Solar Power Purchase Agreements have been pitched to UK homeowners and businesses for a decade as the “no money down” route to solar — someone else owns the panels, you just buy the electricity they produce, usually at a discount to the grid rate. In 2026, with 0% VAT on residential solar and battery storage still running until 31 March 2027 and cash panel prices lower than they’ve ever been, the maths behind rent-a-roof deals has shifted hard against them for most homes. For some commercial roofs, a PPA can still make sense. This post runs the real 25-year numbers on both, and is clear about who actually keeps the Smart Export Guarantee income under each model — because that detail alone can be worth thousands over the life of a system.
What a solar PPA actually is
A Power Purchase Agreement means a third party — sometimes the installer’s finance arm, sometimes a dedicated PPA provider — installs and owns the solar panels (and sometimes a battery) on your roof at no upfront cost to you. You then sign a contract, typically 15-25 years, to buy the electricity the system generates at an agreed rate, usually pitched below your grid import price. The provider owns the asset, maintains it, insures it, and — critically — usually claims any Smart Export Guarantee (SEG) payments for electricity you don’t use, because they own the export.
“Rent-a-roof” schemes work on a similar principle but sometimes swap the electricity-purchase model for a flat annual roof rent instead, with the provider selling all the generated power to the grid. Either way, you’re trading upfront capital for a long-term contractual relationship with someone else’s asset sitting on your property.
The buying case: what ownership actually costs in 2026
Buying outright is now genuinely affordable compared to five years ago. A typical domestic system runs:
| System size | Installed cost (0% VAT) | Typical annual generation* |
|---|---|---|
| 3kW | ~£5,000 | ~2,550 kWh |
| 4kW | £6,000-£8,000 | ~3,400 kWh |
| 10kW | £13,000-£17,000 | ~8,500 kWh |
*Based on the UK average yield of roughly 850 kWh per kWp per year, rising to 1,050+ kWh/kWp in the sunniest parts of the south of England.
Add a battery if you want to shift more of that generation into evening use — expect £4,000-£8,000 installed for a domestic unit (roughly £400-£700 per kWh of storage), or £8,500-£10,500 for something like a Tesla Powerwall 3 at 13.5kWh. None of this is trivial money, but the 0% VAT window (in place in Great Britain until 31 March 2027, after which it’s scheduled to revert to 5%) has meaningfully compressed the payback period versus a few years ago. For a detailed size-by-size breakdown, our own cost of solar panels in the UK guide and solar battery storage costs page walk through the figures in more depth, and you can run your own numbers through the solar panel calculator.
With ownership, every unit of electricity your panels generate and you use is one you don’t buy from the grid at around 25p/kWh under the current Ofgem price cap level. Every unit you export goes to whichever SEG tariff you’ve signed up to — and because SEG rates are set by individual suppliers rather than government, they vary widely, from a few pence up to the best current offers around 12-20p/kWh. You choose your supplier, you keep 100% of that income, and you can switch SEG tariff whenever a better one appears, exactly as you’d switch a normal energy tariff.
Over 25 years — which is realistic, since modern N-type panels (TOPCon, HJT and back-contact designs are now standard from most reputable installers) degrade at only around 0.4% a year and are routinely warranted for 25-30 years — an owned system keeps generating meaningful output long after it’s paid for itself. The one certain future cost is a string inverter replacement at some point in years 10-15, typically £500-£1,000, which is worth budgeting for but doesn’t come close to changing the overall economics.
The PPA case: what you’re actually signing up to
The appeal is obvious on day one: zero capital outlay, someone else’s problem if a panel fails, and an electricity rate that’s usually a discount on your current import price. For homeowners who genuinely cannot access £6,000-£17,000 in capital or finance, and who would otherwise stay on 100% grid electricity, a PPA can still beat doing nothing.
But run the same system over 25 years and the picture changes:
- You pay for electricity indefinitely. Even at a discounted rate, you’re still paying per kWh for the life of the contract — there’s no point at which the system becomes “free” the way an owned system does once it’s paid back.
- You don’t own the export income. Under most PPA structures, the provider owns the generation asset and therefore owns the SEG revenue on anything you don’t consume. That’s a stream of income — potentially hundreds of pounds a year on a well-sized system — that flows to the provider, not you.
- Contract terms travel with the property. Selling a house with an active PPA or rent-a-roof agreement attached has, in plenty of documented cases across the solar leasing market (both UK and US, where the model originated), complicated conveyancing and put off buyers or mortgage lenders. Read the small print on assignability before signing anything.
- Escalator clauses. Some PPA contracts include an annual rate increase written into the agreement. A “discount to grid price” in year one can look a lot less generous by year 15 if your rate rises on a fixed schedule regardless of what happens to wholesale energy prices.
