Australia now has more than 4.4 million rooftop solar systems installed nationwide, yet the upfront cost of a system remains the single biggest reason homeowners and businesses delay switching to solar power. A solar PPA (power purchase agreement) or solar leasing agreement can remove that barrier entirely, letting you access clean energy with no capital outlay. If you’re comparing finance options, our guide to commercial solar for businesses explains how organisations of every size cut energy costs without buying a system outright.
Under a solar PPA, a third party owns and maintains the panels, and you simply pay for the electricity generated, usually at a rate well below your retail tariff. A solar leasing agreement works differently: You pay a fixed monthly fee for use of the equipment, regardless of how much power it produces.
If you want to harness the benefits of solar power without the immediate financial burden, it may be worth exploring these financing options. Energy Matters can provide valuable insights and free solar quotes tailored to your specific needs. Understanding the available options and gathering information can empower you to make decisions about integrating solar energy into your home or business seamlessly.
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Key takeaways
- Solar PPA and leasing agreement options can reduce the upfront capital barrier to commercial solar.
- A PPA generally charges for solar electricity, while a lease generally charges for use of the solar equipment.
- Contract length, escalation, maintenance, ownership, incentives and early termination can materially change the economics.
- Australia’s 2026 policy changes, including the planned expansion of SRES eligibility to eligible solar systems up to 1 MW from 1 October 2026, should be considered when assessing new commercial projects.
- Comparing a PPA, lease and outright purchase on a consistent long-term cash-flow basis is usually more useful than comparing advertised monthly payments.
Energy Matters can help you take the next step. Get up to 3 free solar quotes from pre-vetted solar professionals and compare the options for your business before committing to a long-term solar agreement.
What is a solar PPA in Australia?
A Power Purchase Agreement (PPA) is a long-term contract under which an energy buyer purchases electricity generated by a renewable energy project at an agreed price structure.
In a commercial rooftop arrangement, a solar provider or project owner may finance, install, own and maintain the solar system on business premises. The business then purchases the electricity the system generates under the PPA.
The terminology can become confusing because the Australian PPA market includes several structures. A corporate PPA can also involve electricity purchased from a larger off-site renewable project rather than solar panels physically installed on the customer’s roof.
ARENA describes corporate PPAs as long-term contracts between corporate or government energy buyers and renewable energy suppliers for renewable electricity and/or associated renewable energy certificates.
How a rooftop solar PPA works
The exact treatment of exports, certificates, network charges, and grid-supplied electricity depends on the contract and project structure. A typical rooftop solar PPA may follow this sequence:
- The solar provider assesses the business premises, electricity consumption and available roof space.
- The provider designs a solar system around the site’s electricity demand and technical constraints.
- The provider or financier funds and owns the system.
- The provider installs and connects the system in accordance with applicable requirements.
- The business uses the solar electricity the system generates.
- The business pays the PPA provider according to the agreed electricity pricing structure.
- The business continues to purchase grid electricity when solar production does not meet demand.
- Excess electricity may be exported according to the site’s connection and retail arrangements.
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Why businesses consider solar PPA agreements
The main attraction of a commercial solar PPA is that it can shift some initial capital requirements and operational responsibility away from the energy user.
Instead of purchasing the solar system outright, the customer agrees to buy electricity under the contractual arrangement. Potential advantages include:
- Reduced or no upfront solar-system purchase cost.
- Access to renewable electricity without owning the generation asset.
- Potentially lower energy costs compared with applicable grid electricity prices.
- More predictable pricing over an agreed contract period.
- Provider-managed operation and maintenance, depending on the agreement.
- Potential support for corporate emissions-reduction objectives.
- Ability to preserve capital for core business activities.
What are the potential disadvantages of a commercial solar PPA?
A PPA is not free solar. It is a long-term commercial contract, and businesses need to understand what they are committing to. Potential disadvantages include:
- Long contract terms.
- Possible price escalation.
- Limited control over the solar asset while the provider owns it.
- Complex early termination provisions.
- Potential complications if a business sells, relocates or subleases its premises.
- Contractual restrictions on roof alterations or other building works.
- Different treatment of renewable energy certificates and environmental claims.
- Savings that depend on actual electricity production and the contracted price.
What is a solar leasing agreement?
A solar lease is a financing arrangement where a customer pays to use a solar system owned by another party.
Unlike a PPA, where payment is generally linked to the electricity produced, a lease normally involves scheduled payments for use of the equipment.
The original Energy Matters content describes the arrangement as similar to renting solar panels, with regular payments over a predetermined period.
The practical structure can vary significantly between providers, so businesses should read the actual agreement rather than relying on the label “lease”.
How solar leasing works
A typical commercial solar lease may involve:
- A provider or financier funds the solar system.
- The provider installs the system on the customer’s property.
- The provider retains ownership during the lease term.
- The customer makes scheduled lease payments.
