The latest Corporate PPA Government update looks at how these long-term renewable electricity deals could help industrial and commercial businesses strengthen their energy strategies. Peak demand charges are often overlooked, despite having a significant impact on electricity bills. A single short period of high demand can increase costs for a whole billing period, regardless of how efficiently the site runs for the rest of the month. Margins can be reduced before the first product has even left the production line.
Published on 7 July 2026, the Corporate PPA Government update follows a call for evidence that drew input from 125 organisations across the electricity sector, including buyers, generators, suppliers, traders, advisers and industry bodies.
The feedback showed that Power Purchase Agreements (PPAs) can give businesses more certainty about their long-term electricity costs and support investment in renewables. However, several barriers remain, including credit and collateral requirements, complex contracts, and transaction costs.
The Government’s response considers the broader PPA market, including options for buying offsite-generated renewable electricity. It does not introduce new funding for on-site commercial Solar PV.
Even so, this development matters for businesses reviewing their renewable energy strategy. Long-term electricity agreements are increasingly seen as a way to manage costs and help renewable projects secure the stable revenues needed for investment.
If your business has a suitable roof or land space, an on-site solar PPA is another way to secure long-term renewable electricity. Here, a third party funds the Solar PV installation, and you buy the electricity generated on-site through a long-term contract at a much cheaper rate than from the grid. This removes the need for upfront capital outlay whilst reducing electricity bills.
What did the Corporate PPA Government update say?
A Corporate Power Purchase Agreement is a long-term contract in which a business agrees to purchase electricity from renewable energy sources.
The Government’s July response examined the potential role of PPAs in supporting industrial and commercial electricity users, in investing in new low-carbon generation, and in developing the wider Great Britain PPA market.
A key commercial benefit highlighted was greater long-term price certainty. For businesses exposed to wholesale electricity price swings, locking in a price or pricing mechanism for part of your future electricity needs can make energy budgeting much clearer.
That remains relevant because wholesale energy represents a substantial part of commercial electricity costs. Ofgem states that wholesale costs typically account for around 40% of a business’s electricity bill, although the precise proportion varies by customer.
PPAs are not the right fit for every organisation. Barriers such as credit requirements, collateral requirements, complex contracts, and transaction costs were all raised. Any long-term electricity agreement needs careful financial and legal review before proceeding.
The Government is now reviewing the evidence and considering steps to further develop the GB PPA market.
Why does this matter for commercial Solar PV?
While the Government’s response focuses on the wider PPA market, the commercial principles behind long-term renewable electricity deals are just as relevant for businesses looking at on-site generation.
If you want to reduce your reliance on grid electricity, there are several options. You could buy and own a commercial Solar PV system, use alternative funding, or enter into an on-site PPA if the project is suitable.
An on-site Solar PPA is especially useful if you have a good opportunity for Solar PV but prefer not to commit significant capital to the installation.
In this setup, a third-party PPA provider funds the Solar PV system. Green Shield Group can handle the design and installation, while you agree to buy the electricity generated under the PPA.
The agreement typically runs for a long period, commonly between 15 and 25 years, although the exact structure and terms vary by project and provider.
This means you can access on-site renewable electricity without using your own capital for the initial Solar PV installation.
How can an on-site Solar PPA reduce electricity costs?
The main financial benefit comes from replacing some of your grid electricity with power generated by the Solar PV system at your site.
With a PPA, you pay an agreed rate for each kilowatt-hour of solar electricity you use on-site. This rate can be lower than what you pay for grid electricity, so you see immediate savings on that part of your energy use.
For example, you might secure on-site solar electricity at around 13p/kWh, while the business is purchasing grid electricity at a materially higher rate. This is an illustrative example rather than a standard PPA price, as rates depend on your project, contract terms, system economics and the current electricity market.
Take a manufacturing facility with high daytime electricity use. A commercial Solar PV system on the factory roof generates electricity during production hours. The business buys this solar electricity at the agreed PPA rate, while any extra electricity needed still comes from the usual supplier.
This way, you can cut the cost of part of your electricity without having to buy the Solar PV system upfront.
A long-term PPA also gives you more visibility over how your on-site electricity price will be set, depending on the contract’s pricing and indexation terms.
