Worked example: a hotel funds 60 kWp on asset finance

In this scenario an independent hotel with a restaurant, a spa and a steady all-day load from kitchens, laundry, hot water and guest rooms wants to hedge against volatile energy prices without pledging its property or tying up the overdraft it relies on through the seasonal swings of hospitality. It funds a 60 kWp rooftop system on asset finance, written as hire purchase and secured against the solar equipment itself. The hotel and every figure below are modelled assumptions that show how the route works, not measured results from a real building.

The funding structure

Asset finance is the umbrella term for borrowing secured against the plant it pays for, and in this model it takes the form of a hire-purchase agreement from a specialist renewable-energy lender. Because the solar system is the collateral, the hotel keeps its cash, its overdraft and its other credit facilities free for the rest of the business. Written as hire purchase rather than a lease, the agreement means the hotel claims the capital allowances as owner and owns the array outright at the end of the term; the model assumes the full allowance falls in year one, a timing point to agree with an accountant because roof-mounted panels are usually fixtures. The structure, HP versus lease, matters far more than the label on the product, so the business should confirm in writing that the agreement is hire purchase before signing.

The model uses an assumed installed cost of about £850 per kWp, an indicative 2026 figure, which puts the 60 kWp system at roughly £51,000 before VAT. The hotel is assumed to be VAT-registered, so it reclaims the VAT through its normal return. Spread over a seven-year term at an indicative finance rate of base plus a margin, the agreement costs about £8,600 a year, or roughly £720 a month. A real quote could land either side of these figures, so they are planning numbers rather than an offer.

The numbers

The model assumes the system generates around 57,000 kWh a year. Hospitality carries a strong all-day load, so the scenario sets self-consumption at about 76%, meaning roughly 43,300 kWh is used on site. Each of those units displaces grid power at an assumed grid price of 28p a unit, which is worth about £12,120 a year. The remaining 13,700 kWh is exported at an assumed export rate of 8p (Smart Export Guarantee tariffs vary by supplier), adding about £1,096. Together that gives a gross annual benefit of about £13,200 in the model, and because most of it comes from avoided imports, the self-consumed share becomes worth more if grid prices rise.

Set the roughly £720 monthly payment, about £8,600 a year, against the £13,200 annual benefit and the project runs around £4,600 a year cash-positive across the term, before tax relief. The full cost sits well within the £1m Annual Investment Allowance, so the hotel claims 100% first-year relief. Assuming it pays corporation tax at 25%, that relief is worth roughly £12,750 against its year-one tax bill. Measured the simple way, the cost net of that relief divided by the gross annual benefit gives a payback of about 2.9 years. Against the full pre-relief cost of £51,000, the payback is about 3.9 years. Neither figure counts the interest built into the finance payments, which pushes the total paid over the term above the cash price, so the cashflow comparison above is the fairer test of whether the agreement pays its way.

At the end of the seven-year term the finance cost stops, the hotel owns the system, and the full saving flows through for the rest of its working life.

Why this route suits this scenario

Hospitality lives and dies on cashflow, and a hotel’s most valuable security, its property, is not something an owner usually wants to encumber for a rooftop system. Asset finance addresses exactly that: the equipment is the security, so in this scenario the building stays unpledged and the banking facilities stay free for refurbishments and the lean months between seasons. An HP structure rather than a lease means the hotel keeps the capital allowances and ends up owning the asset, rather than handing the relief and the kit to a lessor. With the modelled monthly payment comfortably under the modelled monthly saving and a strong daytime load to soak up the generation, the finance pays for itself in the model while the hotel locks in a slice of its energy cost against future price shocks. A real hotel should run the same sums on its own consumption data and on the terms it is actually offered before committing.

Model this against your own electricity spend in the finance calculator, then get costed quotes when you are ready.