For commercial and industrial (C&I) businesses in Kenya, solar PPAs and self-financing represent two different trade-offs between capital, risk and long-term returns. A PPA allows a business to install solar with little or no upfront investment because a third-party developer finances, owns and operates the system. The customer instead pays a pre-agreed price for the electricity generated, typically under a 10–20 year contract. Self-financing, by contrast, means the business purchases the system outright or finances it through a loan, taking ownership of the asset and its future savings.
The biggest difference is who captures the economics. Under a PPA, the developer builds its return into the electricity tariff, meaning the customer shares part of the potential savings in exchange for avoiding the upfront capital requirement. With self-financing, the business captures the full value of the electricity it generates and avoids paying a developer margin over the system’s lifetime. This generally makes ownership the more attractive option for businesses with strong cash flow, access to relatively cheap financing and a long-term commitment to the property.
The second difference is risk. A PPA transfers much of the technology, maintenance and performance risk to the developer, although the customer still carries contractual and counterparty risk. With self-financing, the business carries the performance, maintenance and financing risks itself. However, ownership also provides substantially greater control: the business can choose equipment, expand the system, add batteries, change its O&M provider or integrate solar with other energy-management measures without being constrained by a long-term third-party contract.
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Flexibility also matters. A PPA can be attractive for businesses operating from leased premises, facing capital constraints or simply wanting predictable energy costs without becoming an energy-asset manager. But a long-term contract can become restrictive if the business relocates, expands significantly or changes its electricity consumption. Ownership is generally better suited to companies expecting to remain at the site for many years and willing to treat solar as a strategic asset rather than simply another utility expense.
The decision therefore comes down to capital versus value: a PPA is essentially “let someone else invest and manage the system while I buy cheaper electricity,” whereas self-financing is “I will invest today so I can capture more of the savings tomorrow.” For a profitable C&I business with sufficient capital, a long site horizon and the ability to use Kenya’s available tax incentives, self-financing can deliver the stronger lifetime economics; for a business prioritising liquidity, simplicity and risk transfer, a PPA can be the more practical choice.