- No control over maintenance timing or contractor choice. The provider decides who services the system and when — fine when it works well, frustrating if response times slip.
None of this makes every PPA a bad deal — for domestic customers with genuinely no other route to solar, or for some commercial estates where balance-sheet treatment or capital allocation rules make off-balance-sheet energy contracts attractive, they remain a legitimate option. But “cheaper over 25 years” is very rarely one of their selling points once you model the SEG loss and the indefinite per-kWh payments against an owned system’s break-even.
Running the numbers side by side
Take a typical 4kW home system generating around 3,400 kWh/year, with roughly 40% self-consumed and 60% exported (a reasonably common domestic split without a battery).
Buy outright (£7,000 installed, 0% VAT):
- Self-consumed savings: ~1,360 kWh/year × 25p ≈ £340/year avoided import
- Export income: ~2,040 kWh/year × 15p (mid-range SEG) ≈ £306/year
- Combined annual benefit: ~£646/year, rising as grid prices rise over time
- Simple payback: roughly 11 years; the following 14+ years of a 25-year panel life are close to pure benefit, minus one inverter swap
Typical PPA (no upfront cost, discounted import rate, provider keeps export):
- You still pay for every self-consumed kWh, just at a discount — say 20p/kWh instead of 25p/kWh
- Self-consumed saving: ~1,360 kWh × 5p difference ≈ £68/year
- Export income: £0 to you — it belongs to the provider
- Over 25 years, cumulative benefit rarely approaches what ownership delivers once the system has paid itself off, because the PPA has no “break-even point” after which the electricity becomes effectively free
The gap widens further if you later add a battery, since a PPA provider who owns the panels but not necessarily the storage can create an awkward split-ownership situation on one roof. For a fuller explanation of why payback timing is the number that matters most, our solar panel payback period UK page breaks down how self-consumption ratio changes the calculation.
Where PPAs still make commercial sense
The calculation shifts on larger commercial roofs. A business with a large, currently-unused roof, limited capital budget, and a genuine appetite to avoid asset ownership can use a PPA to access commercial-scale solar — often 50kW-plus — without touching the balance sheet. Commercial systems typically cost £900-£1,200 per kWp installed when bought outright, so a 100kWp array is a six-figure capital decision; a PPA removes that barrier entirely. For businesses weighing this up, Solar Power Purchase Agreements is a useful independent starting point on how commercial PPA structures and pricing actually work, and [Solar Asset Finance](https://solarasset finance.co.uk/) covers where asset finance or lease options sit alongside a straight PPA. It’s also worth comparing PPA economics against a fully-financed purchase via Commercial Solar Finance before committing either way — the finance route often keeps SEG-equivalent export revenue in the business’s hands, which a PPA typically doesn’t.
Sector-specific costs vary too: a warehouse roof with minimal shading and high daytime demand is a very different PPA proposition to an office building with lower baseline consumption. If you’re assessing a specific building type, Solar Panels for Warehouses and Solar Panels for Office Buildings both set out how load profile affects the buy-vs-PPA decision for that property class, and Solar Panels for Farms is relevant for agricultural buildings weighing the same choice against the Improving Farm Productivity grant, which covers roughly 25% of eligible costs in England (rates differ by nation — don’t confuse this with the old FETF scheme, which no longer applies at that rate).
Getting quotes for both routes
If you’re genuinely undecided, get like-for-like quotes for outright purchase and for a PPA on the same roof, same system size, and compare the 25-year totals rather than the year-one headline rate. Installers experienced with both commercial models are a good source of an honest comparison rather than a sales pitch for whichever they prefer to sell: ec eco energy in Essex and East Anglia and D&R Energy in Bristol both work across commercial solar and can talk through PPA versus purchase for a specific building. For domestic systems, ecoaim in Central Scotland and ElectriFusion Solutions in South Yorkshire are worth asking for a cash/finance quote alongside any PPA offer you’ve received, purely so you’re comparing the real 25-year numbers rather than two different sales narratives.
The bottom line
For the great majority of UK homeowners in 2026, buying outright — helped by 0% VAT until March 2027 and genuinely affordable installed costs — beats a PPA over 25 years, mainly because ownership means you keep the SEG income and eventually stop paying for electricity altogether once the system has paid for itself. PPAs remain a legitimate tool for commercial roofs where capital constraints or balance-sheet treatment matter more than maximising 25-year return, and for domestic households with no realistic access to upfront capital or finance. Whichever route you’re weighing, insist on seeing a 25-year total-cost comparison, not just a year-one saving, before you sign anything.