How to Finance Commercial Solar Panels in the UK
Commercial solar in the UK is no longer a “green upgrade”. For most businesses it is a finance decision: how to turn a long-life asset (often 25+ years) into predictable energy costs, lower exposure to National grid energy grid price swings, and a measurable return.
This guide explains the main financing routes used for UK commercial and industrial solar PV, how they compare, what changes the final budget, and how capital allowances and export payments can improve the numbers.
What counts as “commercial solar finance” in the UK?
Commercial solar finance is the method your business uses to pay for, own (or not own) methods such as Power purchase agreement, (PPA) or Hire purchase agreement(HPA) agreement for a solar PV system installed on a business sites (warehouse, factory, retail unit, offices, schools, farms, or multi-site estate). In practice, most UK projects site in one of four categories :
1. Buy the system outright (CAPEX)
2. Borrow to buy (loan / asset finance / hire purchase)
3. Lease the system (fixed monthly rental)
4. Use a Power Purchase Agreement (PPA) where a third-party funds and owns the system
Those choices affect your cash flow, tax treatment, balance sheet, and your ability to upgrade, expand, or exit the building later.
The four main ways UK businesses buy or finance solar
1. Buy outright (CAPEX purchase)
Best for: businesses with cash reserves, strong taxable profits, or a low appetite for long contracts.
You pay for the system, and you own it. Your savings come from using more of your own power on-site (self-consumption) and exporting any surplus.
Pros
✅ Highest lifetime savings (no finance margin paid to a lender or funder)
✅ Full control over the asset, design, O&M provider, and future upgrades
✅ Straightforward contract structure
Cons
✅ Capital tied up in a single asset
✅ Slower decision cycles (often needs board approval)
✅ You carry performance and maintenance risk (unless you wrap it into an O&M contract)
2. Borrow to buy (loan / asset finance / hire purchase)
Best for: businesses that want ownership but prefer to preserve cash.
You still own the system (often immediately or at the end of term), but you spread the cost over time. In the UK, this is commonly done via:
✅ business loans
✅ asset finance
✅ hire purchase
Pros
✅ Ownership plus predictable monthly payments
✅ Often cash-flow positive when solar savings exceed repayments
✅ Keeps working capital available for core operations
Cons
✅ Lender underwriting and covenants may apply
✅ Interest costs reduce total lifetime return versus a cash purchase
3. Lease (fixed rental for using the system)
Best for: businesses that want predictable cost and minimal admin, but do not want to own the asset during the term.
A lease is typically a fixed monthly payment for the use of the system, often with options at the end of term (renew, buy, upgrade), depending on the contract.
Pros
✅ Lower upfront cost
✅ Simple budgeting (fixed rental)
✅ Can include maintenance in one monthly figure
Cons
✅ Depending on structure, total cost over time can be higher than borrowing to buy
✅ Less flexibility if you change sites, sell the building, or alter roof use
4. Power Purchase Agreement (PPA) / “no upfront cost solar”
Best for: sites with strong daytime usage, long-term occupancy, and a preference to keep capex for other investments.
With a PPA, a third-party funds and owns the solar PV system. You agree to buy the electricity it generates at an agreed discount retail rate for an agreed term (commonly multi-year). PPAs are widely used in UK commercial solar for organisations that want savings without funding the assets themselves.
Pros
✅ Usually minimal or no upfront cost
✅ The provider often takes on performance and maintenance risk (contract-dependent)
✅ Can be attractive for multi-site rollouts
✅ Can be attractive both for Small to medium businesses and Corporate level
Cons
✅ Longer contracts with site and legal constraints (roof rights, access, termination)
✅ If grid prices drop under your agreed rate, you may lose part of the upside
✅ Your options to modify the roof (HVAC moves, skylights, re-roofing) can be constrained
Quick comparison table: what to choose and why
Option | Who owns the panels? | Upfront cost | Contract length | Typical best-fit | Main watch-out |
CAPEX (buy outright) | You | High | None | Strong cash position, long site life | You manage performance/O&M |
Borrow to buy | You (or at end) | Low–medium | 3–10+ years | Want ownership, preserve cash | Interest + lender terms |
Lease | Lessor (during term) | Low | 5–15 years | Budget certainty | Less flexibility on exit/roof changes |
PPA | PPA provider | Often low/none | 10–25 years | No capex, long occupancy | Roof legal terms + long commitment |
What makes commercial solar cheaper or more expensive in the UK?
