Comparison

PPA vs Grant-funded Solar

Solar PPA vs IETF / PSDS / Salix grant-funded installation. Which routes are mutually exclusive vs stackable.

Side-by-side comparison

	Solar PPA	Grant-funded (PSDS, IETF, Salix)
Capital needed	£0	0-30% match required typically
Speed to deploy	6-12 months	12-24 months (application + procurement)
Eligibility	Most commercial	Restricted (PSDS public sector, IETF EII, Salix public)
Long-run cost (lifetime kWh)	11-16 p/kWh	5-9 p/kWh (after grant + tax)
Procurement burden	Provider-led	Off-taker-led, formal PCR / PA 2023
Stackable with PPA?	—	PSDS/IETF rarely stack; SEG always stacks
Best for	Speed + capital constraint	Public sector, EII, or balance-sheet ready

First, can you even get the grant?

Grant funding sounds like the obvious winner until you check who qualifies. Schemes like PSDS (public sector), IETF (energy-intensive industry) and Salix (public bodies) are tightly gated — most private commercial off-takers simply aren't eligible. A PPA has no such gate: it's open to almost any business with a decent roof and a creditworthy trading history. If you don't fit a scheme's criteria, the comparison is already over.

The cost gap is real — and so is the effort behind it

Where you do qualify, grants win on lifetime cost. After the award and tax relief, grant-funded solar can deliver electricity at roughly 5–9p/kWh, well below a PPA's 11–16p. But that cheaper power comes with strings: you own and maintain the asset, you run a formal procurement (PCR 2015 / Procurement Act 2023), and deployment stretches to 12–24 months against a PPA's 6–12. You're buying a lower price with capital, compliance and time.

What actually stacks

• PSDS and IETF rarely combine with a commercial PPA — they generally assume direct ownership.
• The Smart Export Guarantee stacks with almost anything, PPA included, paying for exported surplus.
• A grant-funded core plus a PPA on a second site is often the pragmatic portfolio answer.

Choosing your route

Public-sector and EII organisations that are ready to own should chase the grant. Everyone else — or anyone who needs solar live this financial year without capital — is better served by a PPA. See the full funding routes compared and read the mechanics of a solar PPA before deciding, or map your own position through the PPA financing options.

FAQs

Comparison FAQs

Which option should I pick?

Grants tie you to direct ownership and a heavier compliance burden but cut LCOE the most. PPA gets you started immediately with no capital. 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. Capital allowances combine only with cash or self-finance — and note solar is a special-rate asset, so it does NOT qualify for full expensing; the correct 100% route is the Annual Investment Allowance (up to £1m/year). 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.