- The customer uses the electricity the system generates.
- The agreement allocates maintenance responsibilities.
- At the end of the lease, the customer may have several possible options, depending on the contract.
Those options can include purchasing the system, renewing the lease, returning the equipment or transferring ownership.
Benefits of solar leasing
A commercial solar lease may suit a business that wants to access solar generation without committing the full purchase price upfront. Potential benefits include:
- Lower initial capital requirement.
- Predictable scheduled payments.
- Access to onsite solar generation.
- Potential reduction in grid electricity consumption.
- Maintenance arrangements that may be included in the contract.
- Possible accounting or financing advantages depending on the business structure and applicable accounting advice.
Potential disadvantages of leasing
A lease also creates a long-term financial obligation. Businesses should investigate:
- Total payments over the lease term.
- Ownership at the end of the agreement.
- Maintenance responsibilities.
- Insurance requirements.
- Equipment replacement provisions.
- Early termination costs.
- Transfer requirements if the property is sold.
- What happens if the building lease ends before the solar lease.
- Whether the system can be upgraded during the contract.
Solar PPA vs leasing: What is the difference?
The simplest distinction is the way you pay.
With a PPA, the customer generally pays for electricity generated by the solar system. With a lease, the customer generally pays for access to the solar equipment itself.
However, the actual economics can be more complicated because contracts can contain fixed charges, escalators, minimum payments, performance conditions and other provisions.
|
Feature |
Solar PPA |
Solar lease |
Outright purchase |
|
Upfront capital |
Usually low or none |
Usually low or none |
Higher |
|
Main payment |
Usually based on solar electricity generated |
Usually scheduled equipment payment |
Upfront or finance repayments |
|
System ownership |
Usually provider |
Usually lessor |
Customer |
|
Maintenance |
Often provider-managed |
Depends on agreement |
Customer or service provider |
|
Price certainty |
Depends on PPA pricing and escalation |
Usually scheduled payments |
Depends on financing and grid costs |
|
Long-term commitment |
Yes |
Yes |
Financing term only, if applicable |
|
Control of asset |
Limited during contract |
Limited during lease |
High |
|
End-of-term ownership |
Contract dependent |
Contract dependent |
Already owned |
|
Suitable for |
Businesses seeking lower upfront capital |
Businesses seeking equipment access without purchase |
Businesses prioritising ownership and long- |
A PPA may suit you if:
- You want to pay for solar electricity rather than purchase equipment.
- You want to minimise upfront capital expenditure.
- You prefer the provider to manage the solar asset.
- Your business has strong daytime electricity consumption.
- You can commit to a long-term agreement.
A solar lease may suit you if:
- Predictable equipment payments are important.
- You want to use solar without purchasing the asset outright.
- Your business can support a long-term equipment agreement.
- The lease provides suitable maintenance and end-of-term conditions.
Buying may suit you if:
- You have capital available for the investment.
- You want maximum control of the system.
- You want to retain the long-term benefits of asset ownership.
- You expect to occupy the property for many years.
- You want greater flexibility over future upgrades.
What should you check before signing a solar PPA?
Assess a PPA as a commercial contract, not simply a solar quote.
1. Electricity price
Check whether the PPA rate is fixed, indexed or escalated. If the rate increases each year, calculate the actual expected price in years five, 10 and 15 rather than comparing only the starting rate.
2. Contract term
Long agreements can provide price certainty but reduce flexibility. Ask what happens if you:
- Sell the business.
- Sell the building.
- Move premises.
- Sublease the property.
- Change your electricity consumption.
- Redevelop the building.
- Need to replace the roof.
3. System performance
The contract should clearly explain expected generation and what happens if the system produces less than forecast.
Check whether there are performance guarantees, availability requirements or remedies for extended equipment downtime.
4. Maintenance
Confirm who pays for:
- Inverter replacement.
- Panel faults.
- Monitoring.
- Repairs.
- Electrical work.
- Roof-related work.
- System removal and reinstallation.
5. Insurance and liability
Establish who insures the solar system and who carries liability for damage to the equipment, building or third parties.
6. Renewable energy certificates
Do not assume that the customer automatically receives every environmental attribute associated with the system.
Your agreement should explain ownership and treatment of certificates, including any applicable Small-scale Technology Certificates or Large-scale Generation Certificates.
7. Grid connection
Solar generation does not operate independently of the electricity network.
The project may require network approvals, metering arrangements and compliance with technical requirements.
8. End-of-term arrangements
This is one of the most important areas to clarify. The contract should state whether you can:
- Purchase the system.
- Renew the agreement.
- Extend the lease.
- Have the system removed.
- Transfer the agreement.
- Transfer ownership.
Solar financing and Australia's 2026 incentive changes
Government incentives can materially change the economics of commercial solar.
