PPA tariff UK 2026: what a solar PPA costs per kWh
A PPA tariff is the price per kilowatt-hour you pay for the electricity a provider-owned solar array supplies under a power purchase agreement. In 2026 UK on-site solar PPA tariffs sit at an indicative 8–22 p/kWh in year one — well below the 21–25 p/kWh most commercial buyers pay for delivered grid electricity.
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 21–25 p/kWh for grid import. That is a saving of 7–16 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 21–25 p/kWh, so a PPA typically cuts your electricity cost 35–60% on self-consumed units.
What is a PPA tariff?
A PPA tariff is the unit price in a power purchase agreement: what you pay for each kilowatt-hour a provider-owned solar array supplies to your site. The provider funds, builds, owns and maintains the system; you agree to buy what it generates, at the tariff, for the length of the contract. For an array at your own premises the tariff is quoted in pence per kWh. For a utility-scale corporate deal the same idea is quoted as a strike price in pounds per megawatt-hour.
Three things separate a PPA tariff from the unit rate on your electricity bill:
- It covers only the array's output. Everything else you use still arrives from your supplier at your normal rate, so a PPA sits alongside your supply contract rather than replacing it.
- It is set for the term, not the season. The tariff is either fixed for the whole contract or moves by a formula agreed on day one, instead of re-pricing at every supply renewal.
- Behind-the-meter units skip the network. Solar consumed on the site never crosses the public grid, so it carries none of the network charges built into a delivered grid price — the main reason an on-site tariff can sit so far below what you pay your supplier.
That third point causes most of the confusion when buyers compare offers. A pence-per-kWh tariff for on-site generation and a delivered grid rate are different kinds of number, and a utility-scale strike price is different again, because network charges, levies and supplier margin still sit on top of it. A comparison only works when each figure is set against the part of your bill it actually displaces.
PPA tariff structures: fixed, escalating and index-linked
Every UK PPA tariff answers one drafting question: what happens to the price after year one? There are four common answers, and they share inflation risk between you and the provider very differently.
| Tariff structure | How the price moves | Who carries inflation risk | What to check in the offer |
|---|---|---|---|
| Fixed (flat) | The same p/kWh for the whole term | The provider | A higher starting tariff, because the provider prices in the inflation it absorbs |
| Fixed escalator | Rises by a set percentage each year, such as 2% | Shared, and known on day one | The tariff in the final year, not the first |
| Index-linked (CPI or RPI) | Rises each year with a published inflation index | You | Which index, which base month, and whether there is a cap |
| Collared | Index-linked, but held between a floor and a cap | Shared, within the collar | How wide the collar is, and whether the floor can ratchet upwards |
The escalator decides more of your lifetime cost than the headline tariff does. A 12.0 p/kWh tariff rising at 2% a year reaches 17.48 p/kWh in year 20; the same tariff held flat is still 12.0 p/kWh. The Bank of England's inflation target is 2%, but CPI rose 3.1% and RPI 3.4% in the 12 months to August 2026 — so a fixed escalator near 2% is a price you can agree today, while an index-linked tariff is a bet on where inflation actually lands. If an offer is RPI-linked, note that the ONS does not class RPI as an accredited official statistic, and plans to bring CPIH methods into it from 2030 at the earliest; CPI is the index the Bank of England targets. The cumulative cost of each path over a 20-year term is worked through on our solar PPA rates page, and the trade-off is set out structure by structure in fixed versus floating escalators.
Escalator arithmetic is modelled: 12.0 × 1.0219 = 17.48 p/kWh in year 20. Inflation target: Bank of England — monetary policy and inflation. CPI and RPI: ONS — Consumer price inflation, August 2026 (series D7G7 and CZBH). Verified 26 Sep 2026.
PPA charges beyond the tariff
What are PPA charges? For most of the contract the only payment is the tariff multiplied by the units the array delivers. A PPA can still create other payment obligations, and an offer that looks cheapest on its headline tariff can cost more once they are counted. These are the lines to find in any draft:
- Your continuing supply bill. Units the array does not cover still come from your supplier, with its standing charges, network costs and levies. A PPA shrinks that bill; it does not replace it.
