Solar Power Purchase Agreement (PPA)

A solar Power Purchase Agreement, or PPA, allows an organisation to benefit from solar energy without paying the upfront cost of installing the system. A third party funds, owns and maintains the solar PV system, while the customer buys the electricity generated at an agreed rate.

Under a solar PPA, the system is installed on your site and generates electricity for your organisation to use. Instead of purchasing the system outright, you buy the electricity it produces, usually at a rate lower than standard grid electricity. This can help reduce energy costs without capital expenditure.

A PPA may be suitable if your organisation has strong daytime electricity demand, suitable roof or land space, and wants to reduce energy costs without upfront investment. It is often used by businesses, schools, public sector organisations and larger sites with predictable energy consumption.

Savings depend on your current electricity tariff, energy usage, system size, agreed PPA rate and how much of the solar electricity you use on site. Organisations with high daytime demand often achieve stronger savings because they can use more of the electricity generated directly.

Solar PPAs commonly run for a long-term period, often between 10 and 25 years. The exact length depends on the agreement, system size, funding model and commercial terms.

At the end of the agreement, options may include extending the PPA, purchasing the system, renewing the arrangement or having the system removed. The available options should be clearly set out in the contract before the agreement begins.

Yes. Maintenance, monitoring and system performance management are typically included in a solar PPA. Since the system owner is responsible for the asset, they usually manage ongoing servicing and repairs throughout the agreement.

Risks are generally manageable when the agreement is properly structured, but they depend on contract terms, electricity usage, site suitability and long-term business plans. It is important to review the agreed electricity rate, contract length, responsibilities and end-of-term options before proceeding.

Ownership or long-term control of the site is usually important. If you lease the building, landlord consent may be required before installation. Site ownership, roof rights and lease terms should be reviewed early in the process.

A PPA assessment usually requires your site address, electricity consumption data, current electricity costs, roof or land information, site ownership details and operational energy profile. This helps determine whether a PPA is commercially viable and what savings may be achievable.