Guide
Solar PPA vs buying solar panels: which is better for your business?
There are two main ways for a business to get solar power: buy the system outright, or sign a solar power purchase agreement (PPA). Neither is right for everyone. Here is how they compare.
The short version
- Buying outright suits businesses with spare capital that want to own the system and keep all the savings once it has paid for itself.
- A solar PPA suits businesses that want lower electricity costs without spending capital or taking on maintenance.
Side by side
| Solar PPA | Buying outright | |
|---|---|---|
| Upfront cost | None | Significant capital spend |
| Who owns the system | The provider, during the term | You |
| Maintenance and repairs | Included | Your responsibility |
| Electricity price | Fixed rate for 15 years | Free once the system has paid back |
| Performance risk | Sits with the provider | Sits with you |
| Impact on cash | Immediate saving, no outlay | Savings build up slowly after the payback period |
When buying makes sense
If you have the cash, are happy to manage the system and plan to stay at the site long term, owning it can deliver the highest total return over its life.
When a PPA makes sense
If you would rather keep your capital for your core business, want a fixed price from day one and prefer not to deal with installation, monitoring and repairs, a PPA lets you start saving immediately. Many commercial customers typically save 20–40% on their electricity costs, depending on usage and site.
Things to check before you decide
- Who is responsible for repairs, insurance and system performance?
- Is the price per unit fixed for the whole term?
- What are your options at the end of the term?
- Does your landlord or lease allow solar on the roof?
Not sure which is right for you?
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