What is a Power Purchase Agreement (PPA)?
A Power Purchase Agreement (PPA) is a contractual arrangement between a business and a solar energy provider, where the business purchases electricity generated by a solar PV system at a pre-agreed rate. PPAs allow businesses to access renewable energy without large upfront capital costs, offering long-term energy price stability, predictable electricity bills, and sustainability benefits.
PPAs are widely used across the UK, from small rooftop installations to large-scale commercial solar projects, providing both financial and environmental advantages.
Benefits of Power Purchase Agreements
Businesses entering into a solar PPA enjoy multiple advantages:
- Cost Predictability – Fixed electricity rates reduce exposure to energy price fluctuations
- Reduced Upfront Investment – The PPA provider owns and maintains the solar PV system, eliminating the need for large capital outlay
- Long-Term Energy Price Stability – Lock in electricity rates for 10–25 years, protecting budgets from rising grid costs
- Environmental Impact – Contribute to carbon footprint reduction and annual CO₂ savings, supporting corporate sustainability goals
- Government Incentives – PPAs may leverage renewable energy guarantees of origin, SEG payments, and tax incentives to improve ROI
- Optimised System Performance – Professional maintenance and monitoring ensure high system efficiency and a strong performance ratio
- Battery Storage Integration – Enhances self-consumption and energy reliability, maximising savings
How a Solar PPA Works
- Site Assessment and Feasibility – The provider evaluates your property, energy consumption profile, and grid connection options
- System Design – Includes solar PV panel layout, inverter selection, mounting solutions, and optional battery storage integration
- Installation – The PPA provider manages turnkey installation with minimal disruption, including scaffolding, electrical integration, and commissioning
- Electricity Supply – You pay for the electricity generated at the agreed PPA rate
- Monitoring and Maintenance – Continuous performance monitoring and annual maintenance ensure efficiency and longevity
Cost, Financing, and Return on Investment of PPAs
Understanding the financial implications of a Power Purchase Agreement (PPA) is key for businesses considering commercial solar installations. PPAs provide a cost-effective route to renewable energy with minimal upfront investment while offering predictable returns over the contract term.
Key Financial Considerations
- No Large Capital Outlay – The PPA provider covers the cost of solar PV panels, inverters, mounting systems, and installation, reducing the business’s upfront expenditure
- Operations & Maintenance Costs – PPAs typically include O&M packages, ensuring system efficiency, performance warranty coverage, and professional electrical integration without additional costs
- Annual Investment Allowance & Tax Incentives – Businesses may leverage capital allowance tax benefits and government solar incentives to improve the financial viability of the project
- Performance Ratio & System Efficiency – Optimised system design and high-quality equipment maximise energy yield and overall system efficiency, directly impacting ROI
- Payback Period – Depending on system size, energy consumption profile, and contract rates, most PPAs deliver positive cash flow and predictable energy savings from day one
Financing Options
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- Asset Finance – Spread the PPA costs over a fixed term to balance cash flow and budgeting requirements
- Commercial Solar Panel Finance – Tailored financing solutions allow businesses to access solar power while preserving capital for other investments
Tools for Financial Planning
- Solar Panel Calculators – Estimate annual energy generation, projected cost savings, and cumulative return on investment
Use our ROI Calculator
- Feasibility Assessments – Evaluate grid connection considerations, system size, and energy consumption profile to ensure maximum efficiency and profitability
By combining fixed energy rates, minimal upfront costs, and integrated maintenance, PPAs provide businesses with a financially secure and environmentally responsible path to renewable energy adoption.
Power Purchase Agreements for Commercial Solar Installations
PPAs are ideal for businesses of all sizes, whether adopting:
- Rooftop Solar PV Systems – Maximise use of existing roof space while avoiding upfront capital costs.
- Ground-Mounted or Large-Scale Solar Farms – Achieve significant annual output and energy security for industrial facilities.
- Battery-Integrated Solutions – Store surplus energy for peak times or export to the grid.
PPAs are often offered as turnkey solutions, covering installation, maintenance, and performance monitoring, allowing businesses to focus on operations while benefiting from renewable electricity.
power purchase agreement
Frequently Asked Questions
What is a PPA in the UK government context?
PPAs may be supported by government-backed incentives, renewable energy guarantees of origin, and SEG payments to encourage renewable energy adoption.
How does a PPA reduce upfront costs?
The solar provider owns and maintains the system; the business only pays for the electricity consumed, eliminating major capital expenditure.
Are maintenance and monitoring included?
Yes, PPAs typically include a full maintenance manual, remote monitoring, and professional electrical integration.
Can I see an example of a PPA?
Power Purchase Agreement PDFs and sample agreements are often provided by solar companies to outline terms, rates, and operational details.
How long do PPAs last?
Most commercial solar PPAs in the UK run between 10–25 years, providing long-term energy cost stability.
Are PPAs suitable for all business types?
Yes, from offices to factories, farms, and large-scale commercial projects. Feasibility assessments ensure the system meets energy requirements efficiently.
Power Purchase Agreement Companies in the UK
Leading providers offer:
- Full feasibility assessments and site surveys.
- Customised system design with CAD visuals and schematics.
- Turnkey installation, including mounting solutions, inverters, and battery storage.
- Performance monitoring and maintenance to maximise ROI.
- Support with government incentives, grants, and renewable energy certificates.
Why Choose a Solar PPA?
- Predictable Costs & Positive Cash Flow – Lock in energy prices and reduce annual electricity bills.
- Sustainability & Net Zero Goals – Demonstrable CO₂ reductions and improved brand image.
- Turnkey Installation & Ongoing Support – All technical and operational aspects managed by the provider.
- Scalable & Flexible Solutions – PPAs are suitable for small rooftop installations, mid-scale commercial systems, and large solar farms.
Benefits of Power Purchase Agreement (PPA)
ZERO UPFRONT COST
We fully fund your commercial solar PV system, ensuring you start saving from the very first day
IMMEDIATE SAVINGS ON ELECTRICITY BILLS
Solar electricity is procured at a significantly lower rate compared to what your current energy provider offers
ZERO COST ‘GREEN’ CREDENTIALS
Enhance your company’s environmental responsibility and foster positive relationships with environmentally conscious customers, suppliers, and staff
NO MAINTENANCE OR INSURANCE COSTS
We actively oversee the system through a comprehensive, long-term operation and maintenance contract, which includes providing insurance coverage—all without any cost to you
LONG-TERM PROTECTION + FORECASTING
The unit price for electricity generated by the solar PV system will increase only in accordance with RPI, enabling you to budget more effectively
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