Three different solar PPA structures get used interchangeably in conversation and they have fundamentally different economics. The distinction matters because it determines whether you avoid 50-60% of your electricity bill stack or just a few percent of it.
MTFD provides behind-the-meter PPAs only, the structure that delivers the largest bill reductions for UK commercial buyers. The reason that matters is not the wholesale electricity price; it is the pass-through charges you avoid.
A behind-the-meter (BTM) PPA installs solar physically on your site, your roof, your land. The electricity flows directly from the panels into your distribution board, downstream of the grid meter. From the grid operator's perspective, you simply import less. The solar units never enter the public transmission or distribution network. Because they never enter the grid, they attract none of the non-commodity charges that make up the majority of a UK commercial electricity bill, TNUoS, DUoS, BSUoS, Capacity Market levies, CCL, Renewables Obligation supplier costs, FiT supplier costs, supplier margin, and VAT on top. Together those typically account for 50-60% of a UK commercial bill. Every kWh of solar that displaces a kWh of grid import saves all of that.
A sleeved PPA is something quite different. The solar is generated remotely, usually at a utility-scale ground-mount installation elsewhere, and exported into the public grid. A licensed energy supplier "sleeves" the matched volume to you through your normal grid connection. Contractually you're buying renewable electricity at a fixed PPA rate; physically you're receiving normal grid electricity. All pass-through charges apply because the electricity reaches you via the grid. The PPA only fixes the wholesale component, which is around 40% of a typical commercial bill. Net cost savings against grid procurement are usually in the 5-15% range, not the 30-50% that BTM delivers.
A virtual (or synthetic, financial) PPA is purely a financial contract, no physical electricity supply between the generator and the buyer. The solar farm sells into the wholesale market at the spot price. The buyer continues to purchase electricity from their existing supplier on normal commercial terms. The PPA settles the difference between an agreed strike price and the spot price as a separate Contract for Difference. Virtual PPAs are predominantly used by large multinational corporates for renewable energy certificate procurement and Scope 2 reporting. They do not reduce the customer's actual electricity bill, they convert one component of it from variable to fixed.
When a buyer compares headline p/kWh rates across these three structures they're often comparing wholesale equivalents and missing the larger story. A 7p/kWh BTM rate and a 7p/kWh sleeved rate are not equivalent purchases. The BTM rate is for electricity that replaces a 28-30p/kWh fully-loaded grid unit; the sleeved rate is for electricity that still attracts all the grid pass-through charges on delivery. Total cost outcomes differ materially.
For typical UK mid-market commercial buyers (annual demand 100 MWh - 30 GWh), BTM is virtually always the right answer. It delivers the largest bill saving, requires no upfront capital, and uses an asset (your roof or land) that is otherwise generating no return. Specific accounting and tax treatment varies by company structure, please consult your accountant. Sleeved PPAs become relevant for very large multi-site corporates with demand far exceeding what their roofs can supply. Virtual PPAs become relevant for global enterprises with formal renewable procurement obligations measured in TWh per year.