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PPA Mechanics
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.
What "off-taker covenant" means
The PPA SPV raises capital based on the certainty of your future kWh payments. The stronger your credit (the lower the chance you'll default on monthly bills), the cheaper their capital, the lower the tariff they can offer.
The covenant ladder
| Tier | Examples | Tariff impact |
|---|---|---|
| Investment-grade rated (BBB- or better) | FTSE 100/250, NHS Trusts, major retailers, councils | Headline tariff |
| Strong unrated | Top-50 private companies, established mid-caps with audited accounts | +0.5–1 p/kWh |
| SME with parental guarantee | Mid-size with a strong UK or international parent | +1–2 p/kWh (or no deal without guarantee) |
| SME no guarantee | Most £5–20m revenue businesses | +2–4 p/kWh or shorter term required |
| Sub-investment-grade | Loss-making, distressed, or single-customer-concentration | Usually no deal |
How to strengthen your covenant for the PPA
- Group guarantee from a stronger parent (most common).
- Step-up tariff in the early years (provider takes more risk later when your covenant has hopefully strengthened).
- Letter of credit or cash deposit (typically 3–6 months of expected payments).
- Take a shorter contract to reduce the provider's risk window.
Not sure if your covenant qualifies?
Send us your basic financials (last 2 years of accounts) and we'll match you to providers comfortable at your tier.
Get an indicative PPA tariff
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Where you sit on that ladder is worth real money in pence per kilowatt-hour, and the five covenant tiers and their tariffs shows roughly what each rung is priced at.
The larger the commitment, the harder the credit question becomes: the covenant test at 2 MWp typically means a full 25-year term or a parent-company guarantee, plus group electricity spend of £750,000 or more.
Covenant strength decides your tariff, but it does not decide who absorbs a future policy shift — that sits in the change-in-law clauses in UK PPAs, which you should read before signing.
Weaker covenants are priced up and papered more tightly, which is where step-in rights and lender protections enter the negotiation.
Get your site assessed for a solar PPA
Off-taker Covenant: How Your Credit Affects Your PPA — tell us about your site and we'll return an indicative p/kWh tariff for it. Reply by email within one working day.