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PPA Mechanics
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 generated at a pre-agreed tariff that is typically 30–50% below grid import.
Step 1
Indicative tariff
Provider reviews your annual kWh consumption, roof area, postcode irradiation, and DNO context. Returns an indicative p/kWh band and term length within 1–2 weeks.
Step 2
Site survey
Provider's EPC contractor surveys roof structure, electrical infrastructure, planning constraints and DNO connection capacity (G99/G100 if >50kWp).
Step 3
Heads of Terms
Non-binding term sheet covers system size, tariff, escalator, term, off-taker covenant requirements, exit options and assignment-on-sale clauses.
Step 4
Full contract
Long-form PPA executes alongside the EPC contract and (if applicable) the O&M agreement. Typical legal cost £8k–£25k for the off-taker.
Step 5
Build
EPC contractor installs the system over 6–16 weeks depending on size. DNO connection, commissioning and Ofgem MCS certification follow.
Step 6
Operations
From day one of commissioning you pay the PPA tariff for every kWh generated. Provider handles O&M, insurance, monitoring, REGO administration and SEG export (where structured).
Step 7
End-of-term
After 15–25 years you typically have three options: (a) extend at a re-negotiated tariff, (b) buy the system at fair market value, or (c) have the provider remove the system at no cost to you.
FAQs
Common questions about how a PPA works
How long does it take to sign a PPA?
From first call to commissioning typically 6–12 months: 2–4 weeks for an indicative tariff, 4–8 weeks for site survey and term sheet, 8–12 weeks for full contract negotiation, 6–16 weeks for build.
Do I need to pay anything upfront?
No. The provider funds 100% of the system. Your only upfront costs are typically £8k–£25k of legal review on the long-form contract for a mid-size deal.
Can I terminate early?
Most PPAs include termination clauses but with a buy-out at fair market value or a discounted cashflow of remaining payments. Early termination is rarely cheap; structure the term carefully upfront.
What if I sell the building?
Standard contracts include change-of-control and assignment-on-sale clauses. The buyer typically inherits the PPA, but conditions apply — particularly on covenant rating.
Who owns the panels?
The PPA provider (or the SPV behind it) owns the system for the duration. At end-of-term you can buy, extend or have the panels removed.
Want to see what tariff your site qualifies for?
A 60-second form gives us enough to return an indicative p/kWh band, term length and provider shortlist within one working day.
Get an indicative PPA tariff
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