Tariff structure
Headline tariff: per-kWh price for solar generation consumed. Typical 2026: 11-14p/kWh year 1, vs grid retail 22-28p/kWh. Tariff differential provides immediate cash benefit. Watch for: introductory tariff vs steady-state, tiered tariffs, seasonal pricing.
Escalation
How tariff rises annually. Standard: CPI-linked with annual cap (3% common). Critical comparison: PPA escalation vs forecast grid retail trajectory (4-8% expected through 2030). Properly-structured PPA tariff diverges below grid retail over time.
Contract term and buyout milestones
Standard term: 20-25 years. Buyout milestones: typically year 5, 10, 15. Buyout price reflects PPA provider's remaining asset value. Negotiate clear, formula-based buyout pricing rather than provider-discretionary.
Negotiation checklist
(1) Lock tariff escalation at CPI capped 3%. (2) Buyout pricing formula-based not discretionary. (3) Performance threshold 92% min, ideally 90%. (4) Reasonable assignability (not blocked). (5) Force majeure narrow. (6) Independent monitoring. (7) Annual O&M reporting to customer. (8) End-of-PPA options clearly stated.
Common questions
Should we get a lawyer to review the PPA?
Yes — for any PPA above £500k total contract value. Specialist energy lawyers (Bird & Bird, Pinsent Masons, Eversheds, Burges Salmon). Typical legal fee £8-20k for review and negotiation.
Can we exit a PPA early?
Yes via buyout milestones (typically year 5, 10, 15). Buyout price reflects PPA provider's remaining asset value. Sometimes economic to buy out if grid retail has risen faster than expected.