School solar power purchase agreement pilot

The Department for Education (DfE) has launched a pilot programme to test private sector financing for installing rooftop solar panels in English schools and colleges.

Up to 150 schools and colleges in Yorkshire and Humber, the East Midlands and south east will take part in the first phase of the DfE’s renewal and retrofit programme. 

The pilot will evaluate the power purchase agreement (PPA) model for private sector investment in education sector solar installations. 

A PPA is a commercial arrangement in which a private sector provider finances, installs and maintains solar panels at no upfront costs to the school, college or responsible body, which agrees to purchase the electricity generated by those panels at a pre-agreed rate that is usually lower than standard grid tariffs. 

Zoe Stollar, partner in energy and infrastructure at UK and Ireland law firm Browne Jacobson, said: ‘The DfE's decision to pilot the PPA model for schools is a genuinely significant moment for the UK's clean energy transition. PPAs are already well established in the commercial and industrial energy market, so it is encouraging to see government actively structuring a route to bring that private finance expertise into the education estate.

‘What will be critical, however, is how the DfE's new template PPA and land lease documents are drafted. A standardised template can be enormously beneficial as it reduces transaction costs, speeds up procurement and gives private sector investors the certainty they need to price risk competitively. But templates can also bake in imbalance if they are not carefully calibrated. 

‘Schools and colleges will be largely non specialist counterparties in these arrangements, and the terms around tariff review mechanisms, step in rights, roof condition warranties, and exit provisions will all need to be fair and clearly understood by those signing them.

‘Looking ahead, the ambition to make this model available to all schools from the 2027 to 2028 financial year is welcome, but the pace of roll out will depend heavily on whether procurement in the pilot regions delivers good outcomes for both investors and schools. 

‘The private sector will be watching closely. To attract the depth of market participation needed at scale, the DfE will need to demonstrate that the model is commercially viable – and this means publishing the template documents promptly, engaging with energy and infrastructure investors during the testing phase, and being transparent about how value for money assessments will be applied.’

Rebecca Cullen, senior associate specialising in solar panel provision within education real estate at Browne Jacobson, added: ‘For many schools, energy bills are one of the largest and most unpredictable items of expenditure they face. The prospect of locking in electricity at a rate below standard grid tariffs, with no upfront capital cost, is genuinely attractive, particularly for schools operating under sustained financial pressure.

‘But school leaders and governors need to approach this with their eyes open. A PPA is a long term contractual commitment, typically running for 15 to 25 years, which involves granting a land lease over part of the school's roof and a new partnership with a private sector counterpart.

‘The responsible body – whether that is a local authority, multi-academy trust or the trustees of a voluntary aided school – needs to get to grips with the nature of obligations they are taking on and ensure they have appropriate advice before signing.

‘Going forward, the DfE should provide clear, accessible guidance for responsible bodies on what to expect from the template documents and how to negotiate, or at least understand, the key terms. A standardised PPA is only as protective as the school's understanding of it.’