By the PPA Funding team Last updated
With a solar PPA you pay for the energy the system produces, at a rate below the grid, and maintenance is included. With a lease you pay a fixed rental for the equipment regardless of how much it generates. A PPA ties cost to output and risk to the provider; a lease is a predictable fixed operating cost.
Solar PPA vs equipment leasing at a glance
| Consideration | Solar PPA | Equipment lease |
|---|---|---|
| What you pay for | The clean energy the system produces (per kWh) | The equipment itself — a fixed regular rental |
| If output is low | You pay only for what's generated — output risk sits with the funder | You pay the fixed rental regardless of output |
| Maintenance | Included in the PPA | Often your responsibility — check the lease |
| Upfront cost | £0 | Usually £0, but terms vary |
| Rate vs the grid | Guaranteed at least 30% below the grid | Depends on output against the fixed rental |
| End of term | System becomes yours for £1 | Own, renew or return — depends on the lease |
| Best for | Zero-risk energy savings, fully managed | Businesses that want the asset and accept output risk |
How each one works
A PPA charges per kilowatt-hour generated — you only pay for the clean power you get, and the provider carries performance and maintenance risk. A lease is a rental agreement: you pay a set amount to use the equipment, whatever it produces.
Cost basis and risk
Because a PPA is priced per unit generated, an underperforming system costs you less — the risk sits with the provider. A lease keeps payments fixed and predictable, but performance risk sits more with you (though you may claim allowances on a leased or financed asset).
Ownership and end of term
Both routes can lead to ownership. Many PPAs transfer the system to you for a nominal sum at the end; leases often include a purchase option or return. Check the end-of-term terms in each case.
Which suits your business?
If you want zero maintenance responsibility and cost tied to generation, a PPA fits. If you prefer a fixed operating cost and potential tax treatment of the asset, a lease may suit. We can compare both on our funding options page.
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
Is a PPA or a lease cheaper?
It depends on your usage, the system’s output and the terms offered. A PPA links what you pay to what the system generates; a lease fixes the payment. The only reliable way to compare is against your own numbers in a proposal.
Can I claim tax relief on a leased solar system?
Leasing and hire purchase can have tax advantages, such as offsetting payments or claiming capital allowances when you own the asset. Your accountant can confirm what applies to your business.
Related guides
- How to switch to a solar PPA (step by step)
- Is a solar PPA worth it for your business?
- How much do commercial solar panels cost in the UK?
See our funding options, commercial solar and solar by industry pages.