Comparison

PPA vs Operating Lease

Solar PPA vs operating lease — accounting treatment under IFRS 16, monthly cost, exit flexibility. Which suits your business?

Side-by-side comparison

	Solar PPA	Operating lease
Payment structure	Per-kWh generated	Fixed monthly amount
Performance risk	Provider	You (lease pays whether system works or not)
IFRS 16 treatment	Typically off-balance-sheet (service contract)	On-balance-sheet right-of-use asset
Term	15-25 years	5-15 years typical
Exit	Buy-out at FMV	Return to financier or buy at residual
Tax	Operating expense; deductible	Lease accounting
Tariff (per-kWh equivalent)	11-16 p/kWh	13-20 p/kWh

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 Operating lease wins

Operating lease 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 shifts performance risk to the provider; operating lease keeps you in control of the asset but exposes you to under-performance. 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.