Commercial Solar PPA Explained: 2026 UK Guide
A Power Purchase Agreement (PPA) lets a UK business install solar with zero upfront cost — paying only for the kWh consumed at a tariff below grid. Here is how PPAs actually work in 2026.
What a commercial solar PPA is
A Power Purchase Agreement is a contract under which a third-party funder owns, installs and maintains a solar PV system on your premises. You pay only for the kWh you consume from the system, at a tariff fixed (or RPI-linked) for the contract term. You pay nothing for the install, nothing for maintenance, and nothing for the kWh you do not consume. The funder earns their return from your kWh purchases plus the SEG export they collect on the kWh you do not consume.
Typical 2026 PPA terms in the UK
- Contract length: 20-25 years standard
- PPA tariff: 9-13p/kWh fixed for years 1-10, RPI-linked thereafter
- Comparison to grid: typically 50-60% below your blended commercial grid rate
- Service fees: bundled into the kWh tariff — no separate maintenance bill
- End of contract: three options typically — asset transfer, contract extension, or system removal
Who should consider PPA
- Charities, schools, NHS trusts, councils — no corporation tax means no AIA benefit, so the CAPEX advantage shrinks. PPA is often the right route.
- Businesses with capital constrained — strong profit but cash earmarked for higher-return alternative uses (acquisitions, marketing, product development)
- Multi-site portfolio operators — rolling capex across 5+ sites is administratively heavy; one PPA contract per site simplifies management
- Tenanted property where lease is <15 years — the funder takes the residual risk past lease end
Who shouldn't take a PPA
- Limited companies with strong profits and cash on hand — CAPEX + AIA usually delivers better lifetime returns
- Property owners planning to sell within 5 years — the PPA novates to the buyer but can complicate the sale price negotiation
- Sites where the building is <10 years from end of life (demolition, redevelopment)
The KMM commercial PPA process
- Site assessment — same drone survey + HH-data desktop as our CAPEX projects
- PPA tariff modelling — we run your specific roof, load profile and credit position past 3-4 PPA funders we work with
- Best-and-final tariff — competitive funders, honest finance modelling
- Contract negotiation — KMM project-manages on your behalf, your solicitor reviews
- Install — funder pays KMM directly; you sign no purchase contract
- Live operation — you pay your PPA invoice monthly, KMM (or the funder's O&M arm) handles maintenance
Honest honest finance modelling
KMM earns an introducer fee on PPA-funded projects, typically 1-2% of the contracted lifetime value of the PPA. We disclose this on every PPA quote. If a CAPEX route is genuinely better for your business, we will recommend CAPEX even though it pays us less in introducer fees.
PPA vs CAPEX vs lease — quick decision tree
You're a non-CT-paying body (charity, school, NHS)? → PPA or Salix loan (both work)
You have strong CT position but want to preserve working capital? → Asset finance / hire-purchase lease
You operate 5+ sites and want unified contracting? → PPA
You sell the property in 3-5 years? → CAPEX or lease (PPA novation gets messy)
FAQs
What credit checks do PPA funders run?
What happens if my business goes bust during the PPA?
Can I buy out the PPA early?
Does the PPA tariff include VAT?
Model Commercial Solar PPA Explained on your project
Tell us about your project and we will run this finance route alongside the alternatives, with honest finance modelling.
Request Commercial Quote → 0115 647 3822