One important 2026 development is the planned expansion of the Small-scale Renewable Energy Scheme. The Australian Government announced that eligible solar PV systems between 100 kW and 1 MW will be eligible for STCs from 1 October 2026, subject to regulations being in place. Previously, systems above 100 kW generally fell outside the SRES threshold.
This change is particularly relevant to businesses considering commercial rooftop solar because it can affect a project’s upfront economics.
Energy Matters’ current commercial solar rebates and incentives guide also covers the changing commercial incentive environment.
Why incentives matter to a PPA or lease
The financing structure must establish how incentives are treated.
A provider may incorporate certificates or other incentives into the project economics rather than passing the full value directly to the customer. Ask:
- Who owns the certificates?
- Have you already included incentives in the quoted price?
- How are future regulatory changes treated?
- Can the PPA or lease price change if incentives change?
- Does the customer receive any environmental attributes?
Solar PPA agreements and the Australian energy transition
PPAs are becoming increasingly relevant as businesses look for ways to manage energy costs and support emissions-reduction targets.
ARENA’s research describes PPAs as a mechanism for matching electricity buyers with renewable generation and notes their role in helping organisations decarbonise.
AEMO’s 2026 Integrated System Plan reinforces the broader shift towards renewable generation, storage and network investment across the National Electricity Market.
For businesses, this means solar financing should increasingly be considered alongside energy efficiency, batteries, demand management, electric vehicles and other energy technologies.
Energy Matters’ commercial battery storage guide explains how batteries can store solar or grid electricity for later use and help businesses manage when they consume energy.
What about solar PPAs for leased commercial buildings?
Commercial tenants can face a particular challenge: they may want solar but do not own the roof.
A PPA or leasing model can potentially overcome some of the capital barriers because a third party may finance and own the equipment.
However, the building owner needs to be involved where required, particularly where roof access, structural modifications, electrical infrastructure, maintenance access or property rights are affected.
ARENA has documented projects exploring solar arrangements for commercial tenants, including models where tenants could access rooftop solar through leasing or PPAs.
Questions for commercial tenants
Before proceeding, confirm:
- Who owns the roof?
- Does the landlord approve the installation?
- Who is responsible for roof repairs?
- Can the solar system remain if the tenant leaves?
- Can the agreement be transferred to another tenant?
- What happens when the property lease expires?
- Who removes the equipment at the end of the arrangement?
Can a solar PPA include batteries?
Yes, depending on the provider and project structure.
A commercial PPA may include solar PV alone or potentially combine solar with battery energy storage. The commercial value of a battery depends on the site’s electricity consumption, tariff structure, demand profile, export arrangements and battery operating strategy.
Battery economics have also changed following Australia’s 2026 SRES battery changes. From 1 May 2026, battery STC calculations were adjusted, including changes to how usable battery capacity is treated.
For businesses considering a solar PPA with batteries, check:
- Battery ownership.
- Usable capacity.
- Expected degradation.
- Replacement responsibility.
- Dispatch strategy.
- Backup capability.
- Network requirements.
- Software and monitoring.
- End-of-contract ownership.
How to compare solar PPA and leasing agreement options
A structured comparison can make a long-term decision much easier.
Step 1: Understand your electricity use
Collect at least 12 months of electricity bills where possible. Identify:
- Annual electricity consumption.
- Daytime versus nighttime consumption.
- Peak demand.
- Seasonal changes.
- Current electricity rates.
- Export volumes.
- Expected future energy demand.
Step 2: Assess the property
Check roof condition, available roof area, shading, orientation, structural requirements and electrical infrastructure.
Commercial installations may require additional planning, approvals, and technical considerations. Energy Matters explains these considerations in its commercial solar system guide.
Step 3: Obtain comparable proposals
Ask each provider to quote on the same basic assumptions. Request:
- System size.
- Expected annual generation.
- PPA rate or lease payment.
- Escalation.
- Contract term.
- Maintenance.
- Insurance.
- Export treatment.
- Incentives.
- End-of-term options.
- Early termination costs.
Step 4: Calculate the long-term outcome
Do not compare only year-one savings. Model the expected outcome over the full contract term, including likely electricity-price movements and changes in system output.
Step 5: Review the contract
A commercially attractive spreadsheet can still conceal unfavourable contractual provisions.
Have qualified advisers review legal, tax, accounting and financial implications where appropriate.
What questions should you ask a solar PPA or leasing provider?
Before signing, ask the provider:
- Who owns the solar system?
- Who owns any renewable energy certificates?
- What is the starting electricity price or lease payment?
- Is the price fixed or indexed?
- Is there a minimum annual payment?
- Who pays for repairs and replacement?
- What happens if the system underperforms?
- Who pays insurance?
- What happens if the roof needs replacement?
- Can the agreement be transferred to a purchaser?
- What happens if the business moves?
- What are the early termination costs?
- What happens at the end of the contract?
- Can the customer buy the system?
- Who pays for removal if the system is not retained?