By the PPA Funding team Last updated
When reading a solar PPA proposal, check the price per kWh and how far it sits below your grid rate, the contract term, any annual price escalation, what maintenance is included, the exit and buyout terms, and the performance or generation assumptions. These six points decide whether the deal genuinely saves money.
The headline rate and term
The core of a PPA is the price you pay per kWh for the electricity the system generates and you use. Compare it against your current grid unit rate: a genuine PPA should sit at least 30% below the grid price. Make sure you are comparing like with like, including or excluding standing charges and levies consistently.
Next is the term, commonly around 20 years. A longer term spreads the funding partner's cost and usually supports a lower rate, but it is also a long commitment. Check the start date, when billing begins, and whether the quoted rate applies from day one.
Escalation, maintenance and performance
Many PPAs include an annual escalation, where the rate rises by a fixed percentage or in line with an index each year. A rate that looks cheap today can climb over 20 years, so ask what the escalator is and model the later years, not just year one. Compare the escalated rate against realistic assumptions for grid prices.
Confirm what maintenance, monitoring, insurance and repairs are included. A well-structured PPA has the funding partner own and maintain the system, so inverter replacements and servicing are their responsibility. Finally, review the generation assumptions: the proposal's savings depend on how much the system is expected to produce, so check the yield looks realistic for your roof rather than optimistic.
Exit, buyout and ownership
Understand what happens if circumstances change. Look for the exit terms: can you buy out the system early, and how is that price calculated? What happens if you sell or vacate the building? A fair PPA explains how the agreement transfers or terminates without trapping you.
At the end of the term the system typically becomes yours for a nominal sum, often £1. Confirm this is stated, along with the condition the equipment will be in and whether any life-extension or replacement is covered near the end. Clarity here separates a straightforward proposal from one with hidden edges.
This guide is general information, not financial or tax advice. Your circumstances determine what applies — please confirm with your accountant or advisor. Get a tailored proposal →
Frequently asked questions
What is a fair price escalator in a solar PPA?
There is no single right figure, but the escalator should be clearly stated and modest enough that the rate stays well below expected grid prices across the whole term. Ask to see the projected rate in later years, not just at the start.
What happens to a PPA if I sell my building?
Most PPAs include provisions to transfer the agreement to the new owner or occupier, or to buy the system out. Read this section carefully before signing, and confirm the process and any costs with the funding partner.
Related guides
- Capital allowances on commercial solar: full expensing & AIA explained
- How solar improves your commercial EPC (and helps with MEES)
- How much can your business save with commercial solar?
See our funding options, commercial solar and solar by industry pages.