A Power Purchase Agreement (PPA) lets businesses install solar panels with zero capital expenditure. A third-party investor funds, installs, owns, and maintains the system on your roof. You simply buy the electricity generated at a fixed rate — typically 15-20p/kWh compared to 25-29p/kWh grid electricity. Savings from day one, no risk, no maintenance responsibility.
The investor pays for everything — panels, installation, inverters, and ongoing maintenance. They retain ownership of the equipment throughout the contract term (typically 15-25 years).
Your business provides the roof space and agrees to purchase the solar electricity generated at a pre-agreed rate. This rate is typically 15-20p/kWh and may include an annual escalator of 1-3%.
The savings are immediate. You pay less per kWh for solar electricity than grid electricity. On a typical commercial system, this saves 20-35% on the portion of your electricity bill covered by solar generation.
| Factor | PPA (Zero Upfront) | Outright Purchase |
|---|---|---|
| Upfront cost | £0 | £70,000-£400,000+ |
| Savings from day one | Yes (20-35%) | Yes (40-70%) |
| Maintenance | Included | Your responsibility |
| Tax benefits (AIA) | No (you don't own it) | Yes (100% first year) |
| Contract length | 15-25 years | No contract |
| Best for | No capital / risk averse | Maximum long-term savings |
PPAs are particularly popular with schools (public sector cannot always fund capital projects), hotels (preserving capital for refurbishment), and warehouse operators (landlords unwilling to invest in tenant improvements).
Options typically include: purchasing the system at fair market value (heavily depreciated after 15-25 years), extending the PPA at renegotiated rates, or having the equipment removed at the investor's cost. Most businesses choose to purchase — a 20-year-old system with 15+ years of useful life remaining can be bought for a fraction of original cost.
Most PPA providers require a minimum system size of 50-100 kWp to make the investment worthwhile. This typically means a roof area of at least 300-600m². Smaller businesses may find lease or hire purchase more accessible.
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Commercial Solar · Schools · Hotels · Warehouses · Farm Buildings · Factories · Restaurants · Hospitals
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