Commercial solar PPAs in the UK — the £0-upfront funding guide
A Power Purchase Agreement (PPA) is the most common way UK businesses put solar on the roof without spending a penny of CapEx. This guide covers how a commercial solar PPA actually works, what a bankable contract looks like, how the numbers compare to asset finance and outright purchase, and where PPAs fit — and don't fit — for UK commercial property.
By the Solar Britain commercial team · Published 20 July 2026.
Short answer
A commercial solar PPA lets a third-party funder install, own and maintain a solar system on your roof at zero cost to you. You buy the electricity it generates at a fixed unit rate, typically 20–40% below your current grid import price, for 15–25 years. There is no CapEx, no debt, no maintenance liability and no balance-sheet asset — you pay only for the solar electricity your building actually consumes.
A PPA fits well when…
- You want solar on the roof without touching CapEx budgets or covenants.
- Your electricity spend is £75,000+ per year and daytime consumption is high enough to use most of the generation on site.
- You occupy the building on a long lease (10+ years remaining) or own the freehold.
- You'd rather pay a predictable, escalator-capped unit rate than manage the asset yourself.
- You want the maintenance, insurance and performance risk sitting with a specialist, not your facilities team.
A PPA is usually the wrong tool if…
- Sites with short remaining lease terms and no landlord willing to co-sign.
- Very small systems (under ~100 kWp) — the legal and setup cost is disproportionate to the funder's return.
- Businesses that want to maximise lifetime savings and have the balance sheet for a cash or finance-funded purchase.
- Sites with structurally constrained roofs where the funder can't justify the 25-year investment.
How a commercial solar PPA works, step by step
A PPA is a long project with a short list of decisions. Here is the seven-stage process from first survey to buying power at the PPA rate.
- 1
Roof and load assessment
A PPA funder will only invest in a system that will actually generate for 25+ years. The first step is a desktop and physical survey — roof age, structural load, orientation, shading and available area — to confirm the site can host a bankable array.
- 2
Site energy profile and tariff design
The funder analyses your half-hourly consumption and current import tariff. The PPA rate is set as a fixed discount to your grid price (typically 20–40% below your current unit rate), with an agreed annual escalator (often CPI-linked or a flat 2–3%).
- 3
Heads of terms and credit check
The funder issues heads of terms covering system size, tariff, escalator, contract length and buy-out schedule. A light-touch credit check on the trading entity confirms you can commit to the offtake for the term.
- 4
Legal agreements: PPA and roof lease
Two documents get signed: the Power Purchase Agreement (offtake and tariff) and a Roof Lease or Licence granting the funder the right to install, own and access the array. If you lease the building, your landlord will also need to sign a Deed of Consent.
- 5
Design, planning and DNO
The funder's EPC contractor handles detailed design, structural sign-off, permitted-development check and the G99 grid application. On typical commercial sites this takes 8–14 weeks and happens at the funder's cost.
- 6
Install and commissioning
Installation on a mid-sized commercial roof (250–500 kWp) takes 4–8 weeks. Commissioning includes DC/AC testing, DNO witness and the handover of a monitoring portal so you can see generation and consumption in real time.
- 7
Offtake starts — you buy power at the PPA rate
From day one after commissioning, every kWh the array produces that your building uses is billed at the fixed PPA rate. Any surplus is exported and paid to the funder. You keep buying grid power for everything the solar doesn't cover.
