No Upfront Cost / Fully Funded

Where the "no upfront cost" route fits

"No upfront cost" and "fully funded" are among the most common phrases you will see quoted for commercial solar, and they are worth understanding clearly. They are marketing labels rather than a distinct financial product. Every "fully funded" offer resolves to one of two underlying structures: a Power Purchase Agreement, where a funder owns the system on your roof and sells you the electricity it generates, or 100 per cent finance, where a lender covers the whole install cost through hire purchase, asset finance or a green loan and you repay from the savings. In both cases the pitch is the same: your monthly energy saving is expected to exceed the monthly payment, so the system is self-funding from day one and no cash leaves your account to get it installed.

The label is not the thing to judge. The structure underneath it is. The moment you ask who owns the asset, who claims the tax relief, who keeps the export income, what it costs over the full term against simply buying, and what happens at the end, "fully funded" stops being a single idea and becomes a choice between two very different deals.

How it works in practice

Under a PPA, the funder pays for and owns the panels, inverters and installation. You sign a long agreement, often 15 to 25 years, to buy the power the system produces at an agreed unit rate, usually below your current grid price. You put in no capital, carry no maintenance responsibility, and your only commitment is to buy the generated electricity. Because you never own the asset during the term, the tax relief and any export earnings sit with the funder, not with you.

Under 100 per cent finance, the picture inverts. A lender advances the full cost and you repay it over a fixed term, commonly 4 to 7 years, at a rate priced off the base rate plus a margin. You own the system (or take title at the end of a hire purchase agreement), so the savings, the tax relief and the export income are yours. The trade is that the monthly repayment is a real debt on your books until the term ends, after which the generation is effectively free for the remaining 15 or more years of the panels' life.

Who it suits, and who it does not

The fully funded route suits businesses that want solar without touching their capital budget or existing borrowing headroom, and that value predictable monthly costs over maximum lifetime return. A PPA in particular suits organisations that prefer to keep the asset and its upkeep entirely off their plate, or that cannot use capital allowances because they are not profit-making or not in a taxpaying position.

It suits you less well if you have the cash or cheap borrowing to buy outright and want the full lifetime saving, or if you are a profitable company that can put the tax relief to immediate use. Handing the allowances and export income to a funder has a real cost, and over a 20-year horizon a capital purchase or a short finance term usually returns more. If you are weighing that trade, the payback and ROI figures and the finance calculator will show you the gap in pounds.

The tax and accounting angle

Ownership decides who benefits from the tax reliefs, which is why the structure matters so much. Solar PV is classed as special rate plant. That means it does not qualify for 100 per cent full expensing, which is main-rate only, nor for the newer 40 per cent first-year allowance. It does qualify for the Annual Investment Allowance, giving 100 per cent first-year relief on up to £1m of qualifying spend, and that cap covers most commercial installs. Spend above the cap can attract the 50 per cent special-rate first-year allowance for companies, with the remaining balance written down at 6 per cent a year.

These reliefs only help the party that owns the asset. Under 100 per cent finance you own it, so you claim them. Under a PPA the funder owns it and claims them instead, which is part of how the funder makes the numbers work. The same applies to export income: power you send to the grid can earn under the Smart Export Guarantee, which replaced the Feed-in Tariff and pays for exported generation on systems up to 5 MW. Under finance that income is yours; under a PPA it typically stays with the funder. VAT on commercial solar is charged at 20 per cent and is reclaimable by VAT-registered businesses, so the headline cost is not the net cost for most companies. The 0 per cent domestic rate does not apply to commercial installs. Separately, rooftop solar used for self-consumption is 100 per cent exempt from business rates in England from April 2022 to March 2035. This is general information, not tax advice; confirm your own position with your accountant before relying on any figure.

What to watch for

Read past the "zero cost" headline to the exit terms. On a PPA, check the annual price escalator, the length of the tie-in, the buy-out schedule if you want to take ownership early, and what happens if you sell or vacate the building, because the agreement usually transfers with the property. On finance, check the total repayable across the term, any balloon payment, early settlement terms, and whether maintenance is included. In every case, "fully funded" almost always means you give up some ownership, tax relief, export income or lifetime return in exchange for zero capital outlay. That may be a sensible trade for your business, but it should be a decision you make with the full-term numbers in front of you, not an assumption baked into a single label.

Get costed quotes

We are a comparison and quote service, not a lender or financial adviser. We connect UK businesses with vetted MCS-certified installers and funders, and we put the fully funded options side by side with buying outright so you can see the real cost of each. To see how a PPA and 100 per cent finance stack up on the same system, read our finance options compared guide, then request your figures through the quote form.