is a private wire?
A private wire is a dedicated cable, buried or overhead, that connects a generator directly to a nearby home, business or public building so the power does not travel over the public grid. The sale of that power is governed by a private wire PPA. The Welsh Government's 2026 guidance describes schemes as most viable when the generator and a large, steady consumer are within a few miles of each other, under agreements that typically run 15 years or more.
Key takeaways
- A private wire is a direct cable from a generator to a nearby consumer; a private wire PPA is the contract that sells the power down it.
- The saving comes from the grid charges, levies and supplier costs the power avoids, and it is shared: the generator earns more than the wholesale price and the consumer pays less than a retail tariff.
- It suits large sites with steady demand within a few miles of a generator, willing to sign an agreement of 15 years or more.
- Supply over the wire must be licensed or exempt. Many schemes rely on the small-supplier exemption: own generation only, up to 5 MW, of which no more than 2.5 MW to domestic consumers.
- Expect high upfront cost, a cable route that crosses other people's land, and a grid connection kept for backup.
What is a private wire?
A private wire is a cable owned and run outside the public distribution network that carries electricity straight from where it is generated to where it is used. The generator can sit on the consumer's own site or on a neighbouring one. Where it sits on the same site and connects on the consumer's side of the supply meter, the arrangement is the familiar behind-the-meter PPA. The term private wire usually refers to the harder case, where the cable has to leave one site and reach another, crossing land in between but never the public network.
Where one cable serves several consumers, such as units on a business park, the arrangement is often called a private wire network. The Welsh Government's guidance notes that serving multiple consumers adds significant technical and legal complexity, and cost, compared with one generator supplying one large consumer.
A private wire does not replace the grid. The consumer normally keeps its grid import connection for backup and for the hours the generator cannot cover, and the generator usually keeps a small import connection for its own site services.
Source: Welsh Government — Private wire energy systems: guidance (29 June 2026). Verified 28 Sep 2026.
How a private wire PPA works
When the generator and the consumer are different organisations, a private wire PPA sets out how the electricity is sold, how payments work and how risks are shared over the long term. When they belong to the same organisation, no PPA is needed. The main terms are:
| Term | What it settles |
|---|---|
| Length | Usually matched to the life of the generating asset, or at least 15 years, so the cost of the wire can be recovered |
| Price | Often set on a flexible basis that follows wholesale prices, rather than one fixed rate |
| Volume | A take-or-pay clause commits the consumer to a minimum volume; where the generator funded the wire, the guidance says a minimum supply requirement is generally not included |
| Grid top-up and export | Separate contracts cover electricity imported from, or exported to, the public grid |
| Access and land | Easements, leases or wayleaves for the cable route, and access for maintenance |
| Termination | What happens if either party fails, including compensation for the stranded cable |
Both parties normally need their own legal advice. Standard templates exist, but the guidance is clear that the negotiation is about sharing risk fairly over a long period.
Source: Welsh Government — Private wire energy systems: guidance (29 June 2026) (sections 1.4 and 4.1). Verified 28 Sep 2026.
Private wire models: on-site, off-site and blended export
| Model | How it works | Trade-off |
|---|---|---|
| On-site | The generator sits on the consumer's own site | Simplest and cheapest: short cable, few parties |
| Off-site | The generator sits on a nearby separate site | More capital and planning, and land agreements along the cable route |
| Single entity | The consumer owns the generator | No PPA needed; the owner keeps the whole saving |
| Multiple entity | Generator and consumer are separate organisations | Needs a private wire PPA to govern supply and sale |
| Blended export | Part of the output goes down the wire and the rest is exported or used elsewhere | Needs an export connection with the distribution network operator and a buyer for exported power, but lets the generator pick the better outlet at any time |
What a private wire saves, and who keeps the saving
Grid electricity carries more than the cost of generating it. A delivered business unit includes network charges, balancing costs, government policy levies and the supplier's own costs and margin. Power that travels down a private wire avoids the public network, so, in the Welsh Government's words, "charges, levies and supplier costs are reduced".
The saving is shared rather than captured by one side. The generator sells at a higher price than it would get in the wholesale market, and the consumer pays less than a standard retail rate. How the split falls is a negotiation, and it is the core of the PPA price.
