PPA vs Buying Logistics Solar Outright: 2026 Comparison

Once a logistics operator accepts that solar pays, the next question is how to fund it, and the answer is not the same for every site. There are three routes for solar panels for logistics in 2026: buy outright with cash, buy on asset finance, or take a power purchase agreement (PPA) where a third party owns the system. Each suits a different combination of tenure, balance sheet and lease length. This guide compares all three on the terms that matter to distribution.

The three routes in plain terms

Capital purchase (cash). You pay for the system upfront and own it outright. You claim the full capital allowances, keep every kilowatt-hour of saving, and own an asset that runs for 20-plus years. The trade is the upfront outlay and the maintenance responsibility.

Asset finance. A lender funds the system and you repay over a term, typically while still owning the asset and claiming the allowances. It spreads the cost so the project is often cash-flow positive from day one, the savings cover the repayments, at the price of interest over the term.

Power purchase agreement (PPA). A third party funds, owns and operates the system on your roof. You buy the power it generates at a fixed rate per kWh set below grid retail, with zero capex and the arrangement usually sitting off your balance sheet. You do not own the asset and you do not claim the tax allowances, the owner does, but you also carry none of the capital risk.

Comparing the options side by side

The merits and drawbacks divide across the three routes:

Factor	Capital purchase	Asset finance	PPA
Upfront capex	Full cost	Little to none	None
Who owns the asset	You	You	Third party
Capital allowances (AIA / FYA)	You claim	You claim	Owner claims
Balance sheet	On (asset)	On (liability)	Usually off
Total lifetime cost	Lowest	Mid (interest)	Highest
Maintenance and performance risk	Yours	Yours	Owner’s
Best for	Owner-occupiers, strong balance sheet	Owners wanting day-one positive cash flow	Tenants, shorter leases, tight capex
Lease-length fit	Long lease or freehold	Long lease or freehold	Works on shorter leases

The headline trade is ownership versus simplicity. Buying outright gives the lowest lifetime cost and full control of the savings, but ties up capital and puts the allowances and maintenance on you. A PPA removes the capex and the risk entirely, but the third party keeps the asset and the tax relief, so you pay more over the system’s life in exchange for paying nothing upfront. Asset finance sits between the two.

Why tenure decides more than anything

In logistics, the route is driven less by preference than by who holds the building and for how long. A large share of UK warehouse and distribution space is occupied under lease, and that single fact pushes many operators toward a PPA.

If you own and occupy, capital purchase or asset finance is usually the right answer, you can claim the allowances and you hold the asset for its full life. If you lease, two things change. First, you need landlord consent before installing anything, secured through a green-lease addendum aligned with the BBP Green Lease Toolkit that most institutional landlords recognise. Second, a PPA becomes attractive precisely because the third-party owner takes on the lease risk: if your lease has, say, eight years left, recovering a full capital purchase can be tight, whereas a PPA simply supplies power for as long as you are there. For tenants on shorter remaining terms, the PPA is often the only route that works cleanly.

Tax: the lever that favours ownership

The reason buying outright still wins on lifetime cost comes down to tax. Solar PV qualifies as plant and machinery, so the 100% Annual Investment Allowance lets a limited company write off the full cost against taxable profit in year one up to the £1m cap, with a 50% First Year Allowance above, worth up to around a quarter of the project value back as tax saved.

Whoever owns the asset claims that relief. Under capital purchase or asset finance, that is you. Under a PPA, it is the third-party owner, and the value of that tax shield is typically priced into the per-kWh rate they offer you. This does not make a PPA a bad deal, it makes it a different one: you are effectively trading the tax benefit and ownership for zero capex and zero risk. For owner-occupiers with profit to shield and capital to deploy, ownership is hard to beat. If your site sits in a Freeport or Investment Zone, enhanced capital allowances strengthen the ownership case further.

What about end of lease?

For leasehold sites, the funding choice and the lease-end position are linked, and worth settling at the outset. A well-drafted lease addendum should specify one of three outcomes: the tenant removes the system at expiry (typical for shorter leases), the tenant transfers ownership to the landlord at an agreed value, or, under a PPA, the agreement continues with a successor tenant. The BBP toolkit covers all three paths, and the right one depends on which funding route you chose and how long you expect to stay. A PPA tends to make the end-of-lease conversation simplest, because the owner, not the occupier, holds the equipment throughout.

A worked example

To see how this plays out, take an illustrative case. A national 3PL on a 280,000 square foot distribution centre, paying around £620,000 a year for power on a 15-year FRI lease with green-lease provisions, installed roughly 1.18 MW (about 2,170 panels) generating around 1.09 million kWh. Because the operator was a tenant and wanted no capex on the balance sheet, the scheme was PPA-funded: zero upfront cost, the owner claimed the allowances, self-consumption sat near 84%, and the annual saving was in the order of £245,000 for a payback close to 5.1 years on the underlying asset. Had the same operator owned the freehold with capital to deploy, a cash purchase would have delivered a lower lifetime cost by capturing the tax relief directly. The figures are illustrative and depend entirely on your site, roof, load profile, tariff and lease.

How to choose

The decision tree is short. If you own the building and have capital to deploy, buy outright for the lowest lifetime cost and full tax relief. If you own but would rather keep cash free, asset finance keeps ownership and the allowances while staying cash-flow positive. If you lease, especially on a shorter remaining term or with no appetite for capex, a PPA removes the risk and works within the lease.

The right answer is specific to your tenure, lease length and tax position, so the sensible next step is to model all three against your real load. Review the cost guide for the underlying numbers, the funding routes for the schemes that apply to your tenure, and the savings calculator for an instant indicative figure. The fit also varies by building type, see distribution centre solar. When you are ready, request a free feasibility and we will return a fixed-price proposal modelling ownership against a PPA for your site.