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 debt servicing.
Why providers prefer longer terms
A solar PPA is a debt-style instrument: the provider raises capital at 5-7% and recoups it over the term via your kWh payments. The longer the term, the more years to amortise and the lower the tariff they can offer.
Why 15 years is the minimum
Below 15 years the maths typically doesn't work. Capex pay-back at 12-15 p/kWh requires 12-14 years assuming reasonable irradiation. So a 10-year PPA gives the provider just 0-3 years of IRR — most decline.
When 25 years suits you
- You own your site freehold or have a 25+ year lease.
- Your business has long-term visibility (manufacturing, agriculture, healthcare, public sector).
- Your covenant is strong enough to support the provider's funding stack.
- You want the lowest possible p/kWh today.
When 15 years suits you
- You're a tenant with a 15-year lease (matching is common).
- You want flexibility to renegotiate / re-tender mid-asset-life.
- You're using the PPA as a stepping stone before refinancing into ownership.
Match your PPA term to your business plan
Send us your business horizon and site tenure — we'll match you to providers comfortable at that term length.
Get an indicative PPA tariffBecause a 25-year term will outlive several governments and several energy policies, the contract needs a change-in-law clause that shares policy risk rather than dumping every new levy on the off-taker.
Long institutional tenure is why education estates suit the top of the term range — a 25-year deal across a trust estate shows how that played out in an anonymised composite trust.
Matching term to business plan is easier with a comparator to hand — see the term chosen on a 220 kWp deal and the reasoning behind it.
Larger schemes amortise over longer contracts, and you can see that trade-off priced out in term and tariff at 2 MWp.
Term length and indexation are one decision, not two: the escalator applied each year compounds over whatever term you agree.
Terms tend to be shorter where the agreement is a financially settled contract rather than one underwriting a physical asset on your roof.
Check what your roof could earn under a PPA
Solar PPA Term: Why 15–25 Years and How to Negotiate It — tell us about your site and we'll return an indicative p/kWh tariff for it. Reply by email within one working day.