Solar Power Purchase Agreements (PPAs) – Public Sector FAQs

Before considering a PPA, organisations should assess alternative delivery models, including: 

• Direct ownership through a self-funded installation using existing cash reserves or capital allocations. 

• Grant-funded opportunities where available. 

• Prudential borrowing (where permitted). 

• Leasing arrangements (where permitted). 

• Each option has different implications for risk, cost, ownership, flexibility and long-term financial return. 

A PPA should therefore form part of a wider options appraisal rather than being considered in isolation. 

Potential benefits include: 

• No significant upfront capital expenditure. 

• Quicker access to renewable energy generation. 

• Reduced exposure to fluctuating grid electricity costs. 

• Maintenance and performance responsibilities typically remain with the provider. 

• Support for organisational net zero objectives. 

For some organisations, PPAs can provide a route to solar deployment where capital funding is unavailable or prioritised elsewhere. 

PPAs are long-term contractual arrangements and should be assessed carefully. 

Potential considerations include: 

• Long-term contractual commitments, often extending 20–25 years. 

• Total lifetime costs may exceed those of direct ownership. 

• Electricity prices are often linked to inflation. 

• Future building works or roof replacement programmes may be constrained. 

• Detailed legal, financial and technical due diligence is required. 

• Savings may be lower than under self-funded ownership models. 

The suitability of a PPA will vary depending on an organisation’s financial position, estate strategy and risk appetite. 

PPAs can be an established route to delivering solar installations within the education sector, but they require careful consideration of governance, procurement, financial and legal requirements. 

Responsible bodies should ensure that any proposed arrangement: 

• Complies with the new Department for Education standard documents. 

• Represents value for money and they have clarity as to who benefits form the savings.  

• Has been subject to appropriate options appraisal. 

• Complies with procurement requirements. 

• Receives any necessary approvals (including Secretary of State approval). 

• Has been reviewed by specialist legal and financial advisers. 

Requirements may differ depending on the organisation’s status, funding arrangements and contractual structure. 

Some PPA providers operate through special legal entities such as Community Interest Companies (CICs) or community energy co-operatives. 

These organisations are typically established to deliver community benefit alongside renewable energy generation. 

While some schemes have successfully delivered local investment, educational benefits and community funding, organisations should distinguish between: 

• Guaranteed contractual benefits; and 

• Future community benefit aspirations. 

The most reliable and measurable benefit is usually the direct energy cost saving delivered through the PPA itself. 

Any future profit-sharing, community dividends or surplus distributions should be assessed carefully and supported by evidence of previous delivery case studies. 

A useful starting point is: 

Strategic Questions 

• Have we compared the PPA against all alternative funding options? 

• Does the proposal align with our estate and net zero strategy? 

• What happens if our future plans for the building change? 

Financial Questions 

• What are the projected savings? 

• How are future electricity prices assumed? 

• What inflation assumptions are being used? 

• What happens at the end of the contract term? 

Technical Questions 

• How has the system size been calculated? 

• What generation assumptions have been used? 

• Who is responsible for maintenance and performance? 

• How will roof condition and future maintenance be managed? 

Commercial Questions 

• Who owns the asset? 

• Who receives income from exported electricity? 

• What are the financing costs? 

• What happens if either party wishes to terminate the agreement? 

• Who benefits form the savings? 

• What happens if the PPA funder ceases trading? 

Governance Questions 

• Have we obtained independent legal advice? 

• Have we obtained independent financial advice? 

• Have we completed appropriate procurement and market testing? 

Before entering into any PPA, organisations should consider: 

• Ensure it is compliant with the new Department for Education standard documents, if an education provider. 

• Technical due diligence on the proposed system. 

• Legal review of contractual terms, including grant of any lease. 

• Financial modelling and value-for-money assessment. 

• Procurement compliance checks. 

• Counterparty financial strength and track record. 

• Building and estate implications over the contract period. 

• Governance and approval requirements (including DfE approval where required). 

Independent specialist advice should be obtained before entering into any binding agreement. 

The public sector is seeing growing interest in community energy models and innovative financing arrangements including solar PPAs. 

Government announcements relating to Great British Energy, future framework arrangements and wider market regulation are expected to further shape this space. 

As these developments emerge, building owners should ensure that decisions are based on robust evidence, independent advice and a clear understanding of long-term obligations. 

Barker has extensive experience supporting schools, academy trusts, local authorities and public sector organisations with estate strategy, funding, procurement and decarbonisation programmes. 

Whether you are considering a PPA, direct ownership, grant funding or a wider net zero strategy, our team can provide independent advice, options appraisal, business case development and project delivery support to help you make informed investment decisions.