How a warehouse solar PPA works
Under a PPA: (1) The PPA provider installs the solar system at no cost to you. (2) You purchase the electricity generated at a fixed per-kWh tariff (typically 7-14p/kWh in 2026 — below grid retail at 20-26p/kWh). (3) Any electricity you don't consume is exported to the grid and managed by the provider. (4) After the contract term (usually 10-25 years), you either: renew the PPA, buy the system at residual value, or the provider removes it. The provider retains ownership and claims capital allowances.
PPA pricing in 2026
Typical warehouse solar PPA pricing in 2026: Floor tariff: 7-12p/kWh (depending on system size and contract term — larger systems attract lower tariffs). Annual escalator: 2-4% (most common); CPI-linked (less common now, given post-2022 CPI volatility); fixed (increasingly available). 10-year contracts: 9-12p/kWh. 15-year contracts: 7-10p/kWh. 20-25 year contracts: 6-9p/kWh. Day-1 saving vs grid retail: typically 30-50% at contract start.
PPA for leased warehouses
PPA is typically the preferred structure for tenant operators on leases with fewer than 7-10 years remaining. Advantages: zero capex, landlord consent easier (provider is the asset owner), off-balance-sheet treatment, no residual value risk if you vacate early. Disadvantages: you don't own the asset or claim AIA. Owner-occupiers and long-lease tenants almost always achieve better economics through ownership — you keep the tax allowances and all generated value.
Key PPA contract clauses to review
Before signing a warehouse solar PPA, review: (1) Minimum purchase obligation — do you have to pay for generation even when the building is empty? (2) Change of occupancy provisions — what happens when you vacate? (3) System performance guarantee — what happens if generation is below PVSyst forecast? (4) Grid curtailment — who bears the risk if the DNO curtails export? (5) Step-in rights — can the provider enter your building for maintenance without notice? (6) Buyout pricing — how is fair market value calculated for early termination? We review PPA drafts as part of our customer service.
PPA vs ownership: worked financial comparison
Example: 500 kW system, grid retail 22p/kWh, PPA at 9p/kWh, ownership capex £375,000. Ownership: Year 1 saving £96k, AIA tax shield £93.75k, net capex after tax £281k. Payback: 4.8 years net (3.8 years after tax). PPA: Year 1 saving (13p/kWh × 461 MWh × 87% self-consumption): £52k savings vs grid. No AIA. Over 10 years PPA: total saving £520k vs total ownership saving £960k (savings minus capex). Owner-occupier ownership generates approximately 2x the financial benefit of PPA over 10 years. PPA is right when capex is unavailable — not when it is available.
Common questions
Can I buy out a solar PPA early?
Yes — most commercial solar PPAs include an early buyout mechanism, typically at net present value of remaining contract cash flows plus a small premium. The buyout price reduces over time. We recommend negotiating a fixed buyout schedule at contract signature — this removes ambiguity and gives you a clear path to ownership if your business circumstances change. We review PPA buyout clauses as part of our advisory service.
Who are the main commercial solar PPA providers in the UK?
Main UK commercial solar PPA providers in 2026: Lightsource bp, Anesco, E.ON Energy as a Service, EDF Renewables, GridBeyond, Octopus Energy for Business, Noveus Energy, Low Carbon. PPA pricing varies — get at least three quotes and compare total 10/15-year cost, not just the headline tariff. Ensure the provider has MCS commercial certification and an IWA-backed workmanship warranty.