Alight appreciates the opportunity to respond to the Department for Energy Security and Net Zero’s Call for evidence on corporate power purchase agreements (CPPAs). As a specialist developer and operator of onsite and private wire solar PV and battery energy storage systems for large energy users across Europe, we welcome the chance to share our practical experience of how CPPAs can accelerate cost effective decarbonisation, support new generation capacity and strengthen the Great Britain power system.
1. To what extent and in what ways are CPPAs attractive for industrial and commercial electricity consumers compared with other electricity supply arrangements?
Corporate PPAs (CPPAs) are highly attractive to commercial and industrial (C&I) consumers compared with standard grid-supplied retail contracts, primarily because they can provide:
- Long-term price certainty and budget visibility
- Structurally lower delivered electricity costs
- Credible decarbonisation and Scope 2 emissions reduction
From Alight’s perspective as a developer and operator of onsite and private-wire solar PV and battery energy storage systems (BESS) for large energy users, different CPPA structures offer distinct advantages.
Onsite and private-wire CPPAs (behind-the-meter, BtM)
For many C&I consumers, onsite and private-wire CPPAs are the most economically compelling form of CPPA:
- Avoidance of non-commodity costs: BtM CPPAs reduce exposure to network charges, policy levies, balancing costs and supplier margin. In Alight’s experience across multiple European markets, this often enables all-in delivered electricity costs below c. £100/MWh, compared to an industrial grid-supplied average of ~£266/MWh in 2024.
- Superior hedge quality: Physical delivery at the customer’s site aligns generation and consumption, eliminating basis risk and substantially reducing shape and imbalance risk relative to sleeved grid or virtual CPPAs. Customers hedge both the energy component and a significant portion of non-commodity costs.
- Capital-free decarbonisation: Alight’s BtM CPPAs are typically structured on a “zero capex” basis for the customer. The generator finances, builds, owns and operates the asset, while the customer benefits from long-term fixed or index-linked pricing without construction or operational risk.
- Grid capacity relief and system benefits: BtM projects reduce peak grid imports and can alleviate local network constraints, particularly at sites in grid-constrained areas or where reinforcement would otherwise be required.
- Optional BESS integration: Co-located BESS increases self-consumption, raises the proportion of site load served at the CPPA price, and can provide resilience (e.g. ride-through of short outages or grid disturbances). Over time, batteries can also provide flexibility services that support system balancing.
These attributes make BtM CPPAs particularly attractive for energy-intensive sites with stable or predictable daytime load profiles, such as manufacturing, logistics and distribution, food and beverage processing, pharmaceuticals, cold storage and other industrial processes.
Sleeved and unsleeved grid-based CPPAs
Where onsite or nearby land is not available or sufficient to meet demand, sleeved and unsleeved (often virtual/synthetic) grid-based CPPAs provide an alternative route to long-term price stability and decarbonisation:
- Scalability: Grid CPPAs can match a higher proportion of a multi-site portfolio’s demand, especially for corporates with dispersed loads.
- Location flexibility: Generation can be located where resource and planning conditions are most favourable, while still delivering traceable low-carbon electricity attributes to the buyer.
- Commercial optionality: Pay-as-produced, baseload and shaped products allow different risk allocations between buyer and generator, though this complexity is often a barrier for smaller buyers.
However, from an C&I buyer’s perspective, these structures typically involve more complexity and transaction cost than BtM CPPAs and usually provide a weaker hedge for non-commodity components of the bill. Where technically and spatially feasible, onsite/private-wire structures are therefore generally more attractive to our industrial customers than sleeved or purely financial grid-based CPPAs.
2. To what extent can CPPAs support the development of new electricity generation capacity?
CPPAs can play a material role in enabling new generation capacity where they are structured as long-term, bankable contracts that underwrite project finance. The impact differs by CPPA type.
Onsite and private-wire CPPAs
For onsite and near-site private-wire projects, CPPAs are often the primary or sole route-to-market:
- Direct additionality: These projects are typically site-specific and anchored by a single offtaker’s demand. In Alight’s business model, projects proceed only when a long-term CPPA is signed with the host customer, meaning the capacity would not be built without that corporate demand.
- Financeability: Long-term (often 15–25 year) CPPAs with investment-grade or strong counterparties provide stable, often inflation-linked cashflows. This supports non-recourse project financing without reliance on government schemes such as CfDs.
- Speed of deployment: Onsite solar and BESS can usually be developed and commissioned within 12–24 months from contract signing, providing near-term capacity additions aligned with Net Zero and Clean Power 2030 timelines.
- System value through flexibility: Co-located BESS improves local flexibility, reduces peak imports, and can support local system balancing, thus reducing pressure on transmission and distribution networks.
Sleeved and unsleeved grid-based CPPAs
For larger, grid-connected projects, CPPAs can also enable additional capacity in several ways:
- Enabling merchant or partially merchant projects: Where developers are unable or unwilling to secure CfDs, long-term CPPAs with creditworthy corporates can provide sufficient revenue certainty to reach final investment decision.
