Ben Brading 8 min read

Selling solar energy through a PPA

Power Purchase Agreements (PPAs) are the most popular way for land owners and large businesses to export and sell their solar electricity to the grid. They are long-term agreements to sell renewable electricity between a buyer (typically an energy supplier or a large corporation) and the owner of a renewable energy source.

A solar installation of 0.3MW or more (approximately 500 standard 1×2 metre panels) can use a PPA to sell electricity to the grid at a much more competitive price than the equivalent Smart Export Guarantee tariff.

A PPA ensures a guaranteed buyer and revenue stability for up to 20 years, providing a clear return on investment for a solar farm.

This guide explains how to sell solar energy with a PPA. Here’s what we cover:

The full process of selling electricity with a solar PPA
Financial benefits of a solar PPA
Options for selling energy with a PPA
Expected earnings from a solar PPA
Regulations and compliance for selling solar power
What types of businesses can sell solar electricity with a PPA?

The full process of selling electricity with a solar PPA

Our guide begins with a complete step-by-step process for setting up a solar PPA for a ground-mounted solar installation.

The process below applies to a solar installation greater than 0.3MW that exports all power directly to the grid.

Step 1. Initial feasibility calculation

Start by assessing the feasibility of a solar installation by estimating its size and expected annual electricity output. Consider the following factors:

Cost – Evaluate the initial investment cost and available funding options for the proposed solar installation. For more details, visit our complete guide to commercial solar panel costs.
Land Suitability – Determine whether you have sufficient spare land for the solar panels (ideally flat or south-facing). Approximately 2.5 acres are required per MW of fixed-tilt panels.
Planning Restrictions – Ground-mounted solar farms typically require planning permission. Consider potential restrictions related to Green Belt, Areas of Outstanding Natural Beauty (AONB), or heritage concerns.

We recommend using this initial assessment to estimate the return on investment (ROI) for commercial solar panels based on current PPA prices per MWh.

Step 2. Grid connection feasibility

A key factor in determining the feasibility of a large-scale commercial solar installation is whether the local grid can support the additional exported power in your location.

In rural areas, the local grid’s cabling may be low-capacity and unable to accommodate large power injections on sunny days.

If any grid upgrades are required to support the proposed solar installation, you will need to cover the associated costs.

We recommend requesting a grid connection feasibility study from your local Distribution Network Operator (DNO) based on the estimated size of your solar farm from Step 1.

A grid connection feasibility study will indicate whether a formal grid application will likely be accepted and provide an initial estimate of the connection costs.

💡 A private wire PPA avoids this step, as the power will be used nearby, but it requires finding a willing buyer to purchase power with a corporate PPA in the local area.

Step 3. Secure planning permission

Submit a planning application to your local authority.

The assessment process can take three to six months and requires visual impact, biodiversity, environmental assessments, and community consultations.

Step 4. G99 application to DNO

Next, you must submit a formal G99 application to the local Distribution Network Operator (DNO) to obtain approval for the grid connection.

G99 applications are the official process required to connect renewable sources of power to the UK electricity distribution network and are required for solar systems over 5kW.

G99 applications ensure that new generators comply with grid safety, technical, and operational standards before exporting electricity.

After an assessment, the DNO will provide a grid connection offer with a cost breakdown and a timeline.

You must sign a connection agreement and pay a non-refundable deposit to accept the connection offer.

The local DNO will then issue your site with an export MPAN associated with the proposed new business electricity connection.

Step 5. Engage a contractor

Hire an Engineering, Procurement, and Construction (EPC) contractor to manage your solar installation, from design through to grid connection.

Since large-scale solar installations are a significant investment, we recommend obtaining formal quotations from at least three EPC firms.

Your EPC provider will guide your project through the following stages:

Procurement – Ordering solar panels, inverters, and racking equipment.
Installation – Ground preparation, installation of the racking, and mounting of the panels.
Connection – Coordinating with the local DNO to finalise grid integration.

The installation process typically takes six months, during which negotiations for a PPA should be conducted.

