Solar PPA vs Grid Electricity: What's Actually Cheaper for UK Businesses in 2026?
6 Minute Read
By
Jake Loggie
A real cost comparison between grid electricity and a solar PPA, using a live Ardora Energy case study with verified savings, payback, and ROI figures.
What Is a Commercial Solar PPA?
For UK businesses with high energy demand, electricity used to be a relatively predictable line on the balance sheet. That's no longer the case. Prices have eased since the extreme peaks of 2022 to 2023, but electricity remains structurally more expensive than historical norms, and far less predictable.
That's pushing many energy-intensive businesses to ask a more specific question: is it still cost-effective to buy all of your electricity from the grid, or does generating a share of it on-site through a Power Purchase Agreement (PPA) now work out cheaper?
This article breaks down a real comparison using a live Ardora Energy project, what a commercial solar PPA actually involves, and how the numbers compare to staying on grid supply.
What Is a Commercial Solar PPA?
A Power Purchase Agreement is a funding model where a third party, in this case an institutional investor, pays for the design, installation, and maintenance of a renewable energy system on a business's site. The business doesn't pay any upfront capital. Instead, it agrees to buy the electricity the system generates at a pre-agreed rate, typically over a 10 to 25 year term.
This is sometimes called a zero-CapEx model, because the cost burden that would normally sit with the business is carried entirely by the investor.
The system is installed "behind the meter," meaning it powers the site directly rather than feeding electricity back through the national grid. The business simply buys power generated a few metres from where it's used, at a lower and more stable rate than the standard grid tariff.
A Real Case Study: Solar and CHP at a UK Resort
A Real Case Study: Solar and CHP at a UK Resort
To make this comparison concrete, here's a recent project Ardora Energy structured and funded: a combined solar PV and Combined Heat and Power (CHP) installation at a golf and spa resort in the South East of England.
The site has a high, constant baseload from kitchens, laundry, and spa facilities, alongside high daytime demand across the clubhouse and grounds, a profile shared by many hospitality and leisure businesses.
The Investment
Total capital requirement: £1,322,283, fully funded with zero capital outlay from the client Combined annual savings: £486,205 Blended payback period: approximately 2.7 years
CHP System Performance
System size: 350 kWe / 439 kWt Share of site electricity demand covered: 91% Annual net savings: £354,159 Payback period: 2.5 to 2.6 years Indicative IRR: 38% 10-year projected savings: £4,238,667
Solar PV System Performance
System size: 530.145 kWp Annual savings (year one): £132,046, a 21% reduction on the annual electricity bill Payback period: 3 to 4 years Indicative IRR: 376% 25-year net present value: £3,834,602
Why Combine Solar and CHP?
Solar and CHP solve two different parts of a site's energy demand, which is why pairing them on one site produces a stronger result than either technology alone.
Solar PV generates electricity during daylight hours, directly offsetting the most expensive peak daytime grid rates at zero ongoing fuel cost. Its limitation is straightforward: it generates nothing overnight and contributes nothing to a site's heating demand.
CHP runs continuously, covering the baseload that solar can't reach. As it generates electricity, it also captures waste heat that would otherwise need to be produced separately, typically through gas boilers, for hot water and process use. For a site with round-the-clock heat demand like a hotel, leisure facility, or food production site, that captured heat is a second, separate savings line on top of the electricity savings.
Combined, the two technologies in this project now cover 91% of the site's total electricity demand, a figure neither system would reach independently.
The Real Comparison: Price vs Predictability
Solar PPA vs Grid Electricity: The Real Comparison
Most cost comparisons between grid electricity and on-site generation focus on price per kWh. That's a useful starting point, but it overlooks a second factor that matters just as much for business planning: predictability.
Grid electricity pricing is made up of volatile wholesale rates, network charges, environmental levies, and supplier margins. Even where a business fixes its rate, that fix typically only lasts one to three years. Once the contract ends, the business is exposed again to whatever the wholesale market looks like at that point, with limited ability to plan around it.
A solar PPA shifts a meaningful share of a site's energy demand onto a long-term, fixed-rate basis, typically 10 to 25 years. That doesn't just reduce cost. It removes a layer of unpredictability from financial planning, which matters for any finance team trying to forecast operating expenses with confidence.
Over a 10 to 25 year period, the gap between a site that remains fully grid-reliant and one that has shifted a portion of demand to fixed-rate, on-site generation compounds significantly. In the case study above, the CHP system alone is projected to deliver £4.2 million in savings over ten years.
Is a Solar PPA Right for Your Business?
A PPA structure tends to work best for sites with:
A large, consistent baseload (manufacturing, hospitality, cold storage, leisure facilities) Significant roof or land space available for installation High annual energy spend, where even a moderate percentage reduction translates into a meaningful pound figure An interest in reducing carbon footprint without capital expenditure, supporting net-zero and ESG targets
For businesses where on-site generation isn't a fit, such as rented premises or sites without suitable roof or land space, a separate route exists through commercial energy procurement and auditing, where the focus shifts to securing a better rate on standard grid supply rather than generating power on-site.
Get a Feasibility Assessment
If your business has a high, consistent energy demand and you want to understand what a solar PPA or combined solar and CHP installation could deliver on your own site, Ardora Energy can provide a detailed feasibility assessment outlining potential generation, projected savings, and the long-term financial case, based on your actual usage data.
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Jake Loggie
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