- Deemed generation. If you switch the array off or cannot take its output — for roof works, a site shutdown or a fault on your side of the meter — contracts commonly require you to pay for the generation that would otherwise have occurred.
- Minimum offtake. Some contracts set a floor on the volume you pay for each year, whatever you actually use.
- Roof works and relocation. Re-roofing under a live array means removing and refitting it. Who pays, and whether the term is extended to compensate the provider, is a negotiated clause.
- Early exit and buy-out. Selling the building, closing the site or buying the system before the term ends triggers a formula payment, usually tied to the provider's outstanding investment. See what happens at the end of a PPA.
- Business rates. Solar plant is excluded from rateable value until 31 March 2035, but the land and fixings around it are not, and the contract should say who carries any rates liability — particularly after 2035. Our guide to business rates on a solar PPA sets out the rules in each nation.
None of these is unusual, and none is a reason to avoid a PPA. They are the reason to compare offers on the whole contract rather than the p/kWh line — and the reason a lower tariff paired with an onerous deemed-generation clause can turn out to be the more expensive deal.
PPA tariff by system size (2026)
| 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) | £55–£75/MWh indicative (5.5–7.5 p/kWh) | £6.5m+ | 9,500,000 kWh/yr |
Year-1 indicative, on-site PPA, investment-grade off-taker, 20-year term — this site's advisory bands. Capex, generation and 20-year costs for each band are on the solar PPA rates page. Last reviewed 28 September 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) | 13–22 p/kWh | −40% to −50% | 15–25 years |
| Sleeved PPA | 11–20 p/kWh | −30% to −60% | 10–15 years |
| Corporate PPA (utility-scale) | £55–£75/MWh indicative (5.5–7.5 p/kWh) | −65% to −78% | 10–20 years |
| Virtual/synthetic PPA | £55–£75/MWh strike, indicative (5.5–7.5 p/kWh) | 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 £114,000/yr at a 24 p/kWh grid rate. That is around £57,000 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
PVGIS puts an optimally tilted array at about 1,066 kWh per kWp a year in Southampton and 855 in Glasgow. The provider recovers the same capex from fewer units further north, so the tariff rises to compensate.
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.
How UK PPA rates vary by region
Two identical rooftops can be offered very different PPA tariffs purely because of where they sit. A PPA rate is set so the funder recovers its capital and target return from the kWh the array actually generates — so the lower the annual yield, the more each unit has to earn, and the higher the p/kWh the funder needs. Geography drives yield more than any other fixed factor on your site.
As a rule of thumb, a well-oriented commercial array in southern England produces roughly 1,000–1,080 kWh per kWp per year, the Midlands and Wales around 900–1,000, and much of northern England, Scotland and Northern Ireland closer to 800–900 — a spread of about 20–25% top to bottom. Because the funder's fixed costs are spread over fewer units in the north, the same deal structure can price 1–2 p/kWh higher there than on an equivalent southern roof. That is a genuine physical effect, not a negotiating position — but it is exactly why a benchmark rate quoted for "the UK" tells you little until it is localised to your postcode and roof.
| Region | Indicative yield (kWh/kWp/yr) | Relative effect on p/kWh |
|---|---|---|
| South-West & South-East England | ~1,000–1,080 | Lowest (baseline) |
| East of England & London | ~980–1,050 | Broadly baseline |
| Midlands & Wales | ~900–1,000 | Slightly higher |
| Northern England | ~850–920 | Higher |
| Scotland & Northern Ireland | ~800–880 | Highest |
Figures are illustrative planning ranges for typical unshaded commercial arrays; your own yield depends on pitch, orientation, shading and inverter design. Model your site precisely with our PPA savings calculator.
Yield is only half the regional story. The other half is the grid. In parts of the country the local Distribution Network Operator (DNO) has little spare capacity, so an export or grid connection can be capped, delayed, or require a paid reinforcement — and a constrained connection changes the economics of a funded deal. Where export is limited, funders lean more heavily on your on-site consumption to make the numbers work, which favours sites that use most of what they generate during daylight. If your connection is constrained, a well-sized battery or a self-consumption-led design can matter more to your tariff than the region itself. We cover how connection capacity feeds through to the headline number in our solar PPA cost guide.
