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PPA Mechanics · Rates & tariffs
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-takers pay for grid import.
What's a good PPA tariff in 2026?
A good 2026 UK commercial solar PPA rate is 9–14 p/kWh for a 250 kWp+ on-site deal with an investment-grade off-taker on a 20–25 year term — versus 28–32 p/kWh for grid import. That is a saving of 14–21 p on every self-consumed unit.
Key takeaways
- 2026 UK solar PPA rates run 8–22 p/kWh year-1 by structure and size; most on-site deals land 11–15 p/kWh.
- Bigger systems and stronger covenants get the lowest p/kWh; sleeved and small deals the highest.
- Compare the 25-year cumulative cost, not the headline tariff — the escalator decides which deal is cheapest.
- Grid import is 28–32 p/kWh, so a PPA typically cuts your electricity cost 40–70% on self-consumed units.
Current UK solar PPA rates 2026 — by system size
| System size | Year-1 PPA tariff | Indicative system value | Generation |
|---|---|---|---|
| 50kWp | 16–20 p/kWh | £42,000–£55,000 | 47,500 kWh/yr |
| 100kWp | 14–18 p/kWh | £82,000–£105,000 | 95,000 kWh/yr |
| 250kWp | 12–16 p/kWh | £200,000–£260,000 | 237,500 kWh/yr |
| 500kWp | 11–14 p/kWh | £395,000–£500,000 | 475,000 kWh/yr |
| 1MWp | 10–13 p/kWh | £750,000–£950,000 | 950,000 kWh/yr |
| 2MWp | 9–12 p/kWh | £1.45m–£1.85m | 1,900,000 kWh/yr |
| 5MWp (ground-mount or large rooftop) | 8–11 p/kWh | £3.5m–£4.5m | 4,750,000 kWh/yr |
| 10MWp+ (utility-scale) | £42–£55/MWh fixed (4.2–5.5 p/kWh) | £6.5m+ | 9,500,000 kWh/yr |
Year-1 indicative, on-site PPA, investment-grade off-taker, 20-year term. Last reviewed 28 June 2026.
2026 indicative tariff bands by PPA structure
| PPA structure | Year 1 tariff | Vs grid import | Typical term |
|---|---|---|---|
| Behind-the-meter on-site | 8–14 p/kWh | −55% to −70% | 15–25 years |
| On-site (in-front-of-meter) | 13–18 p/kWh | −40% to −50% | 15–25 years |
| Sleeved PPA | 11–20 p/kWh | −30% to −60% | 10–15 years |
| Corporate PPA (utility-scale) | £42–£60/MWh (4.2–6 p/kWh) | −75% to −85% | 10–20 years |
| Virtual/synthetic PPA | £45–£55/MWh strike | Financial hedge — no physical delivery | 10–15 years |
PPA tariff vs grid import vs owning the system
Where a PPA rate sits relative to grid import and to owned-solar LCOE is the whole point — here is a 500 kWp site on a 12 p/kWh on-site PPA:
PPA rate vs CapEx vs lease — lifetime cost
| Route | Upfront | Unit cost | Performance risk | Own the asset? |
|---|---|---|---|---|
| Solar PPA | £0 | 9–18 p/kWh | Provider | No (buy-out option) |
| Cash / CapEx | £40k–£400k+ | ~4–6 p/kWh (LCOE) | You | Yes |
| Operating lease | £0 (fixed monthly) | Fixed regardless of output | You | No |
| Asset finance | £0 down | Loan + ~4–6 p/kWh after | You | Yes (after term) |
Buying outright wins on lifetime cost if you have the capital and a 20-year horizon; a PPA wins on cashflow and shifts performance risk to the provider. Full breakdowns on compare PPA UK.
End-of-contract buy-out values
| When | Indicative buy-out (% of original capex) | Why |
|---|---|---|
| Year 7 | ~40–60% | Asset still has 23+ years of generation left |
| Year 15 | ~10–25% | Most of the investor's return is banked |
| End of term (15–25 yr) | Fair market value, often nominal | Extend, buy at FMV, or free removal |
Worked example: a 500 kWp factory
A factory self-consuming 475,000 kWh/yr at a 12 p/kWh on-site PPA pays about £57,000/yr — versus roughly £142,500/yr at a 30 p/kWh grid rate. That is around £85,000 saved in year 1, with no capital outlay and the escalator capped in the contract.
