Both routes can deliver strong returns. PPA preserves cash, shifts performance/O&M risk to a specialist and provides a long‑term hedge. CAPEX can yield higher lifetime savings if you have low cost of capital, strong balance sheet and appetite for owning/maintaining the asset. The best choice depends on your load profile, roof/electrical constraints, cost of capital, risk tolerance and procurement timeline.
Cost components
- CAPEX: Equipment, design, surveys, installation, grid approvals, commissioning.
- Financing: Interest/lease costs; WACC assumptions.
- O&M: Preventive/Corrective maintenance, inverter replacements, cleaning, monitoring, insurance.
- Performance risk: Yield variance, downtime, degradation.
- Decommissioning/End‑of‑life: Removal/disposal or repower options.
- Administrative: Compliance, metering, reporting, H&S
- Design & fund: Power‑Zero engineers size an array for your roof/estate based on load profiles and roof criteria. We fund capex; no upfront cost to you.
- Install & operate: We handle DNO notifications, H&S, CDM, commissioning and ongoing O&M, monitoring and insurance.
- You buy the power: You purchase the onsite generated kWh via the PPA at the agreed rate. When solar output is lower than demand, you still import from your existing supplier as normal.
- Settlement & data: Monthly billing with metered export (if any) and full performance reporting (via the Optimise portal).
Behind‑the‑meter vs offsite: This guide focuses on onsite PPAs (generation connected to your site LV/MV). Offsite/virtual PPAs are financial contracts tied to a remote generator and may involve REGOs and market settlement.
Cashflow comparison
| Line item | Year 0 | Years 1–20 |
| PPA | £0 | Pay per kWh at agreed p/kWh (includes O&M/insurance/monitoring) |
| CAPEX | Significant upfront spend | Lower grid import + your own O&M, insurance, monitoring costs |
Sensitivities that move ROI most
- Self‑consumption ratio (match to load).
- Grid price path (volatility and supplier contract terms).
- Indexation mechanics (PPA escalators vs fixed).
- Cost of capital (WACC) if buying outright.
- System performance (PR, availability, shading).
- O&M costs (who carries the risk).
Non‑financial considerations
- Speed to impact: PPAs can be faster to approve (opex) vs capex governance cycles.
- Balance sheet: PPA keeps capex off your books; check accounting treatment with advisors.
- Operational focus: Outsource monitoring, maintenance and performance risk under a PPA.
- Flexibility: Buyout and end‑of‑term options; relocation/roof works provisions.
- Reporting: PR/availability and ESG reporting delivered by provider.
When each route tends to win
PPA wins when…
- Capex is constrained or better used in core operations.
- You value a price hedge and risk transfer.
- Multi‑site portfolio roll‑out is planned and speed matters.
CAPEX wins when…
- You have low cost of capital and are comfortable taking performance/O&M risk.
- Long site tenure and strong in‑house FM capability.
- Desire to own the asset and optimise tax allowances directly.
How to compare offers
- Normalise system size (kWp), yield (kWh/kWp) and self‑consumption %.
- Use the same irradiance dataset and loss assumptions.
- Confirm O&M scope, response times and availability guarantees.
- Check indexation clauses, caps/collars and price review triggers.
- Map end‑of‑term options and buyout schedule.
- Ask for lifecycle costs (inverters, replacements).
- Stress‑test grid price scenarios and export limitations.
- Validate roof/structural assumptions and responsibilities.
