Commercial solar finance FAQs
Straight answers on funding routes, tax relief, PPAs, no-upfront options and how the quotes work. Last updated July 2026.
These are the questions UK finance directors and owner-managers actually ask when working out how to pay for commercial solar. Where tax is involved we give the correct position, including the point most sites get wrong: solar is special-rate plant, so it is covered by the Annual Investment Allowance rather than 100% full expensing. None of this is financial or tax advice, so confirm finance terms with the provider and tax with your accountant.
Can I get commercial solar with no upfront cost?
Yes. Either a PPA, where a third party owns the system and you buy the cheaper power, or 100% finance, a green loan, hire purchase or lease repaid from your energy savings. Both aim to be cash-flow positive from day one. The trade-off is that you give up some ownership, tax relief or lifetime return in exchange for zero capex.
Is a solar PPA cheaper than buying outright?
Cheaper on day-one cash because there is zero capex, but more expensive over the asset's life. Buying outright gives the highest lifetime return because you keep all the savings, export income and tax relief. A PPA has the lowest lifetime return because the funder's margin comes out of your savings. Asset finance sits in between.
What tax relief can my company claim on commercial solar panels?
For most installs the Annual Investment Allowance gives 100% first-year relief up to £1m, which at 25% corporation tax returns about 25p per £1 spent in the first year. Solar is special-rate, so above the £1m cap a company can use the 50% first-year allowance with the balance written down at 6% a year. Solar does not qualify for 100% full expensing, which is main-rate only. Confirm your position with your accountant.
Does a lease keep solar off my balance sheet?
An operating lease traditionally does, but under IFRS 16 most leases now go on the balance sheet and FRS 102 treatment is tightening. A finance lease and hire purchase are on the balance sheet. Confirm the current treatment with your accountant before relying on off-balance-sheet as a benefit.
Who gets the tax relief and export income under a PPA?
The PPA provider, because they own the asset. You get cheaper power, not the capital allowances or the SEG export payments. If capturing the tax relief matters to you, own the system through cash, a loan or hire purchase.
Can I reclaim the VAT on a commercial solar installation?
If you are VAT-registered, yes. The 20% input VAT is reclaimable through your normal VAT return, provided the system is for business use and you hold a valid VAT invoice. The 0% domestic rate does not apply to commercial buyers, so it is a cash-flow timing item rather than a net cost.
Will commercial solar increase my business rates?
No. In England, qualifying rooftop solar for self-consumption is 100% exempt from business rates from April 2022 to March 2035, so it will not raise your rateable value in that window. Scotland and Wales have separate regimes, so check locally.
Are there grants for commercial solar?
Genuine capital grants for private commercial solar are limited. The main ongoing incentive is the Smart Export Guarantee, which pays for exported electricity. Salix and the Public Sector Decarbonisation Scheme are public sector only. Some regional business grants appear intermittently, so check current schemes for your area. ECO4 and GBIS are domestic-only and do not apply to businesses.
With hire purchase, do I still get the capital allowances even though I pay over time?
Yes. Under hire purchase you are treated as the owner from the start, so you can claim the AIA or 50% first-year allowance on the full cost in year one even though you are paying in instalments. The interest element is separately deductible.
What are typical finance terms and rates for commercial solar?
It depends on the route: hire purchase and asset finance are commonly 3 to 7 years, green loans 3 to 15 years, PPAs 10 to 25 years, and operating or finance leases about 5 to 15 years. Rates are priced off the Bank of England base rate plus a credit margin, so verify live pricing, which moves with rates and your covenant strength.
What happens at the end of a PPA?
Typically you get three options: extend the contract, buy the system at fair market value, or have it removed free of charge. The exact options and any buy-out formula vary between contracts, so read the terms carefully because early-exit and buy-out terms are where PPAs differ most.
Can financing make the project cash-flow positive from year one?
Often yes, if the annual energy saving plus any export income exceeds the annual finance or PPA cost. This is the core self-funding case. It depends on system size versus your consumption, your import tariff, self-consumption percentage and the finance rate, so it must be modelled per site rather than assumed. Our quotes show this figure explicitly.
How do I compare quotes fairly across different funding routes?
Compare on the same basis: upfront cost, monthly or annual payment, who owns the asset, on or off balance sheet, who gets the tax relief and export income, total cost over the term, and the lifetime return. A cheap monthly figure can hide a high lifetime cost. Our quote engine lines every route up on those measures so the comparison is like for like.