An onsite PPA is usually better than an EPC contract when a business wants rooftop solar without deploying capital or managing the asset, whilst an EPC contract is usually better when the business has capital available, wants to own the system from day one and is comfortable taking the long-term performance and maintenance responsibility.

This article explores the differences and lays out the impact for your business in the short vs long term.

Core differences between PPA and EPC

Onsite PPA vs EPC Contract: Key Differences

Compare onsite solar power purchase agreements and EPC contracts by installation cost, asset ownership, maintenance, performance risk, contract duration, and financial treatment.

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Comparison of onsite PPA and EPC solar ownership models
Comparison topic Onsite PPA / Energy as a Service EPC contract / Asset ownership
Who pays for installation? The solar developer typically funds the system. The property owner funds the system.
Who owns the solar asset? The developer generally owns the solar asset during the contract term. The property owner owns the solar asset from commissioning.
What does the customer pay for? Solar electricity consumed, usually charged on a per-kWh basis. The design, equipment, installation, and commissioning of the full solar system.
Upfront capital required Usually none or materially reduced. Significant upfront capital expenditure is normally required.
Ongoing maintenance Usually the solar developer’s responsibility. The property owner’s responsibility, either directly or through a separate operations and maintenance contract.
Performance risk Mainly sits with the developer, subject to the power purchase agreement terms. Mainly sits with the property owner after handover.
Contract duration Long term, commonly 10–20 years. The EPC construction agreement is generally short, while the owner retains the asset for its operating life.
Financial treatment Typically treated as operating expenditure for purchased solar electricity. Accounting treatment should be confirmed with professional advisers. Typically treated as capital expenditure and a balance-sheet asset, subject to accounting and financing treatment.
Best suited for Businesses prioritising cash preservation, predictable solar pricing, and outsourced operations. Businesses prioritising asset ownership and maximum long-term economic upside.

An onsite PPA is not “free solar.” The customer enters a long term electricity purchase commitment where the value comes from avoiding upfront capex and paying for solar energy under an agreed commercial structure.

Key solar PPA benefits

1. Preserve capital for core priorities

With a PPA, the developer funds the rooftop solar project. That means the business does not need to divert capital away from operational expansion, equipment, refurbishment, fleet investment, working capital or other strategic projects. For a hotel, factory, warehouse or school, this can make solar viable even when the sustainability case is strong but capex is already allocated elsewhere.

Singapore's JTC’s solar-deployment guidance describes the solar-leasing / PPA structure as having zero capital installation costs for the property owner, with the solar vendor owning and installing the panels.

2. Turn a capital project into an energy purchase

Under EPC, the business buys an energy-generating asset. Under a PPA, the business buys the electricity that asset produces.

That distinction changes the internal approval conversation:

  • EPC: “Should we spend capital to buy a solar system?”
  • PPA: “Should we purchase part of our daytime electricity from an on-site solar system at an agreed tariff?”

For management teams, the second question can be easier to assess because it connects solar directly to operating expenditure, electricity purchasing and cost predictability.

3. Transfer construction, asset and maintenance burden

In a standard PPA, the developer handles:

  • System financing
  • Design and installation
  • Equipment procurement
  • Asset ownership
  • Performance monitoring
  • Preventive maintenance
  • Repairs and replacement obligations, subject to contract terms
  • Regulatory submissions and maintenance costs

JTC’s guidance specifically notes that the solar vendor is responsible for regulatory submissions and maintenance, while Sembcorp similarly describes the PPA developer as building, owning and maintaining the asset. This is valuable for facility teams that do not want solar asset management to become another internal responsibility.

4. Reduce performance risk

With EPC, the owner carries the commercial consequences if the system underperforms after warranty and handover unless it has negotiated a strong O&M and performance guarantee arrangement.

Whilst with a PPA, the provider’s revenue depends on solar electricity being generated and sold. This generally aligns incentives: the developer has a direct reason to design, monitor and maintain the system well. However, the PPA should be reviewed carefully for:

  • Minimum generation commitments
  • System availability guarantees
  • Metering methodology
  • Tariff escalation mechanics
  • Curtailment rules
  • Force majeure treatment
  • Roof-access responsibilities
  • Repair response times
  • Underperformance remedies

The risk is transferred only to the extent that the contract clearly allocates it.

5. Improve budget certainty

A PPA can offer a fixed or pre-agreed solar tariff for the contract period, making a portion of daytime electricity cost more predictable. This can be particularly useful for sites with steady daytime demand:

  • Warehouses and distribution facilities
  • Factories and industrial sites
  • Schools and campuses
  • Hotels with meaningful daytime common area loads
  • Depots preparing for daytime fleet charging
  • Commercial buildings with office hour consumption

The business will still normally remain connected to the grid because rooftop solar may not cover all loads, especially at night or during low generation periods.

6. Start decarbonisation without waiting for a capex cycle

A PPA can remove the “wait until next year’s capital budget” barrier. This matters when the business has:

  • ESG or decarbonisation targets
  • Customer, investor or tenant expectations
  • Internal carbon-reporting obligations
  • A suitable roof that is currently producing no economic value
  • A planned EV-charging or electrification programme

It allows the property to begin using renewable energy while preserving capital for other business needs.

