How a Solar Power Purchase Agreement Works
A solar PPA is a long-term contract under which a third-party investor funds, owns and operates solar generation on your site (or sleeves it to you). You buy the kilowatt-hours gen…
PPA Mechanics
How Solar Power Purchase Agreements Work
Ten deep-dives on the mechanics of a UK commercial solar PPA — from indicative tariff through to end-of-contract options. Written for procurement, finance and facilities teams comparing routes to renewable electricity.
- Six structures: on-site, sleeved, virtual, corporate, behind-meter, in-front-of-meter
- 2026 tariff benchmarks: 9–22 p/kWh year 1 across UK structures
- 15–25 year typical term — three end-of-contract pathways
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Ten mechanics deep-dives
The complete PPA mechanics library
A solar Power Purchase Agreement is a contract under which a third party funds, owns and operates solar generation; you buy the power it produces at a pre-agreed tariff. The contract details — structure, term, escalator, off-taker covenant requirements, end-of-contract options — drive whether you save 20% or 50% on your electricity bill over 20 years.
Solar PPA Structures Explained
Not all PPAs are alike. The structure that fits depends on whether you own the roof, how many sites you operate, your treasury sophistication and whether you need REGO certificates…
Solar PPA Pricing: 2026 Benchmark Tariffs
PPA tariffs are quoted in pence per kilowatt-hour. In 2026 the indicative range across the UK market is 9–22 p/kWh year-1 — well below the 28–32 p/kWh that most commercial off-take…
Solar PPA Escalators: Fixed, RPI or CPI?
An escalator is the annual % uplift baked into your PPA tariff. Get the escalator wrong and a 25-year contract that looks cheap in year 1 ends up costing more than buying outright.…
Solar PPA Term: Why 15–25 Years and How to Negotiate It
Term length is the single biggest driver of tariff. Shorter terms mean higher rates; longer terms tie you in. Most UK PPAs run 15-25 years to give the investor a 7-9% IRR after deb…
End-of-Contract Options on a Solar PPA
Solar panels routinely produce for 30+ years; PPAs run 15-25 years. So what happens at the end? Three standard pathways, each with different financial implications.…
Off-taker Covenant: How Your Credit Affects Your PPA
PPA providers are non-recourse lenders to your kilowatt-hours for 15-25 years. Your covenant rating directly drives the tariff they can offer.…
The EPC Contractor in a PPA Structure
EPC stands for Engineering, Procurement and Construction. In a PPA, the SPV that owns the system contracts a third-party EPC to build it. The EPC's quality is your quality.…
O&M Under a Solar PPA: What the Provider Covers
One of the biggest PPA selling points is that operations and maintenance are not your problem. But the contract scope matters — here's what a well-drafted O&M annex typically cover…
M&V Under a Solar PPA
M&V is how the provider measures what they generated and what they invoice you for. The metering, performance ratio guarantees and dispute mechanisms matter enormously over a 20-ye…
PPA Structures
15–25 years
10–15 years
10–15 years
10–20 years
15–25 years
10–20 years
Six structures available to UK off-takers in 2026
Not all PPAs are alike. The structure determines who builds the system, where the generation sits, how the electricity reaches your meter, and what risks you carry.
On-site PPA
Generator installs and owns kit on your roof or land; you buy the kWh.
Typical tariff: 9–18 p/kWh year 1 · Audience: Single-site businesses with 200kWp+ of roof or land, occupying for 15+ years.
Sleeved PPA
Generator builds at a separate location; an electricity supplier 'sleeves' the energy to your MPAN.
Typical tariff: 11–20 p/kWh year 1 (excludes supplier markup) · Audience: Multi-site businesses, tenants without roof rights, or sites with poor solar resource.
Virtual (synthetic) PPA
Financial contract-for-difference referencing a wholesale price — you don't take physical delivery.
Typical tariff: Strike price typically £45–£55/MWh fixed · Audience: Large corporates with treasury sophistication; net-zero commitments; multi-jurisdiction operations.
Corporate PPA (CPPA)
Direct bilateral agreement with a generator — can be physical or financial, on-site or off-site.
Typical tariff: £42–£60/MWh fixed or partially indexed · Audience: Investment-grade off-takers signing 20MW+ utility-scale solar farm output.
Behind-the-meter PPA
Variant of on-site PPA where generation sits inside your private wire; never touches the public grid.
Typical tariff: 8–14 p/kWh year 1 (lowest tariff band — no grid charges) · Audience: Industrial sites with 1MWp+ load coincident with daytime generation.
In-front-of-meter PPA
Generation exports to the grid; you receive the kWh via your supply meter under an export-and-import structure.
Typical tariff: 13–22 p/kWh (higher because of network use-of-system charges) · Audience: Sites with roof but limited daytime self-consumption.
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