Capital Free Commercial Solar
Reviewed by the Commercial Solar Finance editorial team — independent advisers (we take no installer or lender commissions). Last reviewed: June 2026.
Capital free commercial solar means installing a solar PV system with no day-one capital outlay from your business — the cost is met by a third party or spread over time and repaid from the energy savings the system generates. For UK businesses that would rather not tie up cash in equipment, several capital-free routes deliver solar for £0 upfront. This guide explains each one and which fits your situation.
What does "capital free" commercial solar mean?
It means zero capital expenditure on day one. The three main capital-free routes are: a Power Purchase Agreement (PPA) — a developer owns the system and you buy the power at a discount; an operating lease — a fixed monthly rental, off-balance-sheet; and a green loan or hire purchase — you own the system but borrow 100% of the cost and repay from savings. Public bodies can go further with PSDS grants. Closely related: no upfront cost commercial solar.
The capital-free commercial solar routes compared
| Route | Day-one capital | Who owns the system | Monthly cost | Keeps tax relief (AIA) | Best for |
|---|---|---|---|---|---|
| Power Purchase Agreement (PPA) | £0 | Developer | Pay per kWh (discounted) | No (developer claims) | Large, constant-load sites wanting zero risk |
| Operating lease | £0 | Lessor | Fixed rental | No (lessor claims) | Off-balance-sheet, predictable cost |
| Green loan | £0 | You | Loan repayment | Yes — 100% AIA | Owning the asset + keeping tax relief |
| Hire purchase | 0–20% deposit | You (on completion) | HP instalment | Yes — AIA on completion | Spreading cost, eventual ownership |
| PSDS grant (public sector) | £0 | You | Grant-funded | N/A | NHS, councils, schools, universities |
Capital free vs no upfront cost vs zero capex: are they the same?
These three phrases are used almost interchangeably in the UK market, and they describe the same commercial goal — getting solar without a day-one capital payment — but there is a subtle distinction worth understanding:
Capital free / zero capex
No capital expenditure appears in your accounts at all. The purest forms are PPA and operating lease, where a third party owns the asset, so nothing is capitalised on your balance sheet. See zero capex commercial solar.
No upfront cost
You pay nothing on day one, but you may still own the asset and capitalise it — e.g. a green loan funds 100% of the cost so there is no upfront payment, yet the system is yours and you claim the AIA. "No upfront cost" is the broader term.
Which capital-free route keeps the tax relief?
The single biggest decision is whether you keep the Annual Investment Allowance — worth 25% of the system cost in year-one corporation-tax relief. Ownership routes (green loan, hire purchase) keep it; PPA and operating lease give it to the provider in exchange for them carrying the asset and the risk. For a profitable business, a green loan is often the best "capital free" route because you pay nothing upfront and keep the £50,000-per-£200k-system tax relief.
Quick rule of thumb
Profitable and want the asset? → green loan or hire purchase (capital free + keep AIA). Want zero risk and zero balance-sheet impact? → PPA or operating lease. Public body? → PSDS grant.
Capital free commercial solar FAQs
Is capital free commercial solar really free?
There is no day-one capital cost, but you still pay over time — either per kWh of electricity (PPA), as a monthly rental (lease), or as loan repayments. The point is that those payments are designed to be lower than the energy savings the system generates, so the project is cash-flow positive from early on without any upfront capital.
Can any business get capital free solar?
Most can. PPAs favour larger, constant-load sites with strong covenants; leases and green loans suit a wide range of SMEs and mid-market businesses subject to credit approval. Public bodies have the strongest position of all via PSDS grants covering up to 80% of cost.
What is the catch with a capital-free PPA?
You do not own the system and you give up the capital allowances and most of the export income to the developer. In exchange you carry no capital cost, no maintenance responsibility and no performance risk. Over 25 years, ownership usually wins on total cost — capital-free wins on simplicity and balance-sheet treatment.
How capital-free solar providers make their money
Capital-free solar is not charity — understanding how each provider earns its return tells you where the cost really sits. Under a PPA, the developer funds and owns the system and profits from the margin between the discounted rate you pay and the system's full generation value, plus the export income and the capital allowances they claim. Under an operating lease, the lessor earns a financing margin on the rental and retains the asset's residual value. Under a green loan or hire purchase, the lender simply earns interest — you keep the asset, the allowances and the savings. This is why ownership routes deliver the best lifetime value for profitable businesses: there is no third party taking the asset's upside.
The 5 steps to a capital-free solar system
The single most valuable thing an independent adviser does on a capital-free deal is run step 3 properly. Because there is no upfront cost to compare, businesses often accept the first capital-free offer they receive — yet the spread between a keen PPA rate and a poor one, compounded over 25 years, can be worth more than the entire system cost. We compare offers against each other and against ownership on a single lifetime-cost basis.
Confused by the terms? See capital free vs zero capex vs no upfront cost.
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We model every zero-capital route — PPA, lease and 100% green loan — against your site and tax position, free and independent.
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