Installer guide · 18 min read

Commercial Solar PPAs: How Installers Win Zero-Capex Deals with Funders

Short answer: in a commercial solar power purchase agreement (PPA), an investor pays for and owns the system on the customer’s roof, and the business buys the electricity it makes at an agreed price for a long term (usually 10 to 25 years, says Solar Energy UK). The business spends no capital; the funder needs a site that will be there, a roof that will last and a customer whose credit it can rely on for the whole term. For an installer, that means a second route to yes when a deal stalls on capital, as long as you qualify, survey and pitch for the funder as well as for the customer.

Why PPAs matter to commercial solar installers

Some commercial solar deals that make sense on paper stall on capital: the business would rather not spend the money up front, or cannot get it signed off this year. A PPA takes the capital out of the decision. Solar Energy UK’s corporate buyers’ guide puts it simply: external investors fund the system, so companies can save money without spending any of their own capital.

The catch is credit. The government’s 2025 Solar Roadmap says it can be challenging to secure finance for behind-the-meter solar if the end user does not have a strong credit rating, so commercial rooftop and small onsite solar “tends to be restricted to major corporates, leaving a large part of the market untapped”. It lists limited credit strength among the challenges facing PPAs, and gives the National Wealth Fund an action to explore ways to finance solar projects with sub-investment grade counterparties. In practice, a PPA is a strong option for some of your customers and not available to others, and part of the installer’s job is telling them apart early.

How a rooftop or private wire solar PPA works

Solar Energy UK defines the arrangement this way: the electricity user, or offtaker (the building owner or user), agrees to buy the power generated by a solar system that is paid for and owned by an investor, from that investor, for a given period. The on-site form is called a private wire PPA, because the power the system produces is used on the business premises through a direct electrical connection. Third party capital covers the entire cost of the project, and the investor earns its return from the electricity it sells.

• The funder builds and owns. The system sits on the business’s roof (or on adjacent land) but belongs to the investor for the term.
• The business buys the units. It pays the agreed rate for the electricity the system supplies to the site, instead of paying for the system.
• The rest comes from the grid. The business keeps its normal supply contract for whatever the solar does not cover.
• Surplus is exported. Power the site does not use goes to the grid under a separate export (“spill”) agreement, where the connection allows it.
• The owner maintains it. Solar Energy UK says the developer remains responsible for operations and maintenance while the contract runs.

Solar Energy UK illustrates the money with a hypothetical example: a system that saves a business £100,000 a year on its energy bills. Self-funded, the business keeps the full £100,000 but has paid for the system. Under a PPA, the investor might receive £40,000 of that saving each year for the term, which covers its capital and its return, and the business keeps £60,000 a year without spending its own capital. The split is illustrative, not a market rate; every deal is priced on the site’s own figures.

A real example of the moving parts: Atrato Onsite Energy, a London-listed company that funds rooftop solar, announced in October 2022 that Vale of Mowbray, the business it supplied with behind-the-meter power from a rooftop system, had entered administration. It said it would keep selling energy to the site during the administration, with excess energy going to the grid under an existing spill PPA, and that if the site was vacated all the energy would be sold to the grid. That is the credit risk a funder is pricing, and why a spill agreement matters to it.

Who the parties are

Sharpe Pritchard’s note on private wire PPAs adds the rights the funder needs over the property: for rooftop solar, typically a rooftop lease, plus any easements or third party consents where cables cross land the business does not control.

The contract: term, price and the clauses that matter

A rooftop PPA is usually two documents: the PPA itself (the sale of the electricity) and the roof lease or licence (the right to keep the system on the building). Burges Salmon makes the point that buyers often ask for “simple” PPAs, but that the PPA is the key revenue document that investors, funders and future buyers of the asset will scrutinise, so it has to stand up. These are the terms to understand before you put a PPA in front of a customer:

Sharpe Pritchard’s list of heads of terms also covers quantity (capacity, demand and intermittent generation), maintenance and access, insurance, and termination. Two published rooftop examples of term: Atrato Onsite Energy’s 20-year PPA with Tesco for a 370kWp roof at a supermarket in Thetford, and Spirit Energy, a Reading installer that offers investor-funded PPAs, which says its PPA term is typically around 25 years.

