The UK solar market has matured. Panel prices have fallen. Green finance has proliferated. Yet for a portion of homeowners, upfront cost remains a barrier — or simply an unappealing use of capital. Solar Power Purchase Agreements (PPAs) have re-emerged as a credible alternative in 2026.
What Is a Solar PPA?
Under a Power Purchase Agreement, a third-party provider installs solar panels on your roof at their own expense. You do not own the system. Instead, you agree to purchase the electricity it generates at a set rate — typically 10–20% below your grid import tariff — for a fixed term, usually 20–25 years.
The provider earns money from:
- The electricity rate they charge you
- Smart Export Guarantee (SEG) payments for units you do not use
- Any applicable subsidies
You benefit from:
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- No upfront cost
- Lower electricity bills immediately
- Maintenance responsibility transferred to the provider
How UK Solar PPAs Differ From Leases
A solar lease is similar but charges a fixed monthly rental regardless of how much electricity the panels produce. A PPA charges per unit generated. In the UK climate, where output varies significantly between December and July, a PPA can be more predictable than a lease from a bill management perspective.
When a PPA Makes Financial Sense
A PPA can be the right choice when:
- You cannot access or do not want a green loan or 0% finance deal
- Your home is not owner-occupied (some landlords use PPAs to offer tenants lower bills)
- You want the maintenance responsibility off your plate entirely
- You plan to stay in the property long enough to benefit from 10+ years of discounted electricity
- Your credit profile makes unsecured borrowing expensive
When Buying Outright or Financing Wins
For most UK homeowners who can access finance, purchasing the system produces better long-term returns.
| Scenario | Best Option | Reason |
|---|---|---|
| Can afford outright purchase | Buy outright | 100% of savings and SEG earnings kept |
| Good credit, want low payments | 0% green finance | Own the system; keep SEG; no long-term contract |
| Cannot access finance | PPA | Immediate bill savings, no capital required |
| Landlord with tenants | PPA or green loan | Improves EPC rating, reduces tenant bills |
| Planning to sell within 5 years | Caution with PPA | Long-term contracts complicate property sales |
The Hidden Considerations
Property Sales
A solar PPA is attached to the property, not the person. When you sell your home, the buyer must either take over the PPA or the provider must be paid off. This can complicate sales and valuations. Always disclose the existence of a PPA to your solicitor and estate agent early.
Rate Escalators
Many PPA contracts include an annual rate escalation clause, typically 2–4% per year. Over 25 years, this means your per-unit rate will be significantly higher than at the start. Read the escalation terms carefully.
SEG Payments
Under a PPA, the provider typically retains the SEG income from exported electricity. This is a meaningful consideration — in 2026, SEG rates from providers like Octopus, EDF, and Ovo range from 5–15p per kWh.
EPC and Mortgage Impact
The system does not appear as an owned asset on your property. Some mortgage lenders look unfavourably at PPA agreements. Check with your mortgage provider before signing.
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Questions to Ask a PPA Provider
- What happens to the contract if I sell my home?
- What is the annual rate escalation clause?
- Who retains SEG payments?
- Who is responsible for cleaning, repairs, and inverter replacement?
- What happens if the provider goes out of business?
- Is the contract assignable to a new buyer?