What's actually inside a PPA tariff
The single p/kWh figure on your offer is a build-up of several distinct costs, each of which the funder has to recover over the life of the contract. Understanding the components tells you which parts are genuinely fixed and which are where providers compete — and it is the fastest way to see why two quotes for the same roof differ.
| Component | What it pays for | Roughly how much of the rate |
|---|---|---|
| Asset capex amortisation | Recovering the panels, inverters, mounting, cabling and installation over the term | Largest share |
| Investor return (IRR) | The funder's target return on capital at risk | Second largest |
| Operations & maintenance | Monitoring, servicing, inverter replacement provision, panel cleaning | Modest |
| Insurance | Asset, public liability and business-interruption cover for the array | Small |
| Metering & administration | Settlement-grade metering, billing and contract management | Small |
| Balancing & imbalance | Only on sleeved / off-site PPAs: supplier costs for shaping and imbalance | Sleeved deals only |
Three things follow directly from this build-up. First, the capex and IRR blocks are the bulk of your rate, which is why the cost of capital in the wider market — and the strength of your own covenant, since it changes the funder's perceived risk — moves the number more than any line-item haggling. Second, O&M, insurance and metering are largely fixed pounds per year, so on a small array they are spread over fewer units and lift the p/kWh, whereas a large system dilutes them — a big part of why bigger roofs quote lower. Third, the balancing and imbalance component only appears on sleeved or off-site PPAs, where power is wheeled through the grid via a licensed supplier; a behind-the-meter on-site PPA has no balancing cost because the electricity never touches the public network.
The one component that is not shown as a flat line here is the escalator — the annual uplift applied to the year-1 rate. It does not change your opening number but it compounds every cost above over the term, so it materially changes lifetime value. We break down how escalators are structured, indexed and capped in our dedicated guide to PPA escalators and indexation.
How to benchmark a 2026 PPA quote
A tariff is only as good as the terms wrapped around it. A low year-1 rate paired with an aggressive escalator, a punitive buy-out or a weak performance guarantee can cost far more over 15–25 years than a slightly higher opening rate on clean terms. Run every offer through the same checklist before you compare the headline p/kWh — and compare like-for-like on structure, since an on-site rate and a sleeved rate are not directly comparable.
- Year-1 rate and structure — confirm the opening p/kWh and whether it is an on-site (behind-the-meter) or sleeved/off-site deal, so you are comparing the same product.
- Escalator basis and cap — is the annual uplift a fixed percentage, CPI/RPI-linked, or hybrid, and is there a stated ceiling? An uncapped index-linked escalator is an open-ended liability.
- Contract term — the length (typically 15–25 years) and whether there are break points. A longer term usually buys a lower rate but locks you in for longer.
- Buy-out / early-termination formula — how the price to purchase the array (or exit early) is calculated at set points, and whether that formula is transparent and fixed in the contract rather than "fair market value TBC".
- Performance-ratio guarantee — does the provider guarantee a minimum generation or performance ratio, and what is the remedy (rebate or make-good) if the system underperforms? This is what protects you from paying for kWh that never arrive.
- Assignment on sale of the property — can the PPA transfer cleanly to a new owner or tenant if you sell or vacate, and on what terms? An unassignable PPA can complicate a future property transaction.
- End-of-term options — what happens at expiry: free transfer of the asset, a nominal buy-out, removal, or an extension — and who bears any decommissioning cost.
- Maintenance, insurance and metering responsibilities — confirm in writing that O&M, insurance and metering sit with the funder (as the tariff build-up assumes) and are not quietly passed back to you.
Score each competing offer against all eight points, not just the opening rate, and you will usually find the genuinely cheapest deal over the life of the contract is not the one with the lowest year-1 number. If you would like an independent, provider-neutral read on how a specific quote stacks up, send us the offer for a benchmarking review — we compare it against current 2026 market terms rather than any single funder's book.
