Short answer: Buying outright usually gives the best long-term return. You own the system, you keep all the savings and you can use tax reliefs. A Power Purchase Agreement (PPA) means no upfront cost: a funder pays for the system and you buy the power it makes at an agreed rate for 5–25 years. Choose a PPA when capital is tight or better spent elsewhere, and you’re sure of the building for the length of the term.
Key facts
- Under a PPA, a third-party funder pays for the installation and you pay a fixed or index-linked rate for the power produced, over 5–25 years.
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With a PPA, the funder typically looks after maintenance and performance.
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If you buy, solar panels qualify as plant and machinery, so the Annual Investment Allowance can cover up to £1m of qualifying spend.
- In England, eligible rooftop solar is exempt from business rates until 31 March 2035, whichever way you pay.
How each option works
Buying outright (or with finance)
You pay for the system, either from cash or through solar finance, and you own it from day one. Every unit of solar you use is a unit you don’t buy from your supplier, and surplus can be exported for payment. You’re responsible for maintenance, though most systems need little more than an annual check. See servicing and maintenance.
A Power Purchase Agreement
A funder pays for the design and installation. We still survey, design and install the system, but it belongs to the funder. You agree to buy the power it generates at a set rate, fixed or index-linked, for an agreed term, usually somewhere between 5 and 25 years. Your rate is normally below what you’d pay your supplier, so you save from the first day without spending capital. Read more on our PPA page.
Side by side
| Buy outright | PPA | |
|---|---|---|
| Upfront cost | Yes | None |
| Who owns the system | You | The funder, for the term |
| Savings | All of them | The gap between the PPA rate and your grid rate |
| Tax reliefs | You can claim capital allowances | The funder owns the asset, so you don’t claim them |
| Maintenance | Your responsibility | Typically the funder’s |
| Commitment | None beyond warranties | Buy the power for 5–25 years |
| Best for | Businesses with capital or finance, owning the building | Businesses preserving cash, or larger sites the funder will back |
Who should buy
- You own the building, or have a long lease, and plan to stay.
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You have the cash or can borrow cheaply, and want the best return over the system’s life.
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You’re profitable enough to use capital allowances. Ask your accountant how they apply to you. See capital allowances on solar panels.
- Your system is small to mid-sized. PPA funders tend to prefer larger systems.
To get a feel for the outlay, see how much commercial solar costs. Our published case studies give estimated paybacks of around four to six and a half years on the jobs where we’ve worked them out. These are estimates, not metered results.
Who should consider a PPA
- You’d rather keep capital for stock, staff, machinery or growth.
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You use a lot of power during the day, so most of the solar is used on site, which is what funders want to see.
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You’re confident of the site for the length of the agreement.
- You want someone else to own the performance and maintenance.
Questions to ask before signing a PPA
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What’s the rate, and how does it change? Fixed, or linked to an index? Over what term?
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What happens if we move or sell the building? Can the agreement transfer to a new occupier?
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What happens at the end of the term? Can you buy the system, extend the agreement, or will it be removed?
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Who maintains it, and what happens if it underperforms?
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What does the funder need from you? Expect checks on the business and the building, and landlord consent if you lease.
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What about the roof? If the roof needs work during the term, who pays to lift and refit the panels?
Leased buildings
If you lease, you’ll need the landlord’s consent either way. A PPA can suit leased buildings because you’re buying power, not adding an asset. The funder will still want comfort about how long you’ll be there. See warehouse and industrial solar and our warehouse roof checklist.
In practice
On the larger multi-unit sites we’ve delivered, such as seven units in Oldham and four in Middlewich, each unit has its own system and grid connection. That’s the kind of setup where whoever owns the system, and whoever buys the power, need to be clear from the start. We work with competitive PPA providers, and we can design the same system and price it both ways so you can compare.
Frequently asked questions
Is a solar PPA cheaper than buying? Not over the life of the system. Buying usually saves more, because you keep all the savings and can claim tax reliefs. A PPA needs no upfront cost, and you save from day one.
How long is a solar PPA? Usually between 5 and 25 years, at a fixed or index-linked rate.
Can I claim capital allowances on a PPA system? No. The funder owns the system, so the funder claims the allowances. If you buy it, you can claim them. Check with your accountant.
Can a small business get a PPA? Sometimes. Funders tend to prefer larger systems and strong daytime use. We’ll tell you honestly whether your site is likely to qualify, and what finance looks like instead.
Compare both on your site
We’ll design one system and price it as a purchase, with finance, and as a PPA, so you can compare like for like.
Book a free survey · Call 01482 765063
Related guides: Power Purchase Agreements · Commercial solar panel cost · Capital allowances on solar panels
