CPPA structures explained

That’ll mean deciding which renewable generation technology you want to support, as well as which structure to adopt.

Let’s take a look at the options.

Private wire

Within a ‘private wire’ agreement, the electricity generator supplies the consumer directly without the power flowing through the National Grid. These structures are often called ‘direct wire’ because they directly connect generation with the consumption site. They therefore on proximity in order to make the physical connection.

As the electricity the generator produces never feeds into the Grid, there’s no need for a third party (a ‘licensed supplier’) to be involved in the arrangement.

Physical

Under a ‘physical’ CPPA structure, a supplier tracks (or ‘sleeves’) generated power through the Grid on the consumer’s behalf. This can involve the supplier creating a‘back-to-back’ contract with the consumer, a contract with both the consumer and the generator, or working with an existing energy supplier to service the consumer.

A back-to-back arrangement’s for when the licensed supplier is the consumer’s existing energy supplier and is providing balancing and shaping services.

A back-to-back’ with ‘portable’ sleeving arrangement’s identical to a ‘back-to-back’ CPPA except that it enables the consumer to change supplier during the agreed term with minimal disruption. It also allows them to retain the original licensed supplier as a balancing and shaping partner.

A tripartite arrangement’s for when the consumer can’t directly purchase energy from the generator (due, for example, to regulatory reasons). It’s also known as a ‘utility-led’ model.

Virtual

Under a virtual CPPA, the consumer pays for the generator’s energy but never takes ownership of it. The contract’s therefore more akin to a financial transaction than a power one.

Comparing the options: CPPA structures

Use the comparison table below to help you assess which CPPA structure’s right for your organisation.

More information

Our guide to Corporate Power Purchase Agreements features more information on CPPA types, their challenges and what to consider when choosing one. It also looks at the future of CPPAs and provides a comprehensive glossary of CPPA terms.

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