Corporate PPAs in the UK: sleeved, virtual and private-wire power purchase agreements explained

What a corporate PPA is, and how it differs from an on-site solar PPA

Four contracts share the name “PPA”. In an on-site PPA a developer owns an array on your roof or land and sells you its output behind your meter. In a private-wire PPA the generator is nearby and connected to you by a dedicated line, outside the public network. In a sleeved PPA a remote generator sells to your licensed electricity supplier, which “sleeves” the volume into your supply contract for a fee. In a virtual PPA no electricity changes hands at all: you keep your normal supplier and settle a financial contract with the generator against a market price, with the renewable certificates transferred to you. The last two are what the market means by a corporate PPA.

The structure decides three numbers that never appear in the headline price: the levy, the VAT treatment and the certificates. They are set by law and by Ofgem's guidance, not by the counterparty, so they are the right place to start a comparison.

The tax and reporting layer: CCL, VAT and REGOs

Climate Change Levy

HMRC's Excise Notice CCL1/3 (section 3.12, updated 24 March 2026) is explicit: an auto-generator or an exempt unlicensed supplier does not account for CCL on self-supplies or direct supplies of renewable-source electricity, where a direct supply is a contract involving only the generator and the customer. Renewable electricity supplied by a utility or any other third party is a taxable supply. Photovoltaics count as a renewable source. So an on-site or private-wire PPA from the provider's own vehicle carries no CCL, while sleeved and virtual PPAs — and green tariffs — do, at the main electricity rate of £0.00801 per kWh (£8.01 per MWh) from 1 April 2026. A Climate Change Agreement cuts the electricity rate to 8% of the main rate. Domestic users, charities' non-commercial activities and de minimis users are outside the levy.

VAT

Electricity bought under any PPA is a supply of electricity. For a business it is standard-rated at 20% (VAT Notice 701/19), recoverable by a VAT-registered buyer; the 5% reduced rate is for qualifying use (domestic, and a charity's non-business use) and de minimis supplies of 33 kWh a day or less, and qualifying use in Great Britain is zero-rated from 1 October 2026 to 31 March 2027. Mixed-use sites where qualifying use is 60% or more take the reduced rate on the whole supply, with a customer certificate.

REGOs and the renewable claim

A Renewable Energy Guarantee of Origin is issued free by Ofgem for every megawatt-hour an accredited station generates — on gross output, including power used on site — and recorded on the Renewable Electricity Register. REGOs can be transferred separately from the power and an unused GB certificate is cancelled 16 months after its month of generation. The GHG Protocol Scope 2 Guidance (section 6.4.1) is the rule that bites: if you consume power from a facility, on site or by direct line, whose certificates were sold elsewhere, you forfeit the renewable claim on those units. A PPA that does not transfer or cancel the REGOs for you leaves the green claim with whoever holds them. Green tariffs must be fully backed by REGOs, and the EU has not recognised UK REGOs since 1 January 2021.

Price and term: how corporate PPAs are set

Corporate PPAs are bilateral contracts with no published price. Two shapes dominate: a fixed price per megawatt-hour for the term, or a discount to a market index with a floor and a cap. Terms of ten to fifteen years are commonly quoted because the generator's lender wants contracted revenue for most of its debt term. The nearest public benchmark for what new UK solar can sell its output for is the Contracts for Difference auction: in allocation round 7a (results published 10 February 2026) solar PV above 5 MW cleared at £65.23 per MWh in 2024 prices, across 157 projects and 4,905 MW, for delivery in 2027–28 and 2028–29. A CfD is a government-backed instrument, not a corporate PPA, so treat the figure as the floor a well-sited solar farm will accept from the state rather than the price a buyer will be offered.

The government's 2026 call for evidence asked four things: how attractive corporate PPAs are to industrial and commercial consumers, how far they can support new generation capacity, what government could do to grow the GB market, and what comparable markets do better. The response summarises the evidence received; it does not change the tax or certificate rules above.

Worked illustration: a 10 GWh-a-year manufacturer (modelled, not a client engagement)

A manufacturer using 10,000 MWh a year compares a sleeved corporate PPA with a private-wire supply from a neighbouring solar farm. Before either price is discussed, the levy line is already decided: on the sleeved route CCL is 10,000 × £8.01 = £80,100 a year (£6,408 with a Climate Change Agreement in place); on the private-wire route it is nil. VAT at 20% is recoverable on both. The REGO position is the same only if both contracts transfer the certificates — if the private-wire generator keeps them to sell, the manufacturer's Scope 2 market-based figure cannot count the power as renewable, whatever the physical reality.

That is why the comparison is run on delivered cost after levy, VAT and certificates, and why the commercial SEG rates page matters to a buyer as well as a generator: the generator's alternative is the export market, and its PPA price is set against it.

Who a corporate PPA suits, and the alternatives

• Multi-site groups and energy-intensive manufacturers with long planning horizons: a fixed-price sleeved or virtual PPA hedges a large bill and supplies a named source for carbon reporting.
• Data centres and campus estates that need a renewable claim at a scale no roof can supply: see solar finance for data centres.
• Smaller businesses are rarely offered a corporate PPA; the equivalents are a REGO-backed tariff, an on-site solar PPA, or owning the array outright and keeping the capital allowances.
• Developers use a signed corporate PPA to raise senior debt against a solar farm; the buyer's credit strength is part of the bank's assessment.

All six on-site routes are compared on the financing routes comparison page; this page is the off-site seventh.

Regulation to know

Supplying electricity to a third party normally needs a supply licence under the Electricity Act 1989. The Electricity (Class Exemptions from the Requirement for a Licence) Order 2001 sets the class limits under which generation, distribution and supply can proceed without one — the basis of private-wire arrangements — and DESNZ's guidance on electricity licence exemptions (updated 14 January 2026, adding guidance on Class A supply exemptions) is the current reference. The Citiworks judgment on third-party access to private networks, and the regulations on third-party access to licence-exempt networks, are the two legal points a private-wire counterparty will raise; take advice before relying on an exemption.

Claims table: every figure on this page and its source

Every number and proper noun above is listed here with where it comes from and the date it was checked. If a row is not here, the figure should not be on the page.