Comparison

PPA vs Cash Purchase

Solar PPA vs buying outright — capital outlay, IRR, balance sheet, ownership, control. Decision framework for UK commercial off-takers in 2026.

Side-by-side comparison

	Solar PPA	Cash purchase (CapEx)
Upfront capital required	£0	£75,000-£900,000 typical
Year-1 cashflow impact	Lower (PPA tariff replaces grid bill)	Major outflow + AIA/Full Expensing tax benefit
Ownership of asset	Provider for term, then options	Day 1
O&M responsibility	Provider	You
25-year cumulative cost (250kWp)	~£1.05m (with 2.5% escalator)	~£700k (cash + 1% annual O&M)
Balance sheet treatment	Off-balance-sheet (typically)	On-balance-sheet asset + depreciation
Performance risk	Provider	You
Exit flexibility	Termination + buy-out clauses	Sell with building

When Solar PPA wins

Solar PPA typically wins when (a) you need zero upfront capital, (b) you want operations and performance risk transferred, (c) your business horizon doesn't extend to a 25-year capital commitment, or (d) you want speed to deploy.

When Cash purchase (CapEx) wins

Cash purchase (CapEx) typically wins when (a) you have capital and want the lowest 25-year cost, (b) you want to retain ownership of the asset and its long-term value, (c) you can manage operations in-house, or (d) you're constrained by structural reasons (e.g., procurement rules for public bodies).

FAQs

Comparison FAQs

Which option should I pick?

PPA wins on cashflow and admin burden; cash wins on long-run cost if you have the capital and a 20-year occupancy horizon. Run your specific numbers in our PPA calculator before deciding.

Can the two be combined?

Sometimes. SEG income always layers on top of either route. AIA / Full Expensing combine only with cash or self-finance. PPA + grant rarely stack — most grants exclude PPA structures.

Where can I read more about the underlying mechanics?

Our mechanics hub covers 10 deep-dives on PPA structure, pricing, escalators, term, end-of-contract, off-taker covenant, EPC, O&M and M&V.