Solar PPA projects: Template Business Case and legal documents

The North East and Yorkshire Net Zero Hub has worked with partners to develop template documents for progressing a solar power purchase agreement (PPA) project on business rooftops.

Rooftop solar PPA projects are reasonably common in the community energy space and have seen some uptake within the local authority sector. The premise is simple: the project owner installs and owns solar panels on a third party’s rooftop and then sells them the electricity generated at a discounted rate. This provides a return for the project owner and an energy bill reduction from the third party.

The Hub’s documents include draft outline business case reports and calculations, plus template legal documents for the PPA and roof lease. These documents are designed to streamline the project development process for any local/combined authority or community energy group looking to set up such a project by providing the initial documentation that can be adapted for local use.

For support in further developing these documents for use in a specific context, please contact your local Net Zero Hub.

Outline Business Case

This document presents a comprehensive Outline Business Case (OBC) covering the Solar for Business scheme. It outlines the strategic case for the project including a comparison with a loan scheme. It explores the economic case through an analysis of the outputs from a theoretical trial of the project, highlighting critical sensitivities with the model. It covers the potential project management and commercial options, including setting out the options for internal and outsourcing actions.

Outline Business Case executive summary

This document provides a neat two-page summary of the OBC.

Decisions matrix

This spreadsheet sets out a list of 25 decisions to shape the project to specific requirements. It includes key considerations on how to make the decisions.

Process and decisions chain

This document sets out the steps and actions to go from a draft OBC to a project that is ready for a Final Investment Decision.

Draft sign-up form

This document highlights the key data and information that will be needed from businesses when inviting them to be part of the scheme.

Economic model

This moderate-level spreadsheet calculates the key outputs of the scheme according to user-defined inputs. Users are able to input modelling assumptions and project details. The existing modelling assumptions are conservative assumptions from a blend of previous experience and independent consultant review. The existing project details are built for a theoretical trial of the scheme.

Airspace lease

The airspace (roof) lease should be considered the main legal document as it sits with Land Registry. It is the document that allows the solar panels to be installed on the rooftop. The document contains some optional clauses that can be included or excluded based on the specific project design.

Landlord and Tenant Act 1954

These two documents are required to declare and provide notice that sections 24 to 28 of the Landlord and Tenant Act 1954 (security of tenure) shall be excluded.

Power Purchase Agreement

The PPA outlines the agreement by which the business will purchase electricity from the project owner’s solar panels. It should be aligned with the lease as much as possible. The document contains some optional clauses that can be included or excluded based on the specific project design.

Guidance note

This document provides the guidance on how to read the legal documents. It explains the various bits of legalese. It outlines the optional clauses within the lease and PPA, considerations on when to use them, and how to use them.

Note

This work was led and developed by officers within the North East and Yorkshire Net Zero Hub, unless otherwise stated. It is intended to be treated as a starting point for further development and should not be treated as a set of finalised documents.

The economic modelling has been subject to a high-level independent review from Altass Consulting as part of a wider commission from the Hub to support project development.

Muckle LLP was commissioned by the Hub to produce the legal contract template pack for use by public and community sector parties. The legal contract template pack presented has not been edited.

This work was funded by the North East and Yorkshire Net Zero Hub, which is itself directed and funded by the Department for Energy Security and Net Zero.