1. An Overview

As energy prices continue to fluctuate and sustainability climbs the corporate agenda, a Power Purchase Agreement (PPA) has become an increasingly popular route for businesses to embrace renewable energy. For many, the appeal lies in the ability to secure long-term cost savings, demonstrate environmental leadership, and transition to low-carbon energy sources—without the burden of capital expenditure.

This guide offers a comprehensive look at PPAs, with a specific focus on how they work in the context of commercial solar PV systems and battery storage. Whether you're new to the concept or looking to refine your understanding, this article will walk you through the fundamentals, benefits, and key considerations of a solar or battery PPA.

2. What is a Power Purchase Agreement (PPA)?

A Power Purchase Agreement is a long-term contract between an energy provider (typically a developer or investor) and a business or organisation (the off-taker) to purchase electricity at an agreed rate. In the case of solar PPAs, this electricity is generated on-site using a solar PV system, which is installed, owned, and maintained by the provider.

Instead of paying for the system itself, your business simply pays for the power it produces—usually at a rate that is lower and more stable than traditional grid electricity. These agreements commonly span 10 to 25 years, depending on your needs and the nature of the installation.

When battery storage is added to the system, it enables your business to store excess solar energy and use it during peak hours or times of low solar generation. This hybrid approach maximises savings and enhances resilience by reducing reliance on the grid.

3. How Do Solar and Battery PPAs Work?

Under a typical Power Purchase Agreement structure, the following steps take place:

01

Assessment & Proposal

Your energy usage, site suitability, and future requirements are assessed. Based on this, a tailored proposal is created.

02

System Design & Funding

The provider designs and funds the installation of the solar PV and/or battery storage system.

03

Installation & Commissioning

The system is installed and connected to your existing infrastructure, typically with minimal disruption to your operations.

04

Ongoing Operation

The provider monitors and maintains the system throughout the PPA term, ensuring peak performance.

05

Energy Billing

You pay only for the electricity consumed, typically at a fixed or inflation-linked rate.

Because the system remains the property of the provider, you avoid the risks associated with equipment performance, technology updates, and maintenance costs. Learn more about our Operations & Maintenance (O&M) here.

4. Benefits of a Power Purchase Agreement

💸 No Capital Outlay

A core advantage of PPAs is the ability to access renewable energy infrastructure with zero upfront investment. The provider covers all system costs, making it easier for businesses to begin their clean energy transition.

📉 Reduced Energy Costs

By generating electricity on-site, you can offset a significant portion of your grid energy usage. Many PPA rates are lower than utility tariffs, translating to immediate and long-term savings.

📊 Price Certainty

With a fixed or predictable pricing structure, PPAs shield your business from energy market volatility, helping you plan ahead with greater financial confidence.

🌍 Carbon Footprint Reduction

Switching to solar and battery power supports your ESG commitments and demonstrates a tangible step towards net-zero targets.

🛠️ Fully Managed Solution

From system design to ongoing maintenance, everything is taken care of by the provider. Your business benefits from expert support without the need to manage the system in-house.

⚡ Energy Resilience

When paired with battery storage, your business gains greater control over energy use. Stored energy can be deployed during peak pricing periods or outages, increasing energy security.

5. What to Consider Before Signing a PPA

While a Power Purchase Agreement offers compelling advantages, it’s important to carefully assess whether the structure is right for your business. Key factors to consider include:

1. Contract Length
Most PPAs run for 10 to 25 years. Consider your long-term occupancy plans and how a PPA fits with your strategic goals.

2. Site Suitability
Not all buildings are suitable for solar installations. Factors such as roof space, orientation, shading, and structural integrity will affect system viability.

3. Energy Consumption Patterns
The more energy you consume during daylight hours, the greater the benefit from solar generation. Battery storage can help extend those benefits into the evening.

4. Legal and Financial Due Diligence
It’s essential to review the PPA terms with legal and financial advisors to ensure transparency, compliance, and clarity on exit clauses, performance guarantees, and billing mechanisms.

5. Ownership and End-of-Term Options
Understand what happens when the contract ends. Some agreements offer the option to buy the system outright, extend the contract, or have it removed.

6. Is a Solar or Battery PPA Right for You?

A Power Purchase Agreement is well suited to medium and large businesses with consistent energy use, especially those looking to meet sustainability targets without locking up capital. Ideal sectors include manufacturing, warehousing, retail, education, and hospitality.

If your business:

Owns or occupies property with usable roof or land space

Has a stable energy demand

Wants to reduce energy costs and improve sustainability

Prefers a hands-off, fully managed solution

...then a PPA could be an excellent fit.

7. Final Thoughts

A Power Purchase Agreement offers a smart, scalable route to clean energy adoption. By combining solar PV and battery storage under a fully funded model, your business can unlock energy savings, improve operational resilience, and accelerate progress toward sustainability targets.

With no upfront costs and minimal risk, a Power Purchase Agreement is more than just an energy contract—it’s a partnership for a cleaner, more secure future.

If you’re ready to explore how a Power Purchase Agreement could benefit your business, get in touch with our team today for a free assessment and personalised proposal.

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A Guide: What is a Power Purchase Agreement (PPA)?