Where the figures on this page come from
Market tariffs are negotiated and unpublished, so the p/kWh bands on this page are this site's indicative advisory bands, not an official statistic. Every other figure traces to a public source:
| Figure on this page | Value | Source | Verified |
|---|---|---|---|
| Delivered grid import benchmark | 21.42–25.00 p/kWh by consumer size band; all-band average 24.14 p/kWh | DESNZ Quarterly Energy Prices, table 3.4.2 (non-domestic, including CCL, excluding VAT), Q1 2026, last updated 30 June 2026 | 26 Sep 2026 (no later edition) |
| Solar yield, optimum pitch | 1,066 kWh/kWp (Southampton) to 855 kWh/kWp (Glasgow) | PVGIS v5.3 (EU Joint Research Centre) — PVGIS-SARAH3 radiation data, 1 kWp crystalline silicon, 14% system loss, optimised angle | 26 Sep 2026 |
| Utility-scale strike band | £55–£75/MWh indicative, anchored on AR7a solar at £65.23/MWh (2024 prices) | DESNZ — Contracts for Difference Allocation Round 7a results | 26 Sep 2026 |
| Escalator example | 12.0 p/kWh at 2% a year = 17.48 p/kWh in year 20 | Modelled arithmetic | — |
| Inflation target | 2% (CPI) | Bank of England | 26 Sep 2026 |
| CPI and RPI, 12 months to August 2026 | 3.1% and 3.4% | ONS — Consumer price inflation, August 2026 | 26 Sep 2026 |
| On-site tariff band | 8–22 p/kWh year one, by structure and size | This site's indicative advisory band — not a market survey | — |
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.
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 21–25 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 deals), with most mid-size on-site deals landing 11–15 p/kWh year-1 (this site's indicative bands). Utility-scale corporate PPAs are quoted in £/MWh, typically £55–£75/MWh indicative (5.5–7.5 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.
What is a PPA tariff?
The unit price in a power purchase agreement: what you pay per kWh for the electricity a provider-owned solar array supplies to your site. It covers only the array's output — the rest of your electricity still comes from your supplier. This site's indicative band for 2026 UK on-site solar PPA tariffs is 8–22 p/kWh in year one.
What are PPA charges?
Beyond the p/kWh tariff, a PPA can oblige you to make deemed-generation payments if you curtail the array, early-termination or buy-out payments if you exit, and contributions to removing and refitting panels during roof works. Your residual electricity supply bill also continues. Compare offers on all of these, not on the headline tariff alone.
Is a fixed or index-linked PPA tariff better?
A fixed tariff starts higher but never rises; an index-linked tariff starts lower and follows CPI or RPI. A 12.0 p/kWh tariff with a 2% annual escalator reaches 17.48 p/kWh by year 20. Model the whole term against your own view of grid prices rather than comparing year one.
Go deeper on PPA rates
Get a tariff specific to your site
Indicative ranges only get you so far. A 60-second form gives us enough to return a real provider shortlist with site-specific tariffs.
Get an indicative PPA tariffOf the eight drivers behind a quoted rate, credit is the one you can most readily improve before you go to market — how covenant strength moves the tariff sets out what underwriters actually score.
Agricultural sites tend to price in the low teens, and an indicative 13.5 p dairy deal shows how a 25-year term and an asbestos roof were handled in a composite 145 kWp case.
Crossing the megawatt line usually moves a quote into the 10–13 p/kWh range, and 1 MWp PPA cost and tariff band shows the tenure and consumption conditions attached to reaching it.
At the top of the market rates are quoted per megawatt-hour rather than in pence, and corporate PPA pricing in £/MWh explains why a £55–£75/MWh headline is not directly comparable with a rooftop tariff.
To see the eight drivers above resolve into a single number, read a 220 kWp distillery tariff build-up.
Small systems spread the fixed costs of metering, legals and O&M across fewer kilowatt-hours, which is why what 50 kWp actually prices at sits above the large-scheme bands.
Everything above prices a physical, on-site tariff; virtual PPA strike pricing works completely differently, because nothing is delivered and the whole contract is cash-settled against a wholesale index.
For the full rates table by size, including what happens to the number over a 20-year term once an escalator is applied, see the dedicated cost page.
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PPA tariff UK 2026: what a solar PPA costs per kWh — tell us about your site and we'll return an indicative p/kWh tariff for it. Reply by email within one working day.