The CFO’s Guide to Commercial Solar PPAs: Risk, Liability, and Long-Term Value

Comparative Overview: Procurement Models

Feature	Outright Purchase	Asset Finance	Fully Funded Solar (PPA)
Capex	Full Upfront	Financed	None
Opex	Internal responsibility	Internal responsibility	Managed by provider
Tax Treatment	Capital Allowances apply	Capital Allowances apply	Funder retains allowances

Decision Matrix: Need help choosing a funding route? View our Funding overview.

Market Context and Accounting Implications

Under a commercial PPA, a third-party investor funds, owns, and maintains the system for a long-term duration. The business purchases generated electricity at a contracted rate, providing a hedge against grid price volatility. For CFOs, it is critical to note that under IFRS 16, long-term PPA commitments may require assessment to determine if the contract contains a lease, which can impact balance sheet reporting. Because the funder retains ownership, they typically claim the capital allowances; the site host generally does not receive these specific tax benefits. VAT remains applicable, though it is recoverable as input tax for VAT-registered businesses.

Strategic Due Diligence: CFO Checklist

When evaluating a PPA, focus your due diligence on these five critical areas:

1. Change-in-law clauses: How does the contract account for legislative shifts?
2. Change-of-control provisions: Are there restrictions if the company is sold?
3. Assignment and Novation: What are the requirements for transferring the agreement during a property sale?
4. Exit costs: Are there defined financial penalties for early termination?
5. Maintenance responsibility: Confirm the provider’s KPIs for ongoing system performance and upkeep.

Download our PPA Risk Matrix to document these requirements during your procurement process.

For those prioritizing full asset control and capital allowance eligibility, an Outright Purchase remains the primary alternative. If your priority is immediate, no-cost carbon reduction, our Fully Funded Solar (PPA) route offers a proven mechanism for implementation. For firms seeking to manage their own assets, we also offer specialized Operations & Maintenance support. Additionally, integrating Battery Energy Storage can further enhance the value derived from any procurement model. We invite you to contact us to discuss the feasibility of these models for your facility. Visit our Contact page to initiate a consultation.