Step 6. Choosing the most suitable type of PPA

PPAs come in several forms, each with different risk and pricing structures. Choosing the right one depends on your business goals, risk appetite, and market conditions.

See below for our full explanation of PPA pricing and revenue models for solar energy.

It is important to consider the ideal contract length for a solar PPA. Typical terms are 10, 15, or 20 years.

Longer PPAs provide the highest revenue stability and may be beneficial for securing loans. However, if electricity prices rise, they could become less profitable.

Step 7: Identifying potential PPA buyers

PPAs can be arranged with energy suppliers, corporate buyers, or aggregators. See below, where we have explained options for selling energy with a PPA, including the pros and cons of each.

We recommend submitting an expression of interest to request initial pricing offers from potential buyers, ensuring you receive the most competitive rates.

Step 8: Negotiating a solar PPA

If you choose to proceed with a proposed PPA offer, the next stage is to negotiate the finer details of the contract. The following key points require careful consideration:

Payment Frequency – Solar PPAs are typically structured as monthly or quarterly payments.
Renewable Energy Certificates – Decide whether you will retain or sell the REGO certificates. If retained, visit our separate guide on generating and selling REGOs.
Termination Clauses – Agree on the conditions required for early termination and the financial penalties that may apply.

We recommend engaging legal and financial advisors to review the PPA contract.

The PPA buyer typically conducts due diligence to assess the technical aspects of your solar installation.

Step 9: Finalising the grid connection

Once your solar panels are installed and connected to the local grid, a business electricity meter will be installed at the point of connection to measure exported electricity.

Your solar PPA counterparty will purchase all the renewable energy your solar installation generates.

As part of the ongoing agreement, you will be required to submit power generation reports to your PPA provider.

Financial benefits of a solar PPA

Here are the most important financial benefits of agreeing to a long-term solar PPA.

Stable and predictable revenue

A PPA guarantees that all power produced by a solar installation will be purchased at an agreed price per MWh for up to 20 years, protecting investors against market fluctuations.

The security of a stable revenue stream from the solar installation makes it easier to secure low-interest green loans or attract investors.

More competitive pricing

Solar PPAs offer significantly more favourable pricing than the Smart Export Guarantee, which smaller solar installations use.

A solar farm’s larger scale of power provides greater negotiating power with corporate buyers and energy suppliers, resulting in more favourable business electricity prices per kWh.

Passive income

Once a solar farm is operational and a long-term PPA is in place, its revenue stream requires minimal effort to maintain.

Choosing a longer-term PPA provides financial stability, operational simplicity, and a reduced administrative burden, making it a more hands-off and predictable investment.

Options for selling energy with a PPA

Here, we present the most popular options for selling solar energy through a Power Purchase Agreement (PPA).

Direct to energy suppliers

The most common option for selling solar energy through a PPA is to a domestic or business energy supplier.

The following energy suppliers purchase electricity through PPAs from solar farms to supply customers under their green business energy tariffs:

EDF – Offers to buy power through a fixed PPA for solar, wind, and anaerobic digestion for sites generating a minimum of 0.5 GWh per year. Find out more on our page about EDF Business Energy.
Good Energy – Has power purchase agreements with over 2,000 independent renewable energy generators. Find out more on our page about Good Business Energy.
Octopus – Holds over 100 power purchase agreements, including smaller-scale installations. Find out more on our page about Octopus Business Energy.
F&S Energy – A leading independent PPA provider that purchases and sells power from British PPAs to customers in the industrial sector.

💡 At Business Energy Deals, we’ve helped thousands of companies compare business energy suppliers to find the best deal in the market.

Selling on the wholesale market

Instead of entering into a long-term Power Purchase Agreement (PPA), a licensed electricity trading partner can sell short-term PPAs on the wholesale electricity market.

Selling on the wholesale market provides greater flexibility, as the prices received will fluctuate directly with the wholesale electricity market.

