FAQ
Commercial solar PPA FAQs
Last updated 15 October 2026 · Figures indicative
Basics
What is a commercial solar PPA?
A commercial solar PPA (power purchase agreement) is a contract where a solar provider installs, owns and maintains a solar system on your business premises at no upfront cost, and you buy the electricity it generates at an agreed price per kWh. Terms usually run 15–25 years, and the rate is normally set below what you pay for grid electricity.
Is solar really free with a PPA?
No — it is funded, not free. You pay nothing to install the panels, but you pay for every kWh of solar electricity you use at the agreed PPA rate. The saving comes from that rate being lower than your grid tariff, typically 10–14p/kWh against around 24–28p/kWh for business grid electricity in 2026.
Is a solar PPA a loan?
No. A solar PPA is an agreement to buy electricity, not borrowing. You don't own the system and don't make repayments for it — you pay only for the electricity it generates. Some PPAs can still be treated as a lease for accounting purposes, so ask your accountant how IFRS 16 or FRS 102 applies to your agreement.
Who owns the solar panels under a PPA?
The PPA provider (or its funder) owns the system for the length of the agreement and is responsible for maintaining, insuring and monitoring it. At the end of the term you can usually extend the agreement, buy the system at a reduced or nominal price, or ask for it to be removed — check which options your contract gives you.
How long is a solar PPA contract?
Most UK commercial solar PPAs run for 15 to 25 years, with 20 years the most common. Longer terms usually mean a lower p/kWh rate because the provider recovers its investment over more years. Many contracts include buy-out options partway through the term.
What happens at the end of the PPA term?
Typically you choose one of three options: extend the agreement (often at a lower rate), take ownership of the system (sometimes for a nominal fee), or have the provider remove the panels and make good the roof. Panels usually keep generating for 30+ years, so ownership at term-end can be valuable.
Costs & rates
What are solar PPA rates in the UK in 2026?
UK on-site commercial solar PPA rates typically range from about 10p to 14p per kWh in 2026, with large industrial systems (250kWp to 5MW+) often at 8–12p/kWh. Your rate depends on system size, how much sunlight your site receives, the contract term, indexation and your business's credit profile. These are indicative figures — get site-specific quotes.
How much can a business save with a solar PPA?
Savings depend on how much of the solar electricity you use and the gap between your grid rate and the PPA rate. As an example, a site using 180,000 kWh/yr of solar at 12p instead of 26p from the grid saves about £25,000 in year one. Most PPAs deliver savings from day one, but results vary by site.
Do solar PPA rates go up each year?
It depends on the contract. Some PPAs fix the rate for the whole term; others rise each year by a set percentage or in line with an inflation index such as RPI or CPI. Indexed rates usually start lower. Compare the total cost over the term, not just the year-one rate.
How much do commercial solar panels cost to buy?
In 2026, buying a UK commercial solar system typically costs about £850–£1,050 per kWp for around 100kWp, falling to £700–£850 per kWp for systems above 1MWp. A 100kWp system is therefore roughly £85,000–£105,000 installed. Payback is commonly 3–7 years depending on usage and electricity prices.
Eligibility & property
What size business qualifies for a solar PPA?
Funders typically look for around 500m² or more of suitable roof or land, electricity use of roughly 80,000 kWh a year or more with strong daytime demand, at least 15 years' security of tenure, and stable company accounts. Smaller sites may still qualify, or may be better suited to buying a smaller system.
Can a tenant get a solar PPA?
Yes, if the landlord consents and your lease has enough years remaining — usually 15+ years, or the PPA can transfer to the next occupier. Many solar PPAs are signed by tenants with a landlord's licence for alterations; some landlords sign the PPA themselves and sell the power to tenants.
What if we move or sell the building?
Most solar PPAs let you transfer (assign) the agreement to the new owner or occupier, or buy out the system using a schedule of prices set out in the contract. Agree these terms before signing — they matter most if there is any chance you'll move during the term.
Do we need planning permission for commercial rooftop solar?
Often not. In England, many non-domestic rooftop solar installations fall under permitted development rights, subject to conditions such as listed buildings and conservation areas. Scotland, Wales and Northern Ireland have their own rules. Ground-mounted and very large systems are more likely to need planning permission — your installer should confirm before work starts.
Can solar panels go on an asbestos roof?
Sometimes. Fixing directly into asbestos cement sheets is generally avoided; options include over-cladding the roof first, using a non-penetrative mounting system, or replacing the roof as part of the project. An asbestos survey and structural assessment are required before design.
Technical
Do solar panels work in the UK's weather?
Yes. Solar panels generate from daylight, not heat, and still produce on overcast days, though less. A well-sited UK commercial system typically generates about 850–1,100 kWh per kWp each year, higher in the south and lower in Scotland and Northern Ireland.
What happens to the electricity we don't use?
Surplus electricity is exported to the grid. Under most on-site PPAs the export income belongs to the provider, which is one reason they can offer a low rate. Sites that use most of the generation themselves get the best value; batteries can store surplus for later use.
Who maintains the panels?
Under a solar PPA the provider is responsible for maintenance, remote monitoring, repairs and insurance of the system for the whole term. You'll usually need to give reasonable site access and report any roof works that might affect the panels.
What is a G99 application?
G99 is the process for getting permission from your local distribution network operator (DNO) to connect larger generation, usually systems above about 16A per phase (roughly 11kW three-phase). It can take several months and may result in export limits. Your PPA provider or installer normally handles the application.
Tax, accounting & carbon
Can we claim tax relief on solar panels?
If you buy the system, you can usually claim capital allowances: solar PV is special-rate plant, eligible for the Annual Investment Allowance up to £1m or, for companies, a 50% first-year allowance. Under a PPA you don't own the asset, so you can't claim allowances, but the PPA charges are normally an operating expense. Take tax advice.
Do we pay business rates on solar panels?
In England, on-site rooftop solar and batteries are exempt from business rates until 31 March 2035, so installing them won't increase your rateable value. Different rules apply in Wales, Scotland and Northern Ireland — check with your local authority or rating adviser.
Does a solar PPA reduce our Scope 2 emissions?
Yes. Electricity generated on-site by solar and used by your business displaces grid electricity, reducing your reported Scope 2 emissions. Your PPA provider's metering gives the kWh data you need. Using the UK Government's grid conversion factor (around 0.2 kgCO₂e/kWh), every 100,000 kWh of solar used avoids roughly 20 tonnes CO₂e.
Is there a government grant for business solar panels in 2026?
There is no national UK grant for commercial solar in 2026. Some local authorities, combined authorities and devolved governments run business energy-efficiency schemes from time to time, so check with yours. Tax allowances, the business rates exemption in England, and no-upfront-cost PPAs are the main financial support routes.