How it works
The PPA party funds installation. The school pays for what it consumes. The contract typically lasts 20 to 25 years, often with a buy-out option.
Contract length and £/kWh
20-25 years is standard. £/kWh varies with wholesale; typically priced below grid-supplied retail to make the deal attractive. PPA pricing reflects the funder's WACC and asset risk.
Academy governance
Academies need DfE consent for novel long-term contracts above ESFA thresholds. Trust counsel should review the energy-supply, indemnity and termination terms.
When PPA beats PSDS
- School cannot fund capex (PSDS not open or not awarded).
- Balance-sheet treatment matters more than headline savings.
- Solar PV only (no heat-source decarbonisation in scope).
- School is happy to give up lifetime savings in exchange for zero capex.
See: PSDS vs PPA, solar PV measure.