- Repowering and life extension: Shorter-tenor CPPAs (e.g. 5–10 years) can support reinvestment in assets exiting RO/CfD support, maintaining or increasing low-carbon capacity.
- Portfolio diversification: Developers can use a mix of CfDs, CPPAs and merchant exposure to optimise their revenue stack; well-structured CPPAs can therefore directly support committed investment decisions in new or repowered capacity.
From Alight’s perspective, the highest “additionality” impact comes from onsite and private-wire solar+BESS projects where corporate CPPAs directly drive the build-out of new capacity that decarbonises industrial demand and relieves local grid constraints, while offsite CPPAs can play a complementary role for larger scale, grid-connected projects.
3. What actions could support growth in the GB CPPA market and make CPPAs a better option for electricity buyers and electricity generators?
For electricity buyers
- Reform the interaction between CPPAs and the Energy Intensive Industries (EII) exemption scheme
Alight has directly engaged with energy-intensive manufacturers (e.g. cement, glass and metals) where onsite or private-wire solar and BESS are economically compelling. In several cases, projects have not proceeded because reduced grid imports under a BtM CPPA would lead to a reduction in EII relief, partially or wholly offsetting the savings from onsite renewables.
This creates a perverse outcome: energy-intensive users that invest in onsite renewables and reduce system load are financially penalised relative to those that continue to import high-carbon electricity from the grid.
Policy recommendation:
- Maintain EII support levels based on gross demand, irrespective of behind-the-meter renewable generation, or
- Explicitly ring-fence eligibility such that BtM decarbonisation measures do not reduce access to EII support.
This single change would immediately unlock a significant pipeline of private-wire and onsite CPPA projects for EIIs.
- Recognise and monetise system value of BtM CPPAs
BtM projects reduce network reinforcement needs and peak imports and can offer local flexibility where BESS is deployed. Yet buyers currently see limited direct financial recognition of these system benefits. Options could include:
- Locational or temporal price signals that reward sites reducing peak demand through BtM generation and storage.
- Mechanisms for aggregators or DNOs to procure flexibility from BtM assets in a more standardised, bankable way, allowing these values to be reflected in CPPA economics.
- Standardisation and advisory support for smaller buyers
While large multinationals have internal expertise and advisory support, mid-market and SME buyers face high transaction costs to negotiate CPPAs:
- Government or industry-backed standard CPPA templates, with balanced risk allocation for onsite and private-wire projects, would reduce legal and advisory costs.
- Light-touch guidance or a “CPPA playbook” for C&I buyers would demystify key concepts (indexation, volume risk, metering arrangements, credit support) and reduce perceived risk.
For electricity generators
- Planning and permitting reform for onsite solar and BESS
From Alight’s experience in the UK and other European markets, planning timelines and local authority interpretation of rules can materially impact project feasibility and cost. Specific measures that would support deployment include:
- Clearer permitted development rights for rooftop and carport solar, including on industrial and logistics sites.
- Streamlined and timebound processes for ground-mounted solar and co-located BESS within the curtilage of existing industrial premises.
- Consistent guidance for local authorities on assessing visual, glare and biodiversity impacts of onsite solar, reducing uncertainty and resubmission cycles.
- Grid connection processes aligned with BtM characteristics
While BtM projects typically have smaller export capacities, they still face some of the same processes and queues as larger export projects. Measures that would help include:
- Proportionate, fast-track connection processes for projects where export capacity is modest relative to the site’s import capacity, and where net system load is reduced.
- Clear, standardised rules for “non-firm” export of surplus BtM generation, so that modest exports do not trigger disproportionate reinforcement costs.
- Credit support mechanisms for mid-sized buyers
For Alight and other developers, a key constraint is that many economically attractive mid-market and upper-SME customers have insufficient credit quality for long-tenor CPPAs. Commercial solutions (e.g. private credit insurance) can be prohibitively expensive and erode project economics.
Government-backed credit enhancement – for example, partial guarantees or a guarantee facility focused on industrial and commercial CPPAs – could materially expand the addressable buyer pool while remaining fiscally efficient if structured on a risk-based premium basis.
Specific business-level barriers Alight has encountered
- Projects for EIIs where the loss of EII relief outweighs the gains from BtM solar and BESS.
- Economically robust projects stalled due to planning delays or inconsistent treatment of rooftop and carport solar across local authorities.
- Strong industrial counterparties with solid operations but non-investment-grade ratings, where the cost of commercial credit insurance makes CPPAs non-competitive.
4. What best-practice approaches developed in comparable markets could address the challenges in developing and agreeing CPPAs in Great Britain?
The Nordic PPA market is one of the most mature in Europe, with onshore wind and increasingly solar contracted through long-term CPPAs in Sweden and Finland. CPPAs have become a standard way for large corporates to finance new renewable capacity and secure long-term price stability. Alight has signed offsite solar CPPAs at several utility-scale solar parks in Sweden and Finland, including Sweden’s and Finland’s largest solar CPPA projects.
Adaptation for GB:
- Ensure that regulatory and accounting frameworks support long-tenor corporate offtake contracts for new build renewable assets, including solar and hybrid solar-storage projects.