Commercial Solar PPA Explained for Australian Businesses

A solar power purchase agreement, or PPA, lets a business put solar on its roof without paying for it. A provider designs, finances, installs and maintains the system, and the business pays for the electricity it produces, per kilowatt-hour, at a rate set below what the retailer charges. For a business that wants lower power costs and no capital outlay, it is a clean pitch. The detail is in the contract, and in who keeps the certificates.

That second point has changed in 2026. From 1 October 2026, solar PV above 100 kW and up to 1 MW can create Small-scale Technology Certificates (STCs) with a fixed five-year deeming period, and the CER says applications open mid to late November 2026. A provider that owns a 250 kW system can claim roughly $65,000 of certificates upfront, which lowers its cost and, in a competitive market, the price it charges. See mid-scale solar STCs.

How a PPA works

1. The provider assesses the site, designs the system and arranges approvals and network connection.
2. The provider pays for and installs the system, and owns it.
3. The business signs a PPA for a term, typically 10 to 20 years.
4. The business pays a per-kWh rate for the solar electricity used, plus any terms for exports.
5. At the end, the business may renew, buy the system or have it removed.

The business pays the retailer for whatever the solar does not cover, so the retailer relationship continues.

Buy versus PPA: an illustrative comparison

These numbers are illustrative only and not a quote. Assume a 250 kW system in zone 3, generating about 375 MWh a year, with 80% used on site and 20% exported.

Under a PPA, the provider carries the $184,400 net cost and charges, say, 14c per kWh for the 300 MWh used, or about $42,000 a year. The business saves about $18,000 a year against the 20c grid rate, with no capital outlay. The provider’s gross revenue of $42,000 on $184,400 of capital is about 23%, against 17% without STCs, before maintenance, insurance and financing. The STCs are what make a 14c rate viable. Without them, the same provider might need 17c or more.

The business that buys keeps the full $63,750 a year after paying for the system. The business on a PPA gives up about $45,750 a year of that for no outlay. That is the price of not owning the asset, and for some businesses it is the right price. A business with a cash-hungry core operation and a better use for $184,000 may well choose the PPA.

What to check in a PPA

Where certificates fit

Mid-scale from 1 October 2026 (100 kW to 1 MW). The system owner can claim STCs once applications open. Under a PPA, that is the provider, so it should show in the price. Make sure the installer and the products meet the SRES requirements, with SAA-accredited design and installation and Clean Energy Council approved products.

Systems up to 100 kW. STCs apply, with the deeming period shortening each year: five for 2026, four for 2027. A 99 kW system in zone 3 creates 684 STCs in 2026 and 547 in 2027.

Above 1 MW. LGCs, created as the system generates, at roughly $6 to $9 in September 2026. The provider owns them unless the PPA says otherwise. See how to sell LGCs and LGC vs STC.

Existing PPAs. If you signed a PPA on a 200 kW system before 1 October 2026, the system is outside the expansion and the original certificate treatment applies. Ask the provider what happens to certificates, and whether a new system would price differently.

For installers and EPCs

Many commercial installers build for providers, and the STC claim can be worth more than the margin on the job. That makes the claim a matter for the contract: who lodges, who pays, who carries the risk if a claim is rejected. If you hold the certificates and sell them, see the trading guide and the cash flow guide. For the broader picture of commercial incentives, see commercial solar rebates in 2026.

When a PPA suits

• The business lacks capital or would rather spend it on the core operation.
• It does not want maintenance and performance risk.
• The roof is long-lived and the lease is secure.
• It has a high daytime load, so most of the solar is used on site.

When buying suits

• The business has capital and a tax position that benefits from ownership.
• It wants the full saving and the certificates.
• It may sell the building, which can complicate a PPA.

Red flags in PPA offers

• An escalator that outruns the grid. If the PPA rate rises at 3% a year and the retailer’s rate does not, the saving disappears in later years.
• A vague certificate clause. “The provider retains all environmental attributes” is standard, but check the price reflects the value of up to about $65,000 on a 250 kW system.
• No performance guarantee. If the system under-produces, you pay for less power and the provider may not owe you anything.
• A buy-out price that is not a formula. “Fair market value, as determined by the provider” is a blank cheque.
• Roof liability. You should not pay to remove and reinstall panels for a roof repair without agreeing the cost first.
• Pressure on timing. A deadline tied to a “limited” STC discount is a sales line, not a rule. Mid-scale STCs applied from 1 October 2026 and the CER’s applications open in mid to late November.

Compare at least two offers on the same system size, and ask a third party to check the contract. For the shorter answers, see the commercial solar rebate answer and LGC vs STC.

What to do next

1. Get one quote to buy and one PPA offer on the same system size.
2. Ask each provider to show the STC or LGC treatment in writing.
3. Run the STC count for your size and zone in the STC calculator.
4. Read the LGC pillar and commercial solar over 100 kW.
5. If you install commercial solar, see STC trading and start trading.