Should our business choose Capex, finance or a commercial PPA for solar and storage?

Australian commercial and industrial businesses have three established ways to invest in solar and battery storage: an upfront capital purchase, a financed solution, or a commercial Power Purchase Agreement (PPA).

Each option suits a different business context. The right choice depends on cash flow priorities, balance sheet strategy, risk appetite, and how energy assets are expected to perform inside the business over time.

This article explains the practical differences, in plain terms, for Australian C&I organisations.

Capex purchase. Ownership and long-term value 

A Capex purchase means the business buys the solar or battery system outright and owns it from day one.

This approach delivers the strongest long-term financial outcome where capital is available. All energy savings flow directly to the business, and the system becomes a depreciable asset. It also allows full control over system design, expansion, and optimisation.

Capex is commonly chosen by manufacturers, logistics operators, and asset-heavy businesses that expect to remain on site long term and prefer direct ownership of infrastructure. 

The trade-off is capital allocation. Upfront investment can be significant, and that capital is no longer available for core business growth. There is also no operational responsibility, even though solar is low-maintenance. Performance still needs to be monitored and managed to ensure savings are actually delivered. 

Capex suits businesses with strong balance sheets, predictable energy demand, and a long-term view. 

Financed solutions. Ownership with cash flow flexibility 

Financed solar and battery solutions sit between Capex and a PPA.

Under this model, the business owns the system but spreads payments over time. Energy savings typically offset a portion of repayments from day one, reducing bill pressure while preserving working capital.

This option is popular with businesses that want asset ownership and long-term returns but prefer not to deploy large amounts of capital upfront. It can also align better with internal hurdle rates and budgeting cycles. 

The key consideration is structure. Finance terms, interest rates, contract length, and performance assumptions must be realistic. Poorly structured finance can erode returns if system performance, usage patterns, or tariffs change over time. 

Financed solutions suit businesses seeking ownership without balance sheet shock, and who want savings now while building long-term asset value. 

Commercial PPAs. Energy as a service, not an asset. 

A commercial Power Purchase Agreement is fundamentally different.

Under a PPA, the solar system is installed on-site at no upfront cost to the customer. The provider owns, operates, and maintains the system. The business agrees to buy the energy it produces at an agreed rate, typically lower than grid electricity. 

The appeal is simplicity and risk transfer. There is no Capex, no asset management, and no performance risk sitting with the customer. Energy savings begin immediately, and capital remains free for core operations. 

PPAs are commonly used by large energy users, multi-site portfolios, and businesses that prioritise cash flow certainty over asset ownership. They are also well-suited to organisations with internal investment constraints or strict return thresholds. 

The trade-off is that long-term returns are lower than ownership models, because the provider retains asset value and incentives. Contract structure, escalation terms, and site tenure all matter, and PPAs must be designed carefully to remain. commercially sound over time. 

PPAs suit businesses that want lower energy costs without owning energy infrastructure. 

Solar and storage decisions are financial decisions

For Australian C&I businesses, solar and batteries are no longer just sustainability projects. They are financial instruments that interact with energy markets, tariffs, and operational load profiles.

The right model depends on how your business values capital, risk, ownership, and certainty. 

A good outcome starts with clarity. Understanding how Capex, finance, and PPAs actually work in practice allows businesses to choose the structure that supports long-term performance, not just short-term savings.

 That decision should be commercial first, and energy-smart sound.