Corporate Solar Power Purchase Agreements (PPA) Guide UK Private Wire

Key Takeaways

• Corporate Power Purchase Agreements (PPAs) structured as private-wire connections deliver fixed-price clean power directly to commercial energy consumers.
• Supplying power directly avoids network transmission and distribution charges while bypassing retail energy supplier margins.
• Private wire supply relies on statutory licensing exemptions under the Electricity (Class Exemptions from the Requirement for a Licence) Order 2001.
• Supplying power to a single on-site consumer who consumes all generated electricity is legally exempt from supply licensing.
• Facilities under 50 megawatts permitted capacity avoid the need for Section 36 consent from the Secretary of State.
• Unlicensed generation or supply outside statutory exemptions constitutes an offence under the Electricity Act 1989.

Private Wire Architecture vs Virtual PPAs

Corporate clean energy procurement follows two distinct contractual structures:

1. Private-Wire Direct PPAs: Physical electrical cables directly link the solar array to the consumer's switchgear. Power does not cross the public distribution grid, eliminating transmission losses and network use-of-system fees.
2. Virtual (Synthetic) PPAs: A financial contract-for-difference (CfD) hedges wholesale electricity prices without physical power delivery.

Statutory Licensing and Supply Exemptions

Delivering electricity across property boundaries is governed by primary and secondary energy legislation:

• Generation Restriction: Section 4 prohibits anyone who generates electricity for the purpose of giving a supply to any premises or enabling a supply to be so given.
• Supply Prohibition: Covers anyone who supplies electricity to any premises.
• Offence Sanction: Establishes that an unauthorized party shall be guilty of an offence unless he is authorised to do so by a licence or exemption.
• Line Delivery: Details that in relation to electricity, means supply through electric lines.

Class A Small Generator and On-Site Supply Relief

The Electricity Class Exemptions Order 2001 provides the statutory foundation for private-wire solar PPAs:

• Small Generator Class: Provides exemption for Persons (other than licensed generators) who do not at any time provide more electrical power from any one generating station than specified caps.
• Declared Net Capacity: Permits 50 megawatts in the case of a generating station with a declared net capacity of less than 100 megawatts.
• On-Site Consumer Exemption: Authorizes power supplied to a single consumer who occupies premises which are on the same site as the premises where the generating station is situated and who consumes all the power provided to him from that generating station at those premises.

Ministerial Consents and Building Reporting

Corporate solar planning must satisfy statutory generation and efficiency requirements:

• Section 36 Consent: Dictates that a generating station shall not be constructed, extended or operated except in accordance with a consent granted by the Secretary of State.
• Permitted Threshold: Consent is not required where capacity does not exceed the permitted capacity, that is to say, 50 megawatts.
• Public Facility Ratings: Appertains to buildings occupied by public authorities and frequently visited by the public.
• Mandatory Display: Requires occupiers to display at all times a valid display energy certificate in a prominent place clearly visible to members of the public who visit the building.
• Approved Benchmark: Mandates that certificates express the operational rating of the building in a way approved by the Secretary of State.