Selling electricity: the licence exemption

Selling electricity to a business normally needs a supply licence unless an exemption applies, and Welsh Government guidance says most private wire schemes use the small supplier exemption. DESNZ’s licence exemption FAQs explain the Class A small supplier exemption in the Electricity (Class Exemptions from the Requirement for a Licence) Order 2001: a generator may supply its own output to domestic and commercial customers without a supply licence, provided it does not at any time supply more than 5MW, of which no more than 2.5MW to domestic customers. DESNZ calls the 5MW an absolute limit, and a measure of rate, not volume.

• Class exemptions apply automatically: there is nothing to apply for and no need to notify DESNZ or Ofgem.
• A Class A supplier may only supply power it generates itself. It cannot buy power in for back-up or top-up, so the business’s licensed supplier supplies the rest under a separate contract.
• Supplying outside the exemption without a licence is an offence. DESNZ cannot advise on individual cases and strongly recommends legal advice where it is unclear. This is the funder’s question to answer, not the installer’s, but it is worth knowing why it is asked.

Which customers qualify for a solar PPA

Solar Energy UK names four things that make a site suitable for an on-site PPA. Add the roof and the lease, and you have the list to qualify against before you mention a PPA to a customer:

1. Credit. The consumer must be creditworthy enough to support financing the funder’s assets. This is the filter the Solar Roadmap says keeps most of the market out. Ask early how long the business has traded, whether it files full accounts and whether a parent company sits above it.
2. Demand. A large, consistent electricity demand that matches when the system generates. Solar Energy UK gives manufacturing (demand peaking in daylight) and cold storage (steady round-the-clock demand) as examples.
3. Space. A suitable roof, or land on or next to the site.
4. Grid. An affordable connection to the local distribution network.
5. Tenure. The business owns the building or holds a lease with enough time left to cover the PPA, with the landlord’s consent. The Solar Roadmap notes that most commercial leases put repairing obligations on tenants and that these lease agreements can hold back rooftop solar.
6. Roof life. Solar Energy UK says that if there is a medium-term plan to replace the roof, the solar should go in as part of that work or after it, not before. Our guide to roof overcladding or replacement before solar covers how to scope both.

Funders and installers that offer PPAs set their own thresholds on top. As one published example, Spirit Energy says its PPA typically suits organisations that own their premises or hold a long-term lease, use at least 80,000 kWh of electricity a year with half-hourly metering, have roof or land for a system of 100 kWp or more (around 600 m² of roof as a guide), and have a stable financial position. Other providers draw the lines in different places, so ask each funder for its criteria in writing.

What funders ask for

A funder is buying a long-term income from your customer’s roof, so it looks at the deal the way a lender would. From the sources above, expect questions on each of these, and have the answers ready before you submit a site:

• The customer’s covenant: accounts, trading history and who stands behind the agreement. Burges Salmon notes that developers want to stop a host transferring the PPA to a party that is not as creditworthy.
• Consumption data: Solar Energy UK says a system can be matched very accurately to a business’s needs with 12 months of half-hourly consumption data. The funder’s income depends on how much of the output the site uses.
• Title and lease: who owns the building, how long is left on any lease, and whether the landlord will grant a roof lease.
• Roof and structure: condition, remaining life against the term, and whether it can carry the system.
• Grid: the DNO position on connection and export, because spill income depends on it.
• Certainty of offtake: Burges Salmon lists certainty that the host will take the power, or compensation if it does not, among the terms a funder needs.
• Design, build and maintenance: the system design and yield, who builds it, and who maintains it and insures it over the term.

