Power Purchase Agreement (PPA) explained
A Power Purchase Agreement (PPA) is a financial arrangement where a third-party solar company owns, installs, and maintains solar panels on your property. You pay nothing upfront, but agree to purchase the electricity generated at a fixed per-kWh rate — typically 10–20% below your standard grid tariff — for a contracted term (usually 20–25 years).
The appeal: zero upfront cost, immediate bill savings, and someone else handles maintenance and insurance.
The trade-offs compared to owning your system outright:
- You don't own the panels — the PPA company claims all SEG export income and any incentives
- Over 20–25 years, you pay significantly more than you would have if you'd purchased the system outright
- Selling your home can be complicated — the new buyer must either assume the PPA or you must buy out the contract (which can cost £5,000–£15,000)
- PPA rates may not keep pace with grid price increases, reducing your savings over time
PPAs are more common in commercial solar and in markets like the US and Australia where they have an established track record. In the UK, they remain relatively niche for domestic solar. For most homeowners who can afford the upfront cost (or finance it), outright purchase offers significantly better long-term returns.