PPA Mechanics

Solar PPA Structures Explained

Not all PPAs are alike. The structure that fits depends on whether you own the roof, how many sites you operate, your treasury sophistication and whether you need REGO certificates or just cheaper kWh.

15–25 years · 9–18 p/kWh year 1

On-site PPA

Generator installs and owns kit on your roof or land; you buy the kWh.

Best for: Single-site businesses with 200kWp+ of roof or land, occupying for 15+ years.

Typical escalator: 0–3% RPI-linked or fixed

10–15 years · 11–20 p/kWh year 1 (excludes supplier markup)

Sleeved PPA

Generator builds at a separate location; an electricity supplier 'sleeves' the energy to your MPAN.

Best for: Multi-site businesses, tenants without roof rights, or sites with poor solar resource.

Typical escalator: RPI or CPI-linked

10–15 years · Strike price typically £45–£55/MWh fixed

Virtual (synthetic) PPA

Financial contract-for-difference referencing a wholesale price — you don't take physical delivery.

Best for: Large corporates with treasury sophistication; net-zero commitments; multi-jurisdiction operations.

Typical escalator: Usually fixed strike, occasionally CPI

10–20 years · £42–£60/MWh fixed or partially indexed

Corporate PPA (CPPA)

Direct bilateral agreement with a generator — can be physical or financial, on-site or off-site.

Best for: Investment-grade off-takers signing 20MW+ utility-scale solar farm output.

Typical escalator: Typically fixed; occasionally inflation-linked

15–25 years · 8–14 p/kWh year 1 (lowest tariff band — no grid charges)

Behind-the-meter PPA

Variant of on-site PPA where generation sits inside your private wire; never touches the public grid.

Best for: Industrial sites with 1MWp+ load coincident with daytime generation.

Typical escalator: Fixed or RPI-linked

10–20 years · 13–22 p/kWh (higher because of network use-of-system charges)

In-front-of-meter PPA

Generation exports to the grid; you receive the kWh via your supply meter under an export-and-import structure.

Best for: Sites with roof but limited daytime self-consumption.

Typical escalator: RPI-linked

FAQs

Structure selection FAQs

Which PPA structure is best for a UK manufacturer with 1MWp of roof?

On-site PPA almost always wins for daytime-heavy industrial loads. Behind-the-meter variant if the roof connects to a private wire.

Can I use a sleeved PPA if I'm a tenant?

Yes. Sleeved PPA is the standard route for tenants without roof rights — the generator sits elsewhere and a supplier delivers the kWh to your import meter.

Are virtual PPAs available to UK SMEs?

Rarely. Virtual PPAs are financial contracts-for-difference requiring treasury sophistication, IFRS 9 hedge accounting capability, and £500k+ annual electricity spend.