Two cautions keep the numbers honest. First, some charges attach to your grid connection rather than to the units you import: since April 2023 the transmission demand residual has been a fixed daily charge per site, set by band, so a private wire does not remove it. Second, the guidance flags regulatory risk, noting that higher fixed charges or limits on supplier levy avoidance could reduce the benefit over a long contract.
Sources: Welsh Government — Private wire energy systems: guidance (29 June 2026) (sections 1.1, 5 and 6.2); NESO — Transmission Demand Residual guidance. Verified 28 Sep 2026.
Private wire vs on-site, sleeved and virtual PPAs
| Private wire (off-site) | On-site rooftop PPA | Sleeved PPA | Virtual PPA | |
|---|---|---|---|---|
| Where the generator is | A nearby site, within a few miles | Your roof or land | Anywhere in Great Britain | Anywhere in Great Britain |
| How power reaches you | A dedicated cable | Your own wiring | The public network, via a licensed supplier | It does not: the contract settles in cash |
| Network charges on the units | Avoided | Avoided | Paid | Your normal bill is unchanged |
| What has to be built | A cable along a route between sites | The array on your own site | Nothing: it uses the public network | Nothing |
| Who it suits | Large, steady consumers next to a generator | Owner-occupiers with a suitable roof | Large or multi-site buyers without a roof | Corporates able to manage derivative accounting |
The rooftop, sleeved and virtual routes are explained in on-site PPAs, sleeved PPAs and virtual PPAs. The choice between a cable and a sleeve is covered in private wire vs sleeved PPA.
Licences and exemptions: can you supply over a private wire?
Generating, distributing and supplying electricity each need a licence under the Electricity Act 1989 unless an exemption applies. The Electricity (Class Exemptions from the Requirement for a Licence) Order 2001 sets out the standard exemptions, and a private wire scheme has to fit all three.
| Activity | Relevant class exemption | Headline limit |
|---|---|---|
| Generation | Schedule 2, Class A: small generators | Broadly up to 10 MW from any one generating station, or 50 MW where the station's declared net capacity is under 100 MW |
| Distribution | Schedule 3, Class A: small distributors | No more than 2.5 MW distributed for supply to domestic consumers |
| Supply | Schedule 4, Class A: small suppliers | Only electricity the supplier generates itself; no more than 5 MW at any time, of which no more than 2.5 MW to domestic consumers |
The Welsh Government's guidance says most private wire schemes rely on the small-supplier exemption. Each class carries conditions beyond these headline limits, so the fit for a particular scheme is a question for your lawyers.
Planning permission is needed before construction, sometimes from more than one planning authority on a longer route, together with any environmental consents, landowner agreements along the route, and permissions from bodies responsible for roads, railways, utilities or waterways that the cable crosses.
Sources: S.I. 2001/3270, Schedule 2, Schedule 3 and Schedule 4 (latest revised versions); Welsh Government — Private wire energy systems: guidance (29 June 2026) (section 4.2). Verified 28 Sep 2026.
Costs, risks and what can go wrong
- Upfront cost and time. The cable, its route and the connections need significant capital, and design, approval and construction can take years on a complex route.
- The route. Roads, rivers, railways and multiple landowners add cost and delay; a longer route that avoids them can be cheaper overall.
- Intermittency. Solar and wind do not produce continuously, so the consumer still needs grid supply, and batteries add cost as well as flexibility.
- Counterparty failure. Over 15 years or more either side could fail, so termination and compensation clauses matter.
- Cable strikes and weather. Excavation or storms can damage the cable; register the route so it appears in land searches, and insure repairs and lost supply.
- Regulatory change. Changes to fixed charges or to how levies apply can erode the saving.
- Carbon accounting for public bodies. The guidance notes that where generator and consumer are separate organisations, a public body may not be able to claim the generator's carbon savings, because only the asset owner can report them.
Source: Welsh Government — Private wire energy systems: guidance (29 June 2026) (section 6). Verified 28 Sep 2026.
A real example: Cardiff's Lamby Way solar farm
The Welsh Government's guidance uses Cardiff Council's Lamby Way solar farm as its case study. The 9 MW farm, built on a former landfill site, supplies both the public grid and a nearby large commercial consumer through a dedicated 2 km private wire.
