Midlands precision engineering: 48 kWp on a green business loan, cash-positive from year one
Midlands precision-engineering firm · Coventry, West Midlands
A family-owned precision-engineering business running CNC machinery on a single-shift daytime pattern wanted solar but would not tie up cash it needed for tooling, materials and the occasional new machine. It funded a 48 kWp rooftop system with a seven-year green business loan, owning the system from day one and repaying the loan from the energy it saved.
The funding structure
The firm took a green business loan that funded the whole installed cost, bought the system outright and owned it from commissioning. Because it owned the asset it kept all the savings, the export income and the full first-year capital allowance, while the loan interest was separately deductible. The green loan came in slightly keener than standard business lending, which the firm confirmed by comparing the two before signing.
At around £850 per kWp the 48 kWp system cost roughly £40,800 before VAT, which the VAT-registered business reclaimed on its normal return. Repaid over seven years at an indicative rate reflecting the 2026 base rate plus a margin, the loan cost about £6,900 a year in principal and interest.
The numbers
The system generates around 45,600 kWh a year. With machining concentrated in daylight hours, self-consumption sits at about 72%, so roughly 32,800 kWh is used on site displacing grid power at 28p a unit, worth about £9,180. The remaining 12,800 kWh is exported under the Smart Export Guarantee at an indicative 15p, adding about £1,920. Together that is a gross annual benefit near £11,900.
Set the roughly £6,900 of annual loan repayments against that £11,900 of benefit and the project runs about £5,000 a year cash-positive from the first year, before counting tax relief at all. On top of that, the full cost fell under the £1m Annual Investment Allowance, so the firm claimed 100% first-year relief and, at 25% corporation tax, recovered roughly £10,200 against its year-one tax bill. Measured against the net cost after that relief, the effective payback lands at about four years.
Once the loan clears after seven years the repayments stop entirely, the finance cost falls away, and the full saving flows to the bottom line for the remaining fifteen years and more of the system’s life.
Why this route suited them
This owner wanted two things that can pull against each other: full ownership with all the tax relief, and no drain on the working capital the workshop lives on. A green loan delivered both. Because the loan sits separately from the solar asset, the system itself carries no finance strings, which keeps things clean if the firm ever refinances or sells the site. And because the annual saving comfortably clears the annual repayment, the project pays for itself as it goes rather than costing money in the early years. For a business with a strong daytime load, a healthy balance sheet and a preference for keeping its cash working elsewhere, borrowing to own is often the sharpest route of all.
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