Solar PPAs explained — free panels, but who really wins?

A Power Purchase Agreement (PPA) is the "no upfront cost" option you'll hear pitched as a no-brainer: a third party pays for the solar system, installs it on your roof, owns and maintains it, and sells you the electricity it generates at a rate below what you pay the grid. You save from day one without spending a penny of capital.

It's a real, useful structure. But "free panels" isn't free — you're trading away the part of solar ownership that makes it such a strong investment. Here's how it actually works and who comes out ahead.

How a solar PPA works

1. A developer funds, installs, owns and operates a solar array on your roof.
2. You sign a long contract — typically 15 to 25 years — agreeing to buy the electricity the system generates.
3. You pay a fixed rate per kWh, usually 15–30% below grid price (in 2026, roughly 10–18p/kWh against a grid rate of 28–32p).
4. The developer handles all monitoring, maintenance, and insurance, and recoups their investment through your electricity payments over the term.

You get cheaper, price-stable electricity and zero capital outlay or hassle. The developer gets a long, secured income stream — and the asset.

The appeal (real benefits)

• No upfront cost. Nothing to fund, so no impact on your capital budget.
• Immediate savings. You pay less per kWh from day one.
• No maintenance burden. The developer owns the risk, the upkeep, and the insurance.
• A price hedge. A fixed PPA rate protects you against grid price rises over the term.

For a business that can't or won't tie up capital, that's a genuinely attractive package.

The trade-offs (the part that's underplayed)

Here's what you give up, and it's significant:

• You don't own the asset — so you don't get the best years. Solar's economics are lopsided: after the ~7–9 year payback, an owned system delivers near-free electricity for another 15+ years. Under a PPA, the developer keeps that upside. You keep paying your PPA rate the whole time. Over 25 years, owning typically delivers far greater total savings than a PPA.
• No capital allowances, no SEG income. The tax reliefs and export earnings go to the owner — the developer — not you. (See grants and funding for what you'd get if you owned.)
• A long lock-in. 15–25 years is a long commitment. It can complicate selling or re-letting the building, and you're tied to the developer's performance and survival for the duration.
• It needs scale and a strong covenant. PPAs typically suit systems of 100 kWp or more (around 600 m² of roof) and businesses with stable finances and a long-term outlook — the developer is effectively lending to you, so expect credit checks.

PPA vs owning — the simple decision

• Own it if you have the capital and a long enough tenure in the building. You get the allowances, the SEG income, and the lucrative back-half years. Best total return.
• PPA if capital is genuinely constrained, you don't want to own/maintain an asset, or you're on a leased building where funding it yourself doesn't work. You sacrifice return for zero cost and zero hassle.
• Asset finance / leasing sits between the two — you spread the cost but usually still own the system and claim the reliefs.

A 2026 note for smaller businesses

Historically PPAs were the preserve of large industrial sites. In 2026, more "productised" PPAs are appearing for mid-sized businesses — shorter terms, bundled services, standardised credit checks. If a PPA appeals but your site is on the smaller side, it's worth asking specifically about these newer products rather than assuming the traditional 25-year deal is your only option.

Sanity-checking a PPA offer

1. What's the PPA rate, and how does it escalate? A rate that climbs steeply each year erodes the saving. Compare the whole escalation profile, not just year one.
2. What's the term, and what are the exit terms? Can you buy the system out, and on what basis? What happens if you sell the building?
3. Who owns the SEG income and the capital allowances? (The developer — confirm you understand you're not getting these.)
4. Have you compared it against owning? Model the owned case too. If you have the capital and the tenure, owning usually wins on total return — the PPA's value is removing the cost and risk, not maximising savings.

The bottom line

A PPA is a fair trade, not a free lunch: you swap the upfront cost, the maintenance, and the price risk for a slice of the long-term reward, which the developer keeps. If capital or appetite for ownership is the blocker, it's a smart way to get solar's benefits anyway. If you can fund it and you'll be in the building for the long haul, owning will almost always leave you better off — run that comparison before you sign 25 years away.

To model the owned case for your building, run the calculator. For how this plays out on a rented site, see solar on a leased building, and for the reliefs you'd capture by owning, grants and funding. Monthly intel: the Brief.

General information, not financial or legal advice. Have a PPA contract reviewed by your solicitor and accountant before signing.