Corporate Power Purchase Agreements ("PPAs") - Which model should you choose?

Entering into a corporate PPA is the most optimal route of purchasing power for corporates looking to achieve their sustainability targets by buying green power whilst benefitting from a long-term pricing model. A corporate customer is able to demonstrate its commitment to sustainability through having a direct contractual relationship with the power generator, and at the same time, can hedge its cost risk through the price certainty that comes with these 10 to 20 year agreements, depending on technology.

Corporate PPAs broadly take form in the following 3 structures:

  1. the “Sleeved” PPA
  2. the “Synthetic” PPA
  3. the “Private Wire” PPA

You can find a general summary of the key features of each model, as well as their strengths and weaknesses in our comparison table below.


Key features



The “Sleeved” PPA

  • Generator sells power directly to the corporate customer under a PPA (PPA)
  • An intermediary (often an energy supplier or a utility) ‘sleeves’ the power through the grid to the corporate customer at its site under a second PPA (Sleeving Arrangement)
  • The energy supplier/utility performs a balancing service to top up the power if needed
  • Financial: sometimes the corporate customer may make an investment into the generator itself to support the project (and open a new revenue stream in potential dividends)
  • Regulatory Environment: there is no need to demonstrate any extra regulatory compliance over the usual


  • Geographical Location: the generator, energy supply company/utility and the corporate customer must all be located on the same grid, and so the sleeved model would not work across grids in different EU states, or US states
  • Structure: two back-to-back contracts for the sale of power makes sleeved corporate PPAs slightly more complex than its synthetic counterpart and reduces the flexibility to change suppliers

The “Synthetic” PPA

  • Synthetic PPAs do not involve the physical delivery of power
  • Generator sells power to a utility company at market price
  • The utility company continues to sell power to the corporate customer at market price
  • Separately, the generator and the corporate customer enter into a contract for difference, option or other financial hedge in order to settle the difference between the agreed PPA price, the ‘strike price’, and the actual market price
  • Geographical Location: The generator, energy supply company/utility and the corporate customer can be located in different grids or even different countries
  • Structure: as there is only one contract for difference / option / financial hedge, the structure for synthetic PPAs tends to be more simple with more scope for flexibility of changing suppliers or adopting a multi-supplier model
  • Regulatory Environment: the contract for difference / option / financial hedge could be considered a regulated financial instrument which would require investigation and analysis into the necessity of any financial services authorisation or compliance obligations

The “Private Wire” PPA

  • Used where the source of power generation is co-located or located close by to the power purchaser, bypassing the traditional national power grid
  • Also referred to as Behind-the-meter PPA
  • Exclusivity: commonly in private wire PPAs, the corporate customer benefits from the supply of power on an exclusive basis, this can mean greater levels of control and supports the growth of localised renewable energy
  • Financial: avoiding national grid charges and policy costs, and the potential for the power supply project to fall under one of the electricity class exemption orders allows for significant savings to be made
  • Geographical Location: the generator must be located at or near the corporate customer’s assets
  • Financial: the costs associated with installation and maintenance of the private wire structure should be considered and factored in

Corporate PPAs are relevant on a global scale. Traditionally, the preferred contract structure for PPAs in the USA is synthetic and where the cPPA hype started out in Europe to be a more sleeved PPA market, the market is now also moving towards virtual arrangement. However, synthetic PPAs are gaining popularity in Europe, due to it being a simpler contract to enter into. At Bird & Bird, we have truly international reach, which has allowed us to develop and negotiate innovative PPA structures across a range of jurisdictions – from sleeved and synthetic PPAs to the more recently emerging blockchain PPAs. 

If you would like to find out more, please visit our Corporate PPA Hub or get in contact with us.

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