A Power Purchase Agreement (PPA) is a way to install solar on your sites without paying upfront CapEx. A third party pays for the system to be designed and installed, and your business buys the solar energy it produces at an agreed rate for the term of the agreement, typically around 10 years.
You get immediate access to lower-cost electricity without owning the asset or funding it from your balance sheet.
The main reason is capital discipline.
A PPA delivers immediate savings against grid electricity without typing up an internal budget. It also reduces internal workload because the system is designed, installed, managed and maintained for the life of the agreement.
For large, asset-heavy organisations, it is often the fastest way to lower emissions at scale without competing with core business priorities.
An onsite PPA means the solar system is built on your own property, usually on the roof, on available ground space or even in the car park. The energy is generated at your site and consumed directly by your operations. You are buying electricity that is produced behind your meter, at a lower agreed rate than grid power, and you avoid many of the network charges that apply to grid energy.
An off-site PPA is different. In that model, your business agrees to buy energy from a solar or wind farm located somewhere else on the grid. The power does not physically flow to your site. Instead, you continue to buy electricity from your retailer as normal, and the offsite PPA operates as a financial contract that hedges part of your energy cost and carbon exposure.
For most multi-site industrial and manufacturing businesses, onsite PPAs deliver more tangible value because they:
Reduce your actual grid consumption at each site
Off-site PPAs can make sense for very large energy users chasing portfolio-level carbon outcomes. On-site PPAs are usually the faster, more practical way to start reducing energy costs and emissions at the site level.
For larger, multi-site programs, it is commonly a third-party funder. In that model, your PPA contract is directly with the funder.
The funder then engages Smart as the EPC contractor and long-term asset manager. In practice:
The funder provides the capital and holds the agreement
This structure allows large portfolios to be delivered without drawing on internal capital or resourcing.
Yes. One of the strengths of a PPA is that it can fund more than just the solar panels. If roof works, switchboard upgrades, or other enabling electrical works are required, these can often be wrapped into the PPA so there is no upfront payment required. Those costs are simply factored into the energy rate over the term.
There are usually three options:
Wrap the full cost into the PPA
Any additional cost bundled in the PPA will increase the per-kilowatt-hour rate, which is why early assessment matters in the multi-site programs.
While 10 years is common, the term can be extended to 12 to 15 years to improve the commercial outcome.
Rates can be structured as:
A fixed annual escalation, often around 2.5 percent, or
The right structure depends on whether your priorty is simplicity, predicatablity, or maximising early savings.
Network approval is the biggest variable. Large or high-voltage sites can take 12-18 months to secure connection approval.
Most portfolios therefore combine:
Sites that can move quickly
This creates momentum while longer-lead projects work their way through approvals.
Most multi-site programs work best when they start with a small, deliberate first tranche.
The usual approach is to prioritise sites that combine:
High electricity consumption
This allows you to achieve early wins, build internal confidence, and create a repeatable model before scaling across the wider portfolio.
In practice, many organisations begin with 5 to 10 sites. That is enough to prove the commercial model, refine internal processes, and demonstrate real outcomes, without overcommitting from day one.
Larger, more complex or high-voltage sites can then follow once the program is established and momentum is on your side.
A PPA does not have to stop at rooftop solar. One of its strengths is that it can act as a single commercial framework for a broader transition plan.
In addition to solar generation, a PPA can include:
Solar car shades in car parks
This allows you to move beyond generation alone and package real operational change into one agreement.
Solar car shades add visible infrastructure and amenity while generating power. Enabling works removes common barriers to deployment. And carbon accounting software provides a live, auditable view of Scope 2 emissions and reduction across your portfolio.
Bundling these elements under a single PPA structure turns a solar project into a whole-of-site energy and reporting solution, aligned with both financial outcomes and mandatory climate obligations.
At the end of the agreement, you typically have three options:
Purchase the system for a pre-agreed residual value
Most organisations choose to buy or extend because the asset is proven and still generating value.
PPAs are usually assignable. The agreement can be novated to a new owner, subject to standard credit checks. This is common in property and industrial portfolios and does not prevent divestment or restructuring.
Under a typical PPA structure:
The funder owns the asset
You are not exposed to equipment failure, performance degradation, maintenance costs or asset obsolescence.
If usage falls, you simply consume less solar and more grid power. You are not penalised for reduced demand.
If usage grows, systems can often be expanded under the same commercial framework, if you have more available roof, ground or carpark space.
A PPA sits behind the meter. You still procure grid electricity from your retailer as usual.
In practice, onsite solar often improves your retail position by reducing peak demand and load volatility, which retailers price as risk.
Yes - PPAs include performance obligations. If the system underperforms against agreed benchmarks, remedies apply.
Because Smart is responsible for design, installation, monitoring and maintenance, performance risk sits with the system owner and operator rather than the customer.
The system owner insures the solar asset.
You continue to insure your building and operations as normal. Public liability and asset insurance forthe solar infrastructure are held by the system owner and operator.
Most organisations treat PPAs as operating agreements rather than capital assets.
Exact treatment depends on your accounting framework and advisors, but one of the core attractions of PPAs is that they usually avoid capitalisation of the asset and associated depreciation.
On-site PPAs directly reduce Scope 2 emissions at each site and provide:
Auditable generation data
They deliver both operational impact and reporting credibility.