Business solar finance options compared
The seven ways a business can fund solar, lined up on the measures that actually decide it: what it costs up front, who owns the asset, who claims the tax relief, how it hits your balance sheet, and what it returns over its life.
All seven funding routes, side by side
| Funding route | Upfront | Who owns it | Term | Balance sheet | You get tax relief | Best for |
|---|---|---|---|---|---|---|
| Buy Outright (Capital Purchase) | Full installed cost | Your business, from commissioning | No finance term | On balance sheet as an owned asset | Claim the Annual Investment Allowance (100% up to £1m) or the 50% special-rate first-year allowance on the whole cost, and reclaim the VAT if you are VAT-registered | Cash-comfortable businesses that want the maximum lifetime return and the full tax relief |
| Power Purchase Agreement (PPA) | £0 | The PPA funder, for the life of the contract | Usually 10 to 25 years | Intended to be off balance sheet, confirm under your framework | The funder owns the asset, so the funder, not you, keeps the capital allowances and the export income | Businesses that want cheaper power immediately with no capital, no maintenance and a long stay in the building |
| Hire Purchase | Deposit only, often around 10% | The lender during the term, your business at the end | Usually 2 to 7 years | On balance sheet from the start | You are treated as the owner for tax, so you claim the year-one allowance on the full cost even though you pay over time | Businesses that want to own the asset and capture the tax relief without paying all the cash up front |
| Asset Finance | Low or none, deposit varies | Depends on the structure: you at the end under HP, the lessor under a lease | Usually 3 to 10 years | On balance sheet under hire purchase or a finance lease | Under an HP or finance-lease structure you typically claim the capital allowances, and the finance charge is separately deductible | Businesses that want the equipment to be the security rather than pledging other assets or facilities |
| Operating Lease | £0 to low | The lessor, throughout the term | Usually 5 to 15 years | Historically off balance sheet, tightening under current accounting rules | The lessor keeps the capital allowances; your rental payments are deductible as a normal business expense | Businesses that value off-balance-sheet treatment and smooth P&L costs over owning the asset |
| Business or Green Loan | £0, the loan funds the purchase | Your business, from day one | Usually 3 to 15 years | The asset is on the balance sheet, the loan shows as debt | As the owner you claim the year-one allowance on the full cost, and the loan interest is deductible | Businesses that want full ownership and tax relief without draining cash, and prefer a clean, separate debt |
| No Upfront Cost / Fully Funded | £0 | Depends on the structure underneath | Varies by structure | Depends on the structure underneath | Depends on the structure, so always check who ends up with the allowances and export income | Businesses that will not commit capital but still want solar cutting their bills now |
Balance-sheet treatment depends on your accounting framework (IFRS 16 or FRS 102) and the exact structure; confirm with your accountant. Last updated July 2026.
Which route fits your business
Sources and official guidance
Figures on this page are based on the following primary sources. This is general information, not tax advice.
Further reading
Comparing the routes: common questions
How can a business finance solar panels?
There are six main routes: buy outright from cash, a business or green loan, hire purchase, asset finance, an operating lease, or a Power Purchase Agreement. Owning the system, through cash, a loan or hire purchase, keeps all the savings, export income and tax relief. A PPA or lease needs little or no capital but the funder keeps the asset and the relief. The right one depends on your cash position, tax profile and how long you will hold the building, which is what the comparison and calculators here are for.
Can my business get solar with no upfront cost?
Yes. Either a PPA, where a funder owns the system and you buy the cheaper power, or 100% finance, a green loan, hire purchase or lease repaid from the energy saving. Both aim to be cash-flow positive from day one. The trade-off is that zero upfront usually means giving up some ownership, tax relief or lifetime return, so it is worth modelling the true cost of each rather than just chasing the £0 headline.
Will the monthly finance payment be less than my energy saving?
Often yes, if the annual saving plus any export income beats the annual finance or PPA cost, which is the whole self-funding case. Whether it works for you depends on system size versus your consumption, your unit price, how much power you use on site and the finance rate, so it has to be modelled for your building. The finance calculator here shows the monthly payment next to the monthly saving so you can see the net position before you commit.
Should my business own the solar or use a PPA?
Own it if you have or can borrow the capital and want the maximum return, because ownership keeps every pound of saving, the export income and the tax relief. Use a PPA if you cannot commit capital, want no maintenance risk and will hold the building long enough to benefit, accepting a lower lifetime return in exchange. A middle path, hire purchase or a green loan, lets you own the asset and claim the relief while still paying monthly.
Does a lease keep solar off my balance sheet?
An operating lease traditionally did, but under current accounting rules most leases now sit on the balance sheet, and a finance lease and hire purchase are on it too. If off-balance-sheet treatment is the reason you are considering a lease, confirm the current position with your accountant first, because it can no longer be assumed.
With hire purchase, do I still get the tax relief even though I pay monthly?
Yes. Under hire purchase you are treated as the owner from the start, so you claim the AIA or 50% first-year allowance on the full cost in year one even though you pay in instalments. The interest element is separately deductible. It is one of the main reasons owners choose HP over a lease or PPA when they want both the relief and a spread cost.