PPA rates by sector
| Sector | Typical PPA rate | Typical size |
|---|---|---|
| Factories | 10–14 p/kWh | 250kWp–2MWp |
| Warehouses | 9–13 p/kWh | 500kWp–5MWp |
| Hotels | 12–16 p/kWh | 100–500kWp |
| Schools | 13–17 p/kWh | 50–250kWp |
| Hospitals | 11–15 p/kWh | 250kWp–2MWp |
| Farms | 10–14 p/kWh | 100kWp–5MWp |
| Offices | 13–18 p/kWh | 50–500kWp |
| Retail | 12–16 p/kWh | 100kWp–2MWp |
| Care Homes | 14–18 p/kWh | 30–150kWp |
| Churches | 15–19 p/kWh | 20–100kWp |
Eight drivers of your PPA rate
System size
Bigger systems mean lower £/Wp capex, which the provider passes through as a lower p/kWh.
Off-taker covenant
Investment-grade off-takers see tariffs 1–3 p/kWh below sub-investment-grade equivalents.
Contract term
A 25-year term gives the provider more years to amortise — tariff drops 0.5–1.5 p/kWh vs a 15-year contract.
Escalator structure
A fixed-3% escalator costs you more over time than a 0% / RPI-linked. Year-1 tariff lower with high escalator, but cumulative cost higher.
DNO connection status
Sites with existing G99 capacity get build-cost discounts. New connections add 6–18 months and £20k–£250k of capex.
Roof condition + age
Roofs over 15 years old need refurbishment first — this gets baked into the tariff or rejected from the deal.
Self-consumption %
Higher self-consumption means less SEG export — the provider quotes lower because less revenue depends on export prices.
Geographic location
Southern UK gets 1,050 kWh/kWp/yr; Scotland 850 kWh/kWp/yr. The lower yield bumps the tariff 0.5–1.5 p/kWh.
Want a real number?
Use our PPA savings calculator to model your specific site, or send a 60-second enquiry and we'll return an indicative tariff range and provider shortlist within one working day.
Market reference
Real UK corporate solar PPAs
| Off-taker | Sector | Structure | What's publicly reported |
|---|---|---|---|
| Amazon | Logistics / data centres | Corporate PPAs (multiple) | Repeatedly reported as the world's largest corporate buyer of renewable energy, with a portfolio of UK and European solar and wind PPAs. |
| Tesco | Retail / supermarkets | Corporate solar PPAs | Has publicly contracted large-scale UK solar generation via long-term corporate PPAs as part of its net-zero programme. |
| Sainsbury's | Retail / supermarkets | Corporate solar PPA | Publicly committed to sourcing renewable electricity through power purchase agreements with UK solar developers. |
| Marks & Spencer | Retail | Corporate renewable PPA | Part of M&S 'Plan A' net-zero commitments, sourcing renewable power via long-term agreements. |
| Nestlé UK | Food & drink manufacturing | Corporate solar/wind PPA | Publicly reported renewable PPAs covering UK manufacturing operations. |
| IKEA / Ingka | Retail | On-site + corporate PPA | Long-running renewable strategy combining on-site solar with off-site corporate PPAs across its UK estate. |
Publicly reported from each company's own sustainability disclosures — market reference only; we are not party to these deals.
FAQs
PPA rates & pricing FAQs
What is a good solar PPA rate in 2026?
A good 2026 UK commercial solar PPA rate is 9–14 p/kWh for a 250 kWp+ on-site deal with an investment-grade off-taker on a 20–25 year term — versus 28–32 p/kWh for grid import. Behind-the-meter industrial deals can reach 8–11 p/kWh; smaller or sleeved deals run 14–20 p/kWh.
How much is a PPA per kWh in the UK?
UK solar PPA tariffs in 2026 range from about 8 p/kWh (large behind-the-meter) to 22 p/kWh (small in-front-of-meter or sleeved), with most mid-size on-site deals landing 11–15 p/kWh year-1. Utility-scale corporate PPAs are quoted in £/MWh, typically £42–£60/MWh (4.2–6 p/kWh).
Are PPA rates negotiable?
Yes, especially for systems above 250 kWp and investment-grade off-takers. The headline tariff, escalator, term and exit options all sit on the table during heads of terms.
Why is my PPA rate higher than the headline range?
Most commonly: small system size (<100 kWp), short site tenure, sub-investment-grade covenant, lower northern UK yield, or DNO connection issues. The headline ranges assume a clean, mid-size deal.
Should I always pick the lowest PPA rate?
No. A low headline tariff with a 5% escalator costs more over 25 years than a higher tariff with 0%. Always model cumulative cost, not just year-1 p/kWh.
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