How a PPA changes the sales pitch

With a purchase you sell a payback. With a PPA you sell a unit rate against the business’s current one, no capital, and maintenance that is not their problem. That changes several things in the conversation:

• Lead with the price of the electricity. The comparison is the PPA rate against what the business pays per unit now, over the term, with any escalation set out plainly.
• Use price certainty honestly. Solar Energy UK points out that, however a system is financed, the price of the electricity it generates is effectively fixed (subject to the agreed escalation), so the business removes price volatility from part of its energy costs. It is still only part: the rest comes from the grid at market prices.
• Expect more people in the room. An agreement that runs for many years is a bigger decision than a purchase order. Plan for the finance director, legal advisers, the board, and the landlord if there is one, and build that into your timeline.
• Answer “what if we move?” Solar Energy UK says a buyer or new tenant may take on the agreement, or a buy-out clause applies. Know which the funder’s contract uses.
• Be straight about tax. Under a PPA the business does not own the system, so it is not the one claiming capital allowances on it. If the allowances matter to them, a purchase or hire purchase may suit them better. Leave the detail to their accountant.
• Keep the purchase option on the table. Solar Energy UK notes that a self-funded project generates better returns for the business. Offering both lets the customer choose, which is easier to sign than a single take-it-or-leave-it option.

Our guide to how to sell commercial solar covers the discovery questions, proposal and objections around these funding routes.

How a PPA changes the site survey

On a PPA deal you are surveying for two clients: the business and the funder that will own the system for the next couple of decades. Add these to your normal commercial survey:

• Get 12 months of half-hourly data and size to on-site use, not to the roof, unless the funder is happy with the export position.
• Record roof type, age and condition with photos, and say plainly whether the roof will outlast the term.
• Check the title or lease: owner, landlord, years remaining, and any restriction on works to the roof.
• Note access routes for maintenance over the term, and where the metering for the PPA will sit.
• Start the DNO conversation early: the connection decides both what can be built and what can be exported.

The alternatives: outright purchase, hire purchase and leasing

A PPA is one of four ways to fund a commercial system. Solar Energy UK’s guide sets out the same choices, and the tax treatment differs with who owns the system.

Public bodies have another route: Solar Energy UK notes that Westminster and devolved governments run grant and financing schemes for public sector capital spending, run through organisations such as Salix. For schools, councils and the NHS, see our guide to commercial solar tenders and frameworks.

Partnering with a PPA funder

An installer does not need its own fund to offer a PPA. Spirit Energy, for example, describes the investor owning the system for the term. The installer finds and qualifies the site, and a funder pays for the system and owns it. Before you take a PPA to a customer, agree with the funder:

1. Its criteria in writing: minimum size, customer credit, lease length, roof, consumption, regions and sectors.
2. What it needs from you to price a site, and how fast it will give the customer an indicative rate.
3. Who contracts with the customer, who holds the build contract, and who maintains the system afterwards.
4. Whose PPA and roof lease are used, and who pays the customer’s legal costs, if anyone.
5. When you are paid for the build, and what happens to your time if the funder declines the site late.

Then screen every commercial lead against those criteria on the first call, so you only spend a survey on a PPA site the funder will take. Our commercial solar lead qualification checklist already asks about ownership, energy spend, roof and funding; add the funder’s credit and lease tests to it. If you build your own target list, the public data in our guide to commercial solar prospecting (Companies House, energy certificates and Land Registry) helps you find businesses that own their sites, and the cold calling guide covers getting through to the person who signs.

Where TNW Marketing fits

TNW Marketing books commercial solar appointments for UK installers, £250 to £1,000+VAT per booked appointment, with no retainer. We book rooftop, ground-mount and PPA projects. Each business is checked for ownership or landlord consent, energy spend, roof suitability and buying intent before the meeting is booked, and each booking comes with the energy usage, bill spend, location and likely system size, several of the facts a PPA funder will ask for. See how pay per appointment commercial solar leads work, or see how we compare with other UK solar lead suppliers.