Why might a business choose a PPA rather than purchasing Solar PV outright?
Commercial Solar PV can require significant capital, especially for larger manufacturing, warehousing, hospitality or commercial property sites.
For some businesses, buying the system outright makes commercial sense. You own the asset and keep the financial benefits, minus operating and maintenance costs.
Other businesses may have more pressing priorities for their available capital.
A manufacturer might be investing in production equipment or additional capacity. A hospitality group may have refurbishment programmes underway. A logistics operator may be investing in vehicles, automation or new facilities.
In these cases, a viable Solar PV project can still proceed via a PPA without tying up your capital budget.
Here, the third-party provider funds the installation, and you pay for the electricity generated over the contract period. This changes your cash flow compared to buying the system outright and keeps your capital free for other investments.
The right approach depends on your financial position, required returns, cost of capital, property plans and long-term energy strategy.
Why does solar self-consumption matter?
A good on-site PPA opportunity depends on how well your solar generation matches your electricity demand.
If your business uses a lot of electricity during the day, you’re likely to use more of the solar electricity generated on-site.
Manufacturing sites, food and drink producers, warehouses, hotels, healthcare estates, universities and other organisations with steady daytime loads can all be good candidates, provided the site is technically and commercially suitable.
Half-hourly electricity data is especially useful at the feasibility stage. It lets you compare your actual consumption pattern with the expected Solar PV generation profile.
This helps you size the system properly, estimate how much electricity you’ll use on-site, and see how much might be exported.
A well-designed project will always consider your actual and expected energy needs, as well as the available roof or land area.
What should businesses consider before entering a long-term Solar PPA?
Not having to pay upfront doesn’t remove the need for careful commercial due diligence.
A PPA is a long-term commitment, often 15 to 25 years, so it’s important to understand how the agreement could perform under different operational and energy market scenarios.
The starting electricity rate matters, but so does how that rate changes over time. Some agreements include annual indexation or set price increases. It’s important to model these terms against realistic assumptions for future grid electricity costs.
Your property plans are also important. An owner-occupied manufacturing site expected to stay operational for decades is very different from a leased property nearing a break clause or a business thinking about relocating.
The agreement should clearly set out who is responsible for ownership, operation, maintenance, insurance and performance. You should also know what happens if you sell the property, move premises or when the PPA ends.
All these factors should be weighed alongside the projected electricity savings to give you a full picture of the long-term commitment.
Where could battery storage fit?
Battery Energy Storage Systems, or BESS, can also be considered alongside commercial Solar PV if the technical, financial and contractual arrangements make sense.
A battery stores electricity generated when solar production exceeds your immediate demand, making it available later. This can help you use more of your own solar power or support broader on-site energy management.
The commercial value of BESS varies widely between businesses.
A manufacturing site with high daytime use may already use most of its Solar PV generation directly. Another site with a bigger gap between generation and consumption may have more reason to look at storage.
You’ll need to consider battery capacity, electricity tariffs, export value, cycling, degradation, site demand and the PPA terms before adding storage to a project.
The decision should be backed by detailed modelling to show the extra commercial value the battery is expected to deliver.
What does the Corporate PPA Government update tell businesses about energy planning?
The Government’s July response makes it clear that long-term renewable electricity purchasing is now a serious focus in the UK’s commercial energy market.
For larger organisations, options now include off-site Corporate PPAs alongside traditional electricity procurement and other energy strategies. If you have suitable premises, it’s worth assessing whether generating renewable electricity on-site could offer a stronger commercial case.
How you fund that on-site infrastructure is a key part of the decision.
Buying Solar PV outright may offer the best long-term financial return if you have the capital available. An on-site PPA is another route if you want to protect capital and secure lower-cost renewable electricity.
Both options require a clear understanding of your energy use, property, financial goals and future plans.
Green Shield Group helps commercial organisations assess the technical and financial viability of Solar PV projects and find the right delivery route, including options that remove the need for upfront capital.
If you’re reviewing your electricity costs and long-term renewable energy plans, understanding the available funding and purchasing options gives you a stronger basis for deciding how commercial Solar PV fits into your wider energy strategy.