Price is not just “£/kWp”. The real cost is driven by site conditions, grid connection, and how complex the job is to deliver safely.
Installation conditions that change the final price
Installation costs can rise materially due to:
✅ Roof height and access (cranes, hoists, scaffolding, lifts, loading bays)
✅ Roof layout and obstacles (skylights, vents, plant equipment, fragile areas)
✅ Structural capacity (need for reinforcement, ballast limits, wind loading)
✅ Cable routes and distance to the main LV board
✅ Working hours constraints (night work, weekend access, live operations)
✅ DNO connection requirements (export limits, protection settings, application work)
If you want accurate pricing, insist on a site survey that covers access method, roof condition, and electrical scope, not just a remote design.
Is it cheaper to install solar during roof replacement?
Often, yes if you plan it properly.
A roof replacement is a rare moment where you already have:
✅ scaffolding/access in place
✅ roof penetrations and waterproofing works happening anyway
✅ planned downtime or controlled working zones
However, solar becomes expensive during a roof project if the sequencing is wrong (panels installed too early, then removed for finishing works) or if the roof spec is not solar-ready.
Rule of thumb for commercial projects: If a roof is near end-of-life, it is usually better to refurbish/replace first or design solar as part of a combined package, so you do not pay twice for access and rework.
Key questions to ask during roof planning:
✅ What is the remaining roof life (10, 15, 25 years)?
✅ Will the new roof warranty allow PV fixings and traffic routes?
✅ Are fall protection and maintenance walkways included?
✅ Can you reserve clear zones for vents, plants, and future upgrades?
What is the payback period for a typical industrial solar PV system?
Payback depends mainly on:
✅ how much of the solar you use on-site (self-consumption)
✅ your daytime electricity price
✅ your system size and cost
✅ any export payment and its rate
✅ tax position and allowances
Many UK commercial solar providers report typical paybacks in the mid-single digits for well-matched sites, but you should treat any “average” as a starting point and run your own numbers.
A good feasibility model should show:
✅ expected annual generation (kWh)
✅ expected self-consumption (%)
✅ expected export (kWh)
✅ electricity price assumptions (and sensitivity ranges)
✅ O&M, insurance, inverter replacement assumptions
✅ degradation assumptions
✅ tax impacts
Payback sensitivity table (why usage matters more than size)
Scenario | Self-consumption | Export reliance | Typical outcome |
Daytime-heavy operations (manufacturing, chilled storage, distribution) | High | Low | Faster payback, strong savings |
Office-heavy, low daytime draw | Medium–low | Medium | Payback depends on export rate and timing |
Weekend-only site | Low | High | Higher risk unless you pair with storage or shift loads |
Capital allowances and incentives: how they reduce effective cost
This is where many “solar ROI calculators” get the UK details wrong.
1. Capital allowances (HMRC) - know the category
For companies, “full expense” is not a blanket rule for all green assets. HMRC guidance notes that solar panels are treated as special rate assets and do not qualify for full expenses; they may instead qualify for the 50% special rate of first-year allowance (subject to conditions).
That is a big difference in year-one tax relief and should be reflected in your model.
What to do in practice
✅ Have your accountant confirmed whether the solar spend sits under special rate pool treatment for your circumstances.
✅ Model tax relief as part of the investment case, not an afterthought.
✅ If the project is being structured as a lease or PPA, the tax benefits may sit with the funder, not the site occupier.
2. Export payments: Smart Export Guarantee (SEG)
If you export surplus electricity to the grid, you may be eligible for payments under the Smart Export Guarantee if your installation meets the eligibility rules. Ofgem states SEG applies to eligible low-carbon generators up to 5MW in Great Britain. SEG rates vary by supplier and tariff, and contracts differ. For commercial sites, export is useful, but the strongest cases are still built on high on-site usage first, then export as a secondary benefit.