PPA vs asset finance vs cash purchase
The three main ways UK businesses fund commercial solar. Each has a very different cashflow, risk and ownership profile.
| Solar PPA | Asset finance / lease | Cash purchase | |
|---|---|---|---|
| Upfront capital | £0 — funder pays 100% | £0 upfront, monthly repayments | Full CapEx from the balance sheet |
| Who owns the system | The PPA funder for the term | You own it (secured against the asset) | You own it outright |
| Maintenance and insurance | Included — funder's responsibility | Your responsibility (or bundled O&M) | Your responsibility |
| Performance risk | Funder carries it — you only pay for kWh delivered | You carry it — repayment continues regardless | You carry it |
| Typical savings vs. grid | 20–40% off day-one unit rate | 60–80% once repaid; less during term | 80–95% for the life of the system |
| Contract length | 15–25 years | 5–10 years | N/A |
| Balance-sheet treatment | Off-balance-sheet in most cases (operating cost) | On-balance-sheet asset and liability | On-balance-sheet asset |
| End of term | Buy out, extend, or transfer to next occupier | You own the asset free and clear | Continues generating for you |
What a bankable UK solar PPA contract looks like
A well-structured PPA is boring in all the right ways. These are the clauses that decide whether the deal you're signing is a genuine £0-upfront solar contract, or a finance product in a PPA wrapper.
Term length
Most UK commercial PPAs run 15, 20 or 25 years. Longer terms give the funder a lower unit rate; shorter terms give you flexibility and an earlier buy-out. 20 years is the current market standard.
Tariff and escalator
The PPA unit rate (p/kWh) is fixed at signing, typically 20–40% below your current grid import rate. It escalates each year — usually CPI-linked with a floor and cap (e.g. 0% floor, 4% cap) or a flat 2–3% annual step. Escalators matter more than the day-one discount over the full term — model both.
Deemed vs. metered offtake
Almost every modern PPA is metered — you pay only for kWh your building actually uses. Avoid 'deemed' contracts that bill you for everything generated whether you use it or not; those transfer performance risk back to you.
Buy-out schedule
PPAs include pre-agreed buy-out prices at set milestones (typically years 5, 7, 10 and 15). The buy-out cost falls each year as the funder recovers their investment. Buying the system out early converts your PPA into an owned asset generating near-free power.
Change of occupier / novation
If you sell or vacate the building, the PPA is designed to novate to the next occupier — the array stays on the roof and the new tenant takes over the offtake. This is a feature, not a problem: a lower-cost energy supply is an asset for the incoming occupier.
Roof lease / licence
The funder needs the legal right to install, own, access and remove the array. This is granted through a roof lease (typically 20–25 years matching the PPA) or a lighter roof licence. Freeholders sign directly; leaseholders need landlord consent.
Maintenance and monitoring
Included as standard. The funder pays for cleaning, inverter replacements, monitoring, insurance and remedial works. You get real-time monitoring access; they get a contractual performance obligation to keep the system generating.
Buying back generated power at a fixed discount
The core of every solar PPA is a single number: the PPA unit rate. You agree it at signing, and every kWh the array generates that your building uses is billed at that rate for the full term.
- Day-one discount. The PPA rate is set as a percentage below your current grid import price. In 2026 UK deals, day-one discounts of 25–35% are typical for well-sited 250 kWp–1 MWp systems.
- Escalator. The rate steps up each year on a fixed basis — either CPI with a cap (e.g. CPI collared at 0–4%) or a flat 2–3% annual increase. Because grid prices historically rise faster, the effective discount usually widens over the term.
- Metered offtake only. You pay for kWh your building actually consumes. Anything the array exports to the grid is billed and paid to the funder — export revenue is not yours.
- Grid supply continues. Solar covers 30–60% of a typical commercial site's annual consumption; the rest still comes from your normal grid supplier at their tariff. A PPA does not replace your supplier relationship — it sits alongside it.
Maintenance, insurance and performance guarantees
The single biggest operational benefit of a PPA is that the funder — not you — owns the risk of the array performing for 25+ years. In practice this means:
- Full O&M included. Cleaning, inverter servicing and replacements, monitoring and any emergency call-outs are the funder's cost. Inverters typically need replacing once during a 25-year PPA, at roughly 10% of original CapEx — under a PPA, that's not your bill.
- Insurance bundled. The funder insures the array against damage, theft, wind and fire. You don't need to add solar cover to your buildings policy.
