A Power Purchase Agreement (PPA) is a long-term contract between an energy generator and a buyer (known as the ‘offtaker’), where the buyer agrees to purchase electricity at a pre-agreed rate for a fixed period of time.
In simple terms, it’s a way for businesses, organisations, or property owners to access renewable energy, such as solar or wind power, without paying upfront for the installation of the equipment.
How a PPA Works
Under a PPA, a renewable energy provider (such as a solar developer) designs, installs, owns and maintains the system on your site. You then buy the electricity the system generates at an agreed price, typically lower than your standard grid tariff.
The arrangement usually lasts between 10 and 25 years, depending on the project. During that time:
- The PPA provider is responsible for installation, performance, and maintenance.
- The buyer benefits from clean, predictable-cost electricity with no capital expenditure.
At the end of the contract, the system can often be:
- Removed at no cost, or
- Transferred to the site owner at a reduced rate or for free, depending on the agreement.
Key Benefits of a PPA
1. No upfront investment
You can adopt renewable energy technology without capital expenditure, the PPA provider funds the project.
2. Lower, stable energy costs
Electricity is purchased at a fixed or index-linked rate, helping protect against volatile energy prices.
3. Sustainability and carbon reduction
On-site generation from solar or wind helps cut your carbon footprint and supports corporate net-zero goals.
4. Maintenance included
The system owner takes care of servicing, monitoring, and performance management.
5. Green credentials
Visible renewable infrastructure, like solar panels or carports, enhances environmental reputation and can support ESG reporting.
Types of PPAs in the UK
There are two main forms of PPAs:
1. On-site PPAs
Electricity is generated and used at your premises (for example, via rooftop solar or a solar carport).
2. Off-site or Virtual PPAs
Electricity is produced at a separate renewable site and supplied to your organisation through the national grid.
Why PPAs Are Growing in the UK
Rising energy prices and ambitious net zero targets are driving demand for PPAs across both public and private sectors. The model provides a practical route for businesses to decarbonise operations while maintaining financial certainty.
From local councils and universities to manufacturers and hospitality groups, many UK organisations are turning to PPAs as a proven, low-risk way to transition to cleaner power.
In Summary
A Power Purchase Agreement offers a straightforward, cost-effective route to renewable energy. By partnering with an experienced PPA provider, UK businesses can cut emissions, stabilise costs, and contribute meaningfully to a sustainable future, all without the burden of upfront investment. If you’d like to find out more about PPA, please contact us.