PPA vs Cash Purchase
PPA wins on cashflow and admin burden; cash wins on long-run cost if you have the capital and a 20-year occupancy horizon.…
Compare
PPA vs the alternatives — eight head-to-head comparisons
A PPA isn't always the right answer. We compare PPA against every realistic UK alternative — cash purchase, operating lease, grant-funded ownership, roof rental, on-site vs sleeved, escalator types, self-finance and corporate-vs-utility structures.
Key takeaways
- A PPA is £0 upfront and the provider carries performance risk; buying outright costs £40k–£400k+ but wins on lifetime cost.
- Owned solar runs ~4–6 p/kWh lifetime; a PPA runs 9–18 p/kWh; grid import is 28–32 p/kWh.
- Compare the 25-year cumulative cost, not the year-1 headline — the escalator decides the winner.
Compare PPA UK: every route side by side
The fastest way to compare a solar PPA against the alternatives for a UK commercial site:
| Route | Upfront cost | Unit cost | Performance risk | You own the asset? |
|---|---|---|---|---|
| Solar PPA | £0 | 9–18 p/kWh | Provider | No (buy-out option at end) |
| Cash purchase | £40k–£400k+ | ~4–6 p/kWh (LCOE) | You | Yes |
| Operating lease | £0 (fixed monthly) | Fixed regardless of output | You | No |
| Grant-funded | Part-funded | Lowest lifetime | You | Yes |
| Roof rental | £0 (you earn rent) | You keep grid supply | Provider | No |
Indicative — your numbers depend on system size, covenant, term and DNO context. Use the calculator to model your site.
Same site, three routes — a worked 25-year comparison
A 250 kWp commercial rooftop generating ~237,500 kWh/yr, self-consuming 80%, against a 30 p/kWh grid baseline:
| Route | Upfront | Year-1 electricity cost | 25-yr cost (indicative) | Own the asset? |
|---|---|---|---|---|
| Solar PPA (12 p/kWh) | £0 | ~£28,500 on PPA units | Lowest cashflow risk; ~£0.8–1.1m incl. escalator | No (buy-out option) |
| Cash purchase | ~£200,000 | ~£11,400 (LCOE) | Lowest lifetime cost if capital available | Yes |
| Operating lease | £0 | Fixed monthly regardless of output | Higher than PPA if under-performing | No |
Indicative only — model your own site with the PPA calculator or see 2026 PPA rates.
Does your site suit a PPA — or should you buy?
A PPA likely suits you if…
- You have little or no capital to allocate to solar
- You want the provider to carry performance & O&M risk
- You have 15+ years of tenure but don't want to own the asset
- You need cheaper, predictable power fast, off balance sheet
Buying outright is likely better if…
- You have the capital and want the lowest lifetime cost
- You'll occupy the site for 20+ years and want the residual value
- You can use 100% capital allowances / AIA in year one
- You're comfortable managing O&M and performance risk
All eight detailed comparisons
PPA vs Operating Lease
PPA shifts performance risk to the provider; operating lease keeps you in control of the asset but exposes you to under-performance.…
PPA vs Grant-funded Solar
Grants tie you to direct ownership and a heavier compliance burden but cut LCOE the most. PPA gets you started immediately with no capital.…
PPA vs Roof Rental
Roof rental gives you ~£5-15k/MWp/year in cash but no power. PPA gives you 30-50% cheaper electricity. Pick based on whether you use the kWh…
On-site PPA vs Sleeved PPA
On-site is cheaper per kWh and lower risk but limited to a single site. Sleeved suits multi-site businesses and tenants without roof rights.…
Fixed vs RPI/CPI-linked PPA Escalator
Fixed gives you certainty; inflation-linked feels safer if you believe grid power will keep rising at RPI+. Run both scenarios before signin…
PPA vs Self-financed Solar (Asset Finance)
Asset finance gives you the system for £0 down then ownership; PPA gives you cheaper kWh but no asset. Pick based on whether you want the lo…
Corporate PPA vs Utility PPA
CPPA gives you the cheapest tariff for investment-grade off-takers; utility PPA suits anyone who needs the supplier's balancing and credit s…
Market reference
Notable UK corporate PPAs (the route the biggest buyers chose)
| Off-taker | Sector | Structure | What's publicly reported |
|---|---|---|---|
| Amazon | Logistics / data centres | Corporate PPAs (multiple) | Repeatedly reported as the world's largest corporate buyer of renewable energy, with a portfolio of UK and European solar and wind PPAs. |
| Tesco | Retail / supermarkets | Corporate solar PPAs | Has publicly contracted large-scale UK solar generation via long-term corporate PPAs as part of its net-zero programme. |
| Sainsbury's | Retail / supermarkets | Corporate solar PPA | Publicly committed to sourcing renewable electricity through power purchase agreements with UK solar developers. |
| Marks & Spencer | Retail | Corporate renewable PPA | Part of M&S 'Plan A' net-zero commitments, sourcing renewable power via long-term agreements. |
| Nestlé UK | Food & drink manufacturing | Corporate solar/wind PPA | Publicly reported renewable PPAs covering UK manufacturing operations. |
| IKEA / Ingka | Retail | On-site + corporate PPA | Long-running renewable strategy combining on-site solar with off-site corporate PPAs across its UK estate. |
Publicly reported from each company's own sustainability disclosures — market reference only; we are not party to these deals.
FAQs
Comparing PPAs — FAQs
What's the best way to compare PPAs in the UK?
Compare on five axes: upfront cost (a PPA is £0 capex; cash is £40k–£400k+), unit electricity cost (PPA 9–18 p/kWh vs owned solar ~4–6 p/kWh vs grid 28–32 p/kWh), who carries performance risk (the provider under a PPA, you if you own), balance-sheet treatment, and flexibility on exit. Run the 25-year cumulative cost, not just year-1.
Is a solar PPA better than buying outright?
A PPA wins on cashflow and admin: zero capital, no O&M burden, provider carries performance risk. Buying outright wins on lifetime cost if you have the capital and a 20-year+ occupancy horizon. Grant-funded ownership (PSDS/IETF) can beat both on lifetime cost where you qualify. The right answer depends on your capital, tenure and risk appetite.
Is a PPA cheaper than a lease?
Usually in risk terms: a PPA charges per kWh generated so you only pay for delivered output and the provider carries under-performance, whereas an operating lease charges a fixed monthly amount regardless of generation. Under IFRS 16 a lease typically sits on the balance sheet; a carefully structured PPA can stay off it.
Before you choose a route
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