PPA vs capex: how Dubai businesses should pay for solar

There are two ways for a Dubai business to put solar on its roof: sign a power purchase agreement (PPA) and pay nothing upfront, or fund the system yourself as capex. Both cut the same DEWA bill. They differ in who owns the asset, how the saving flows through your accounts, and how large the saving eventually gets. A PPA converts part of your electricity bill into a cheaper operating cost from day one. A capex purchase costs more now and keeps every dirham of the saving for the life of the system. Here is how to choose.

How a solar PPA works for a Dubai business

Under a PPA, the provider designs, funds, installs, insures and maintains the system on your roof, and you buy the electricity it produces at a rate set below what those units would have cost from DEWA. In our model the PPA rate sits 25% below your blended DEWA rate for the units the system displaces, so every solar unit you consume is cheaper than the unit it replaces.

The commercial attractions are straightforward:

• AED 0 upfront. No capital raise, no board paper competing with core-business investments.
• An operating cost cut, not an asset purchase. You swap one operating expense (DEWA units) for a smaller one (PPA units). Many businesses can keep the arrangement off the balance sheet, but accounting treatment depends on the contract terms and your reporting standards; confirm it with your auditors.
• No performance risk. The provider only earns when the system generates, so cleaning, monitoring and repairs are the provider's problem. You pay for output, not promises.

The trade-off is equally straightforward: because the provider funds and maintains the system, the provider keeps part of the value it creates. Your saving is real and immediate, but smaller than owning. The free solar PPA page explains the contract structure in more detail.

How a capex purchase works

Buying outright means you fund the system (at commercial scale, indicative turnkey pricing is around AED 2,400 per kWp) and you keep 100% of the bill saving. Commercial systems in Dubai typically pay back in around four to six years, and large consumers whose top units sit in the high commercial slab can be quicker. After payback, the electricity is effectively free for the remainder of the system's 25-year design life.

Figures are estimates, not a quote. Final numbers depend on a site survey and DEWA approval.

Ownership brings the accounting consequences with it. The system sits on your balance sheet as a depreciating asset, you carry the maintenance obligation, and you carry the performance risk. For a business with capital available and a long tenancy or freehold premises, that risk is modest and well understood: panels are static assets with long warranties. See what buying a system involves for the process end to end.

PPA vs capex at a glance

The ESG angle: UAE Net Zero 2050

The UAE has committed to Net Zero 2050, and Dubai's own clean energy targets flow through DEWA's Shams Dubai programme, which is the connection route for every rooftop system in the emirate. For businesses, that policy direction shows up in practical ways: customers and lenders increasingly ask for emissions data, tenders increasingly score sustainability, and a roof full of panels is verifiable evidence rather than a pledge. Both routes deliver the same measurable outcome (solar kWh consumed on site), so ESG rarely decides between PPA and capex. It decides whether you act this year or keep buying every unit from the grid.

Which route fits your business?

Choose a PPA if capital is better deployed in your core business, if you want the saving without adding an asset and a maintenance obligation, or if you need a decision that clears quickly because it carries no capex approval. Choose capex if you have the capital, expect to occupy the premises well beyond the payback window, and want the largest possible lifetime saving plus the depreciation benefit.

Site factors matter too. A logistics operator with a vast, lightly loaded roof, the case we work through in turning warehouse roofs into revenue, often finds capex payback compelling. A tenant with five years left on a lease usually leans PPA, or negotiates with the landlord. Our business solar page covers multi-site and landlord-tenant structures.

The same fork applies to homeowners, with residential turnkey pricing around AED 3,000 per kWp; the logic of cashflow versus lifetime saving does not change with the size of the roof.

The fastest way to make this concrete is to compare both routes side by side with the savings calculator using your actual monthly bill. It shows the PPA saving and the capex payback for the same system, so the board conversation starts from numbers rather than preferences.