1. An overview
As energy prices continue to fluctuate and sustainability climbs the corporate agenda, a Power Purchase Agreement (PPA) has become an increasingly popular route for businesses to embrace renewable energy. For many, the appeal lies in securing long-term cost savings, demonstrating environmental leadership, and transitioning to low-carbon energy — without the burden of capital expenditure.
This guide offers a comprehensive look at PPAs, with a specific focus on how they work for commercial solar PV systems and battery storage. Whether you're new to the concept or refining your understanding, it walks you through the fundamentals, benefits and key considerations.
2. What is a Power Purchase Agreement (PPA)?
A Power Purchase Agreement is a long-term contract between an energy provider (typically a developer or investor) and a business or organisation (the off-taker) to purchase electricity at an agreed rate. In the case of solar PPAs, this electricity is generated on-site using a solar PV system, which is installed, owned and maintained by the provider.
Instead of paying for the system itself, your business simply pays for the power it produces — usually at a rate that is lower and more stable than traditional grid electricity. These agreements commonly span 10 to 25 years, depending on your needs and the nature of the installation.
When battery storage is added, it enables your business to store excess solar energy and use it during peak hours or times of low solar generation. This hybrid approach maximises savings and enhances resilience by reducing reliance on the grid.
3. How do solar and battery PPAs work?
Under a typical Power Purchase Agreement structure, the following steps take place:
- 1
Assessment & proposal
Your energy usage, site suitability and future requirements are assessed. Based on this, a tailored proposal is created.
- 2
System design & funding
The provider designs and funds the installation of the solar PV and/or battery storage system.
- 3
Installation & commissioning
The system is installed and connected to your existing infrastructure, typically with minimal disruption to your operations.
- 4
Ongoing operation
The provider monitors and maintains the system throughout the PPA term, ensuring peak performance.
- 5
Energy billing
You pay only for the electricity consumed, typically at a fixed or inflation-linked rate.
Because the system remains the property of the provider, you avoid the risks associated with equipment performance, technology updates and maintenance costs.
4. Benefits of a PPA
No capital outlay
A core advantage of PPAs is access to renewable energy infrastructure with zero upfront investment. The provider covers all system costs, making it easier to begin your clean energy transition.
Reduced energy costs
By generating electricity on-site, you offset a significant portion of your grid energy usage. Many PPA rates are lower than utility tariffs — immediate and long-term savings.
Price certainty
With a fixed or predictable pricing structure, PPAs shield your business from energy market volatility, helping you plan ahead with greater financial confidence.
Carbon footprint reduction
Switching to solar and battery power supports your ESG commitments and demonstrates a tangible step towards net-zero targets.
Fully managed solution
From system design to ongoing maintenance, everything is taken care of by the provider — expert support without managing the system in-house.
Energy resilience
Paired with battery storage, your business gains greater control over energy use. Stored energy can be deployed during peak pricing periods or outages.
5. What to consider before signing
While a PPA offers compelling advantages, it's important to assess whether the structure is right for your business. Key factors include:
- 1
Contract length
Most PPAs run for 10 to 25 years. Consider your long-term occupancy plans and how a PPA fits your strategic goals.
- 2
Site suitability
Not all buildings suit solar. Roof space, orientation, shading and structural integrity all affect system viability.
- 3
Energy consumption patterns
The more energy you use during daylight hours, the greater the benefit from solar. Battery storage extends those benefits into the evening.
- 4
Legal & financial due diligence
Review the PPA terms with legal and financial advisors for transparency on exit clauses, performance guarantees and billing mechanisms.
- 5
Ownership & end-of-term options
Understand what happens when the contract ends — buy the system outright, extend, or have it removed.
6. Is a solar or battery PPA right for you?
A PPA is well suited to medium and large businesses with consistent energy use, especially those looking to meet sustainability targets without locking up capital. Ideal sectors include manufacturing, warehousing, retail, education and hospitality.
If your business:
- Owns or occupies property with usable roof or land space
- Has a stable energy demand
- Wants to reduce energy costs and improve sustainability
- Prefers a hands-off, fully managed solution
…then a PPA could be an excellent fit.
7. Final thoughts
A Power Purchase Agreement offers a smart, scalable route to clean energy adoption. By combining solar PV and battery storage under a fully funded model, your business can unlock energy savings, improve operational resilience and accelerate progress toward sustainability targets.
With no upfront costs and minimal risk, a PPA is more than just an energy contract — it's a partnership for a cleaner, more secure future.