3. PPA pricing context (why PPAs are attractive again)
UK PPA pricing has been reported as stabilising after European declines, which matters if you are comparing a rooftop PPA rate versus your grid tariff trajectory.
Table: the “CFO view” of each funding route
What a CFO cares about | CAPEX | Borrow to buy | Lease | PPA |
Upfront cash impact | High | Low | Low | Often low/none |
Predictability | High | High | High | High (contracted) |
Ownership & residual value | Yes | Yes | Not during term | No |
Operational responsibility | You (or O&M) | You (or O&M) | Mixed | Often provider-led |
Flexibility if you move/sell | High | Medium | Medium | Lower (contract constraints) |
Best when… | Cash available, long-term site | Want ownership without capex | Prefer rental budgeting | Want savings without owning |
How to choose the right financing option
Step 1: confirm your site reality
✅ Do you own or lease the building?
✅ How many years do you expect to stay?
✅ Roof condition and remaining life?
✅ Any planned roof works within 5–10 years?
If your occupancy is short, long PPAs can be the wrong fit even if they look attractive on paper.
Step 2: map your electricity profile
✅ Daytime demand shape (half-hourly data if available)
✅ Weekend use
✅ Seasonal variability
✅ On-site loads that can shift (EV charging, chilled storage, process loads)
The more solar you can use on-site, the more resilient your project is.
Step 3: decide what you want to optimise
Pick one primary goal:
✅ maximum lifetime savings (often CAPEX)
✅ preserve cash (often PPA/HPA, finance)
✅ simplicity (lease / PPA with bundled O&M)
✅ asset ownership and control (CAPEX / borrow)
Step 4: run a model that includes tax and risk
At minimum, include:
✅ conservative generation
✅ realistic self-consumption
✅ export assumptions (SEG where eligible)
✅ O&M and insurance
✅ inverter replacement provision
✅ tax allowances aligned to HMRC treatment
Frequently Asked Questions related to Commercial Solar Panel Financing
What financing options exist for commercial solar installations in the UK?
The main options are buying outright (CAPEX), borrowing to buy (loan/asset finance/hire purchase), leasing the system, or using a Power Purchase Agreement (PPA) where a third-party funds and owns the system, and you buy the electricity it generates.
Do solar panels qualify for full expenses in the UK?
HMRC guidance indicates solar panels are treated as special rate assets and do not qualify for full expensing; they may instead qualify for the 50% special rate first-year allowance, depending on conditions. Confirm treatment with your accountant for your specific structure.
Can UK businesses get paid for exporting solar electricity?
Yes. If eligible, you can be paid for exported electricity under the Smart Export Guarantee (SEG). Ofgem notes SEG applies to eligible installations in Great Britain up to 5MW. Rates and terms vary by supplier.
Is it cheaper to install solar when replacing a roof?
It can be, because access and roof work are already planned. The saving depends on correct sequencing, a solar-ready roof specification, and avoiding future removal/reinstall costs.
What changes the final installed cost the most?
Access, roof complexity, structural requirements, and electrical scope are the biggest drivers followed by DNO connection constraints and working restrictions on live sites.
Where Excel Energy UK fits
Most providers talk about panel counts and headline savings. Commercial decision-makers want the finance story to be correct, achievable and realistic, defensible.
Excel Energy UK should position has its processes as complete turn-key solution:
✅ a site and structural assessment (not a template quote)
✅ an investment case that includes tax deductible and export potentially
✅ an engineering design that reduces delivery risk (access, roof condition, electrical scope)
✅ A complete management set for project implementation, complete with as built design, plans, set of Health and safety documentality with CDM Regs 2015.
✅ System financial analysis matching the chosen financial option tailoring to your occupancy and cash priorities
Find out how much of your electricity can be replaced with on-site solar, what funding routes fit your business, and what the real payback looks like for your building.
Excel Energy UK provides site-specific, finance-analysis assessments for commercial and industrial properties across the UK.