A solar power purchase agreement (PPA) can cost you nothing up front and still cost you a great deal over twenty years. The risks sit in the small print: how the price rises, what happens when the term ends, who can enter your roof, and what you owe if you sell the building. This guide lists the clauses to read first and what a fair version looks like.
It is general information, not legal advice. Have a solicitor who knows energy contracts review any draft before you sign.
What is a PPA, and why does the contract matter so much?
In an on-site PPA, a funder pays for and owns the solar system on your roof or land. You agree to buy the power it makes, at a set price per unit, for a long term. The saving comes from paying less per unit than the grid price. Our guide to PPA, purchase or lease compares the money side.
Because the funder owns the kit and you are tied in for decades, the contract does the work that a warranty and a bill would do elsewhere. That is why the clauses below deserve your time.
1. How does the price rise over time?
This is the biggest single item. A PPA price may be fixed, rise by a set percentage each year, or follow an inflation index. Each can hurt you.
- A fixed price is simple, but check what it is compared with.
- A set yearly rise compounds. Model it for the full term and compare it with the grid price you would otherwise pay. If grid prices fall, you could end up paying more than the grid.
- An index-linked price depends on which index. The Retail Prices Index (RPI) has not been a National Statistic since 2013, and the UK Statistics Authority plans to bring CPIH methods into it in February 2030. Ask which index applies, what happens if it changes, and whether there is a cap or a floor.
A fair clause names the index, says what replaces it if it changes, and caps the yearly rise.
2. What happens at the end of the term?
Ask three things. Can you buy the system, and at what price? Can you renew, and on what terms? Or must the funder remove it, and who pays?
Watch for a buy-out price described as “fair market value” with no way to set it. That gives the funder room to name a high figure. A good contract fixes the price, or fixes a method and an independent valuer, and sets a notice window for each option.
3. What if you want to leave early?
Early exit often triggers a fee based on the funder’s lost income. Ask for the formula, with a worked example for year five, ten and fifteen. A fee that does not fall as the term runs is a red flag.
4. What if the building is sold or the lease ends?
Your PPA runs with the site, so a sale or a lease break can cause trouble. Check whether the contract can move to a buyer, whether the funder must agree, and what you owe if it cannot. If you rent the building, the landlord’s consent is a must. A PPA signed by a tenant without it can fall apart.
5. What rights does the funder get over your property?
A PPA usually gives the funder rights to access the roof or land. Look at how long the rights last and whether they give the funder exclusive use. A grant of exclusive possession for more than seven years may need to be registered with HM Land Registry, which can affect a later sale or a loan secured on the building. A solicitor should check the wording against the rules.
Your mortgage lender may also need to agree. Ask early, because a late objection can delay the deal.
6. Who is responsible for the roof?
Panels go on roofs, and roofs still leak. Check who pays to move panels if the roof needs repair, how fast, and who is liable for damage the installation causes. Our guide to roof surveys explains what to check before panels go up.
7. Is there a performance promise?
The funder should say how much power the system will make and what happens if it makes less. Look for a guaranteed output or availability level, and a remedy that actually bites, such as a price cut. Also check what counts as the funder’s fault. A promise with broad exceptions is worth little.
8. Are you committed to buy a minimum amount?
Some contracts make you pay for a minimum amount of power whether you use it or not. That can be costly, for example if your site closes, moves or uses less electricity. Ask for the minimum in numbers and test it against your lowest-usage year.
9. What do force majeure and change-in-law clauses allow?
These clauses let one side pause or reprice the deal when something outside its control happens. They should work both ways. Read who bears the cost if the law changes, if the grid connection is delayed, or if the network operator limits the system’s output.
10. Can the funder sell the contract?
Most funders can sell their rights on. That may be fine, although you should ask for conditions. The buyer should take on every obligation, and you should get notice. Without that, you could end up dealing with a stranger who has no incentive to keep the system running.
11. Who removes the system, and who pays?
Decommissioning should be set out clearly: who removes the panels, by when, and who repairs the roof. See our post on end-of-life rules for solar panels for the waste side. Ask what happens if the funder has gone bust by then.
12. Is the funder allowed to sell you the power?
Supplying electricity normally needs a licence or an exemption. Government guidance sets out the licence exemptions for generators. A funder should be able to say which route it uses. If it cannot, treat that as a warning.
A quick scorecard
| Clause | Green flag | Red flag |
|---|---|---|
| Price | Named index, capped rise | “Reviewed from time to time” |
| End of term | Fixed buy-out method | Vague “fair value” |
| Early exit | Formula and examples | Fee set by the funder |
| Assignment | Buyer takes all duties | Free sale, no notice |
| Performance | Guaranteed output with a remedy | Many exclusions |
| Removal | Funder pays, roof made good | Silent |
Before you sign
Ask three funders for terms on the same basis, model the price across the whole term, and read the draft with a solicitor. Our PPA and financing advice runs this comparison for you. We do not fund or sell systems, so we have no interest in which offer you pick. If you want to compare the PPA route with buying outright, read our guide to due diligence on a commercial solar contract.
Sources: UK Statistics Authority, statement on the future of the RPI; HM Land Registry, practice guide 25; DESNZ, electricity licence exemptions guidance.
A PPA review costs less than a bad clause, since most terms run for decades. Our PPA and financing advice reviews the draft, while energy and ROI modelling compares the PPA price with buying outright. A feasibility study checks the yield the funder promises, and procurement and tender support runs a competition between funders.