- The council funded the private wire as part of a £9 million project.
- The consumer signed a 20-year PPA on a "take and pay" basis, with no minimum supply commitment.
- The price is index-linked and updated monthly.
- The farm has two connections of 5 MW export capacity each, one to the consumer and one to the grid, and an automated system switches output to the more valuable outlet.
- An export PPA with Octopus Energy covers the power sold to the grid.
The structure shows why a blended export model de-risks a private wire: the generator can always sell its output somewhere, so it can offer the consumer terms without a minimum volume. More detail is in how Lamby Way uses a private wire.
Source: Welsh Government — Private wire energy systems: guidance (29 June 2026) (case study). Verified 28 Sep 2026.
Is a private wire right for your site?
A private wire is worth exploring when most of these are true:
- Your site uses a lot of electricity, steadily, and for a solar generator mostly in daylight hours.
- A generator exists, or could be built, within a few miles, with a cable route that avoids major obstacles.
- You will occupy the site for at least the length of the agreement, typically 15 years or more.
- You can keep a grid connection for backup and for the hours the generator cannot cover.
- Both sides have the legal and project capacity for a long negotiation and a planning process.
If the answer is no to the first or third point, a rooftop on-site PPA is usually the simpler route, and if you have no suitable roof or neighbour, an off-site deal through a supplier is the alternative. The form below is the quickest way to find out which structure fits your site.
Sources for the figures on this page
| Figure on this page | Value | Source | Verified |
|---|---|---|---|
| Private wire definition, models, parties and risks | Direct cable from generator to a nearby consumer; agreements typically 15 years or more | Welsh Government — Private wire energy systems: guidance (29 June 2026) | 28 Sep 2026 |
| Lamby Way | 9 MW; 2 km wire; £9m project; 20-year take-and-pay PPA; two 5 MW connections; export PPA with Octopus Energy | Welsh Government — Private wire energy systems: guidance (29 June 2026) | 28 Sep 2026 |
| Supply exemption | Own generation only; up to 5 MW, no more than 2.5 MW to domestic consumers | S.I. 2001/3270, Schedule 4, Class A | 28 Sep 2026 |
| Generation exemption | Up to 10 MW from any one station, or 50 MW if declared net capacity under 100 MW | S.I. 2001/3270, Schedule 2, Class A | 28 Sep 2026 |
| Distribution exemption | No more than 2.5 MW distributed for domestic supply | S.I. 2001/3270, Schedule 3, Class A | 28 Sep 2026 |
| Transmission demand residual | Fixed daily charge per site by band since 1 April 2023 | NESO — TDR guidance | 26 Sep 2026 |
Frequently asked questions
What is a private wire?
A private wire is a dedicated cable that carries electricity directly from a generator to a nearby consumer without using the public grid. The generator can be on the same site or a nearby one, and the consumer usually keeps a grid connection for backup.
What is a private wire PPA?
It is the power purchase agreement that sells electricity down a private wire when the generator and the consumer are different organisations. It sets the price, the volume terms, the length of the deal and who carries which risks.
How far can a private wire run?
There is no single legal limit. The Welsh Government's guidance says schemes are typically viable when the generator and consumer are within a few miles of each other, and the Lamby Way cable in Cardiff is 2 km long. Cost rises with distance and with every road, railway or landowner the route crosses.
Do you need a supply licence for a private wire?
Not always. Supplying electricity needs a licence unless an exemption applies, and the Welsh Government's guidance says most private wire schemes rely on the small-supplier exemption, which covers own generation up to 5 MW with no more than 2.5 MW going to domestic consumers. Take legal advice on your scheme.
What does a private wire save?
It avoids the network charges, levies and supplier costs that come with grid electricity for the units sent down the wire, and the generator and consumer share that saving through the PPA price. Charges fixed to your grid connection, such as the transmission demand residual, still apply.
Can a private wire also export to the grid?
Yes. Under a blended export model part of the output goes down the wire and the rest is exported, which needs an export connection agreed with the distribution network operator and a buyer for the exported power. Lamby Way sells its grid exports under a separate export PPA.
Is a private wire the same as behind-the-meter?
An on-site private wire that connects on your side of the supply meter is a behind-the-meter arrangement. An off-site private wire runs between two sites but still never touches the public network.
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