Virtual PPA vs Physical PPA: the complete 2026 comparison
Which PPA structure should a European data center pick? Legal, accounting, tax and risk differences explained.
Two very different worlds
A Physical PPA delivers real electrons through the TSO grid. A Virtual PPA (vPPA) is a financial swap with no physical delivery. Choosing one over the other locks the data center in for 10 to 15 years.
Criterion #1 — geography
- Physical PPA requires producer and buyer in the same price zone (e.g. France as a single zone, or Germany unified since 2018).
- vPPA works regardless of geography — ideal for multi-country operators.
Criterion #2 — IFRS 16 accounting
A Physical PPA can be reclassified as a lease under IFRS 16, forcing on-balance-sheet debt. A vPPA stays off-balance in most cases — a real edge for listed operators.
Criterion #3 — MiFID II taxation
A vPPA is a derivative financial instrument: it triggers EMIR reporting. A Physical PPA is a classic supply contract, outside MiFID scope.
Criterion #4 — basis risk
vPPAs expose buyers to basis risk between the producer's node and the reference hub (PEG in France, NCG in Germany). On congested nodes this risk can destroy €8–12/MWh of expected savings.
Voltarione decision table
| Criterion | Physical | vPPA |
|---|---|---|
| Local single-site data center | ✅ | ❌ |
| Multi-country hyperscaler | ❌ | ✅ |
| 24/7 CFE compliance | ✅ | ⚠️ |
| Off-balance IFRS | ❌ | ✅ |
| Tax simplicity | ✅ | ❌ |
The optimal mix
Most serious operators (Microsoft, Equinix, OVHcloud) blend both: local Physical PPA for 24/7 baseload + distant vPPA for carbon offsets. Voltarione models this hybrid strategy.
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