7. Make use of underutilised rooftop space

For many commercial and industrial properties, the roof is an underused asset. Under a PPA, the customer contributes the usable rooftop and consumes the electricity; the developer provides the investment, system and operating capability. This is especially relevant in land-constrained Singapore, where rooftop solar is a key way for businesses to generate renewable energy on their own premises.

Where EPC can be a better option than PPA

A PPA is not automatically superior. EPC may create more value when the owner can fund the system and intends to keep the building or site for the long term.

When an EPC Solar Contract May Be Preferable

An engineering, procurement and construction contract may be suitable for businesses that have available capital, want direct ownership of their solar system and can manage long-term operations.

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Situations where EPC solar ownership may be preferable
EPC may be preferable when... Why
The business has available capital It can avoid long-term electricity-purchase commitments and retain the asset economics.
The owner wants maximum long-term upside Once the system is paid for, solar generation can continue to reduce grid purchases, subject to operations and maintenance and eventual equipment replacement.
The property has a stable, long holding period Ownership aligns well with a long-term asset strategy.
The organisation has internal energy-management capability It can manage monitoring, warranties, operations and maintenance providers, and system performance more confidently.
The business wants complete control over equipment and upgrades It can select hardware, maintenance providers and expansion timing directly.
The site’s electricity use strongly matches solar output High self-consumption can strengthen the business case for solar asset ownership.
The owner wants to capture export or residual-value economics Depending on market rules and agreement structures, the owner may prefer to retain these benefits.

Under a traditional EPC model, the customer funds construction, owns the panels and bears both capex and operating expenditure.

PPA trade offs to assess

The PPA benefits come with obligations. These are the issues a building owner or management team should evaluate before signing.

Long-term commitment: PPAs are commonly long-term agreements, often around 10–20 years. Early termination because of a sale, redevelopment, relocation or change in strategy may trigger termination payments.

Less direct control over the asset: under an onsite PPA, the solar provider typically owns the system for the duration of the agreement. This allows the customer to access solar energy without purchasing and managing the asset directly, but it also means that responsibilities and rights need to be clearly defined from the outset.

Before signing, the customer should understand how roof access will be managed, when maintenance can be carried out and what visibility they will have over system performance. The agreement should also set out access to generation and consumption data, reporting frequency, response times for maintenance issues and the process for any future equipment upgrades.

It is equally important to address what happens at the end of the contract. This includes whether the customer has an option to purchase the system, renew the agreement or have the provider remove the equipment. Provisions should also cover changes to the property, such as a building sale, tenancy change, redevelopment plan or early termination of the agreement. A PPA should not be evaluated solely on whether its starting solar tariff is lower than the site’s current grid electricity rate. The initial per-kWh price is important, but it is only one part of the long term commercial picture.

A proper review should consider the tariff escalation formula, the duration of the agreement and whether any minimum purchase commitments apply. The business case should also assess expected solar generation, the proportion of generated electricity the site is likely to consume directly and how excess generation will be treated. The proposal should be compared against realistic future grid electricity scenarios rather than today’s tariff alone. It is also important to review the commercial consequences of early termination, a property sale, a tenant change or a transfer of the agreement to a new owner or occupier.

The best PPA is not necessarily the one with the lowest advertised starting price. It is the one with terms that remain transparent, workable and commercially sound throughout the life of the contract.

A suitable roof and load still matter

A PPA can remove the need for upfront investment, but it does not eliminate the technical requirements of a good solar project. The property still needs enough usable roof area, appropriate structural condition and reasonable access to sunlight throughout the day. The site should also have a meaningful level of daytime electricity consumption. Solar delivers the greatest value when the electricity generated on the roof can be used directly within the building, rather than being exported or left underutilised.

Other important considerations include the building’s electrical infrastructure, integration requirements, remaining lease or occupancy term, and any approvals required from the building owner, landlord, management corporation or relevant authorities. A feasibility assessment should therefore look at both sides of the equation: whether the roof can generate solar power effectively, and whether the property can use that power productively.

Choosing between a PPA and EPC

An onsite PPA is generally well suited to organisations that want to adopt solar while preserving capital for core operations. It can be attractive when the priority is lower or no upfront capital commitment, more predictable energy costs, outsourced maintenance and operations, and a reduced project-management burden. It may also be a practical route for businesses that want to begin using renewable energy sooner, without waiting for a future capital-expenditure cycle or building internal capability to manage a solar asset.

An EPC contract is generally more suitable for organisations that want to own the solar system from the start. This model can be preferable when the business has capital available, plans to hold the property for the long term and wants to retain full control over the equipment, maintenance approach and long-term financial upside. EPC ownership can also appeal to businesses that prefer to avoid a long-term electricity-purchase agreement and are prepared to manage the responsibilities that come with owning an energy asset.

Eigen designs and delivers rooftop solar under both models. Because design, installation, commissioning and maintenance are handled by Eigen's in-house team, the engineers who size the system stay accountable for how it performs, whichever model you choose. Where it fits your plans, the system can also be designed with future EV charging and battery storage in mind.

Evaluating rooftop solar for your building? Let's connect to help you make an informed decision: contact us

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