A Department for Education (DfE) pilot to assess how power purchase agreements (PPAs) can enable solar installations in schools has been hailed as a “really important moment for the UK’s clean energy transition”.
However, the PPA template will need to be carefully worded so as not to “create an imbalance,” said Zoe Stollar, an energy and infrastructure partner at British and Irish law firm Browne Jacobson.
DfE’s pilot program will see solar panels installed at around 150 schools and colleges as part of the first phase of the renewal and retrofit programme. The program takes place in the Yorkshire and Humber, East Midlands and South East regions.
The £710 million renewal and refurbishment program aims to fund projects in buildings that would not normally be able to be delivered from existing maintenance funding, but which are not due to be rebuilt.
The PPA pilot will evaluate the model for enabling private sector investment in solar installations in schools and colleges, identifying the best route to market to deliver value for money at scale, regardless of location or building type.
In theory, the DfE’s PPA model would see schools receive the benefits of a solar installation without the need for upfront capital.
Other government interventions to help meet the initial costs have led to the public energy company, Great British Energy, provide the capital for solar installations in schools.
It was first announced shortly after that John Behan, CEO of AMPYR Distributed Energy, wrote to Energy Secretary Ed Miliband and GB Energy chairman Juergen Maier (positions both now gone) to highlight the role that private sector investors can play in supplementing government funding, promising to match the state-owned energy company’s £180m investment in public sector solar.
Rebecca Cullen, senior associate specializing in solar panel supply within education real estate at Browne Jacobson, said: “For many schools, energy bills are one of the largest and most unpredictable expenses they face. The prospect of locking in electricity at a rate below standard grid rates, with no upfront capital costs, is really attractive, especially for schools operating under continued financial pressure.”
PPA and land lease template
As part of the pilot, DfE has developed a PPA and land leasing template to be tested with the sector before wider use. DfE will consider applications it has already received for land consents for PPAs and linked land leases until 15 July 2026.
From 15 July 2026, every PPA for the school estate must use the DfE PPA and land lease template.
This is where Browne Jacobson’s attorneys urge some caution. Stollar noted that while “a standardized template can be immensely useful because it reduces transaction costs, speeds procurement and gives private sector investors the certainty they need to price risk competitively,” it “must be carefully calibrated.”
“Schools and colleges will be largely non-specialist counterparties in these arrangements, and the terms around rate review mechanisms, boarding rights, roof condition guarantees and exit provisions will all need to be fair and clearly understood by those who sign them,” Stollar added.
Along the same lines, Cullen said: “School leaders and governors need to approach this with open eyes. A PPA is a long-term contractual commitment, typically lasting 15 to 25 years, involving a land lease for part of the school’s roof and a new partnership with a private sector counterpart.
“The responsible body – whether that is a local authority, a multi-academy trust or the trustees of a volunteer-supported school – must get to grips with the nature of the obligations they are taking on and ensure they receive appropriate advice before signing.
“A standardized PPA is only as protective as the school’s understanding of it.”