Private wire PPA

In a private PPA, the power generated by commercial solar panels does not feed into the national grid; instead, it is supplied directly to a nearby buyer via a dedicated cable.

A private wire PPA is preferred when a local buyer can be secured. Its advantage is that it avoids the business electricity standing charges associated with using the national grid.

CfDs for solar developers

Large-scale solar farms producing more than 5 MW are eligible to apply for the Contracts for Difference (CfD) scheme, which provides an alternative mechanism for solar projects to guarantee future prices for exported electricity.

Under a CfD contract, the government pays the difference between an agreed-upon strike price and the market rate received from selling power, effectively fixing prices for solar farm owners.

Solar developers can secure a 15-year CfD contract through a government auction, which takes place every two years.

Find out more in our guide to Contracts for Difference for renewable energy.

The Smart Export Guarantee

An alternative and simpler solution for selling solar electricity is the Smart Export Guarantee (SEG) scheme.

Solar systems with fewer than 500 panels, or those where most of the energy is used on-site, typically cannot negotiate Power Purchase Agreements (PPAs) but can instead sell exported energy through the SEG scheme.

With a Smart Export Guarantee tariff, you can sell surplus electricity directly to your energy supplier.

Unlike selling with a PPA, there are no minimum power generation requirements.

However, Smart Export Guarantee rates are significantly less competitive than selling solar power through a PPA.

💡 At Business Energy Deals, our experts can help you find the best SEG tariffs on the market using our business electricity comparison service.

Expected earnings from a solar PPA

After the initial investment, a large solar system using a PPA should generate risk-free profits for decades.

This section explains the ongoing revenues and costs of a large-scale solar farm.

PPA pricing and revenue models for solar energy

In a solar PPA, the buyer typically agrees to purchase electricity on a “pay-as-generated” basis, meaning they only pay for the electricity that is actually generated, with no maximum or minimum limits.

This arrangement guarantees a buyer for the power generated at an agreed price for a period of typically 10 to 20 years. This long-term agreement provides pricing certainty and revenue security for the owner of a solar farm.

Here are the most popular revenue and pricing models for selling solar energy with a PPA:

Fixed-Price Solar PPA – For generators that want a fixed unit cost per MWh of electricity they generate, providing long-term security.
Indexed Solar PPA – For generators that want to receive a price that tracks the wholesale market price for energy, allowing them to benefit from expected rises in electricity prices.
Flexible PPA – An energy supplier facilitates the trading of your power on the wholesale market. This generally requires a minimum output of 40 GWh and has no long-term contract restrictions.

For more information, visit our guides on power purchase agreement pricing and VAT on commercial solar income.

Operating expenditure associated with a solar PPA

Operating expenditure for a large solar array affects profitability and the return on investment of a solar farm.

It is important to be aware of the following ongoing operating costs:

Maintenance – Panel cleaning, inverter servicing, and vegetation management.
Insurance – Covers asset protection, fire, theft, and weather-related damages.
Grid and Network Charges – TNUoS and DUoS charges associated with using the grid connection

Regulations and compliance for selling solar power

In this article, we have summarised the key compliance steps for selling solar power with a PPA. Here is a summary of the relevant regulations:

G99 application (grid connection agreement) – Solar projects with a capacity greater than 50 kW require a G99 grid connection agreement with the local Distribution Network Operator (DNO).
Generation licence – Solar projects are typically exempt from obtaining a generation licence from Ofgem, as solar farms are generally below 100 MW.
Planning permission – Planning permission is usually required for ground-mounted solar systems. See more above on applying for planning permission.
Business rates – Large-scale ground-mounted solar farms are subject to business rates, but they usually receive a 50% relief.

What types of businesses can sell solar electricity with a PPA?

The minimum requirement to sell solar electricity with a PPA is a project of approximately 0.3 MW, which equates to around 500 solar panels, which require 0.8 acres of space.

Businesses that sell electricity with a PPA must have both the capital to invest at least £0.25 million in solar installation costs and the available space for the panels.

Here are the most common types of businesses that sell solar electricity using a PPA: