Commercial
Commercial solar PPAs explained: zero capex, and where the catch usually hides
Power purchase agreements let a business install rooftop solar with no upfront cost. Here is how the contract works and the clauses worth negotiating.
Under a PPA, a funder pays for the system on your roof and you buy the electricity it produces at an agreed rate — usually well below your grid tariff. No capital outlay, no maintenance liability.
How the economics work
The funder recovers their investment through the unit rate over a 15–25 year term. Your saving is the gap between the PPA rate and your import rate, and that gap widens if grid prices rise.
Clauses worth reading twice
- Indexation: how the unit rate escalates each year, and against which index.
- Minimum purchase obligations if your site consumption drops.
- Buyout schedule — the price to purchase the asset at years 5, 10 and 15.
- Roof access, lease and reinstatement obligations at end of term.
A PPA is a property agreement as much as an energy one. Involve whoever manages the lease early.
We model both routes — outright purchase and PPA — so the comparison is on the same page rather than in two different sales pitches.