- Performance guarantee. Because the funder is only paid for kWh delivered, every hour of downtime costs them money. Modern PPAs include contractual generation targets (typically a P90 forecast) with rebate clauses if the array underperforms.
- Monitoring transparency. You get live access to a monitoring portal — real generation, real consumption, real bills. Any dispute is settled by the meter, not by argument.
FAQ — commercial solar PPAs in the UK
What is a commercial solar PPA?
A Power Purchase Agreement (PPA) is a long-term contract where a third-party funder installs, owns and maintains a solar system on your roof at no cost to you, and sells you the electricity it generates at a fixed discount to your grid tariff. You pay only for the solar power you actually consume, for the duration of the contract (typically 15–25 years).
How much cheaper is a PPA than grid electricity?
UK commercial PPAs typically deliver a 20–40% discount against your day-one grid import rate, with a capped annual escalator (often CPI-linked or 2–3% flat). Because grid prices historically rise faster than PPA escalators, the discount tends to widen over the term — most 20-year PPAs deliver total savings of 40–60% versus doing nothing.
Do I really pay nothing upfront?
Yes. In a genuine solar PPA, the funder pays 100% of the design, hardware, installation, DNO application, structural works, monitoring and 25 years of maintenance. You sign a contract to buy the power at an agreed unit rate — there is no CapEx, no loan, no monthly finance repayment and no asset on your balance sheet.
Who is responsible for maintenance and repairs?
The PPA funder. Because they only get paid for kWh you consume, they have a direct commercial incentive to keep the system generating at peak performance for the full term. Cleaning, inverter replacements, monitoring, insurance and any remedial works are all included at no additional cost.
What happens at the end of the PPA term?
You typically have three options: (1) buy the system out at a pre-agreed residual value and own it outright — after 20+ years this is usually low single-digit percentages of the original CapEx, (2) extend the PPA for another 5–10 years at a renegotiated rate, or (3) ask the funder to remove the system and hand the roof back.
Can I buy out the PPA early?
Yes — all reputable UK PPAs include a pre-agreed buy-out schedule with fixed prices at set milestones (commonly years 5, 7, 10 and 15). Buying out early converts the PPA into an owned asset producing near-free power for the remaining 10–20 years of system life. Many businesses model an early buy-out from day one.
PPA vs asset finance — which is better?
Asset finance gives you ownership and a bigger lifetime saving, but you carry the performance, maintenance and insurance risk and the asset sits on your balance sheet. A PPA is off-balance-sheet, hands-off, and pushes all risk to the funder — you accept a smaller lifetime saving in exchange. Businesses choose asset finance when CapEx is available and they want to maximise return; PPAs when they want savings today with zero operational overhead.
Can I get a PPA if I lease the building?
Yes, provided you have at least 10–15 years remaining on the lease and your landlord will sign a Deed of Consent. Increasingly, landlords actively welcome tenant-driven PPAs because a rooftop solar system improves the EPC rating and asset value — many now have a standard consent process.
Is a PPA on my balance sheet under IFRS 16?
In most cases, a UK solar PPA is treated as a service contract (operating expense) rather than a lease, because the funder retains substantive rights over the asset and the offtake is metered by consumption. Some structures do trigger IFRS 16 lease treatment — always run the specific contract past your auditor before signing.
What size system does a PPA make sense for?
UK PPAs are viable from around 100 kWp upwards, with the sweet spot at 250 kWp to 2 MWp. Below 100 kWp the legal and origination cost eats too much of the funder's return; above 2 MWp specialist utility-scale PPA structures are used. If your annual electricity spend is £75,000 or more, you're almost certainly in PPA territory.
See if your site qualifies for a £0-upfront solar PPA
The quickest way to know whether a PPA works for your building is to size the system and check the annual spend. Two minutes in the calculator gives an indicative system size and saving; the commercial team then confirms PPA feasibility, expected day-one discount and typical funder appetite for your sector and site.