Commercial Solar Financing: All Six UK Routes Compared
Reviewed by the Commercial Solar Finance editorial team (we take no installer or lender commissions). Last reviewed: 14 October 2026.
Not sure which finance route fits your project? Answer six questions for an indicative shortlist of cash, hire purchase, loan, lease or PPA, ranked for your tax position, premises and budget.
Check your finance routeAbout the rates on this page. Rates and terms shown are indicative guides to how routes compare, not quotes and not current published lender terms; they have not been re-verified against each lender. Confirm any rate with the lender before you rely on it.
Commercial solar financing — what many buyers search for as commercial solar funding — is the set of methods UK businesses use to fund a solar PV installation without paying the full upfront capital cost. In 2026, there are six distinct financing routes — from green loans to zero-capital Power Purchase Agreements (PPAs). Each route has different cashflow, tax, and balance-sheet consequences. This guide explains every route and tells you which one fits your business.
Quick answer: commercial solar financing in 30 seconds
Six routes: (1) Capital purchase — pay upfront, claim 100% AIA, own from day one. (2) Green loan — borrow at 5.9–9%, claim AIA, repay from savings. (3) Hire purchase — spread cost, own on final payment. (4) Finance lease — fixed rental, on-balance-sheet, lessor claims AIA. (5) Operating lease — off-balance-sheet rental, no capital. (6) PPA — zero capital, zero maintenance, pay per kWh generated. Public sector? Use capital budget, borrowing, a lease or a PPA.
Commercial solar funding in 2026: what the phrase now means
“Commercial solar funding” used to mean grants. In 2026 it almost always means finance. The Public Sector Decarbonisation Scheme closed to new applications in November 2024 and is in its final phase; the private-sector capital grants that existed were regional and small; and the reliefs that remain — capital allowances, the business-rates exclusion, export income — reduce the cost of a project rather than pay for it. Funding a commercial array therefore comes down to choosing one of the six routes above and layering the reliefs on top. The nation you are in changes the layer, not the routes.
Commercial solar funding by nation: the layer on top of the finance
| Layer | England | Scotland | Wales | Northern Ireland |
|---|---|---|---|---|
| Capital allowances (UK-wide) | AIA £1m; 50% first-year allowance on special-rate spend above it; 6% writing-down | Same | Same | Same |
| Business rates on the array | Excluded from rateable value 1 Apr 2022 – 31 Mar 2035 (SI 2022/405) | Excluded 1 Apr 2023 – 31 Mar 2035 (SSI 2023/32, plant only) | Separate rating rules — confirm with the VOA / Welsh Government | Separate rating system (Land & Property Services) |
| Public-body loans | None confirmed from Salix (PSDS grants closed Nov 2024) | Scottish Public Sector Energy Efficiency Loan Scheme, 0%, open | Wales Funding Programme (loans, open); Digarbon £20m for tertiary education | Department for the Economy arrangements |
| SME loans | Regional and combined-authority funds where open | Business Energy Scotland SME loan: interest-free, £1,000–£130,000, 8-year term — but not accepting new applications for solar PV (checked 26 Sept 2026) | Development Bank of Wales Green Business Loan Scheme: loan term linked to project payback; eligibility in its key information | NISEP Commercial Energy Saving Scheme (Northern Ireland): 20% grant, solar PV capped at £30,000, closed to new applications for 2026/27 (next round expected April 2027) |
| Export income | Smart Export Guarantee: supplier-set, e.g. Octopus Outgoing 12p/kWh (16 Sept 2026) | Same scheme | Same scheme | Not in the SEG; supplier export contracts |
| VAT on a business installation | 20%, recoverable if VAT-registered | Same | Same | Same |
Read the table as a checklist for the funding stack: pick the route, claim the allowances, confirm the rating position, price the export, and only then compare the monthly figures. The regional pages for commercial solar finance in Scotland and commercial solar finance in Wales carry the sourced detail for the devolved layers.
Claims table: every figure on this page and its source
Every number and proper noun above is listed here with where it comes from and the date it was checked. If a row is not here, the figure should not be on the page.
| Claim | Source | Checked |
|---|---|---|
| PSDS closed to new applications November 2024; Phase 4 final phase | GOV.UK PSDS collection; DESNZ delivery data 16 June 2026 | 10 September 2026 |
| England rates exclusion 1 Apr 2022 – 31 Mar 2035 | SI 2022/405 | 16 September 2026 |
| Scotland rates exclusion 1 Apr 2023 – 31 Mar 2035 | SSI 2023/32 (Valuation for Rating (Plant and Machinery) (Scotland) Amendment Regulations 2023) | 17 September 2026 |
| Salix loans: Scotland and Wales open; none confirmed in England (PSDS grants closed Nov 2024) | Salix Finance England / Scotland / Wales pages | 10 September 2026 |
| Business Energy Scotland SME loan terms and solar PV exclusion | Business Energy Scotland, SME Loan page | 26 September 2026 |
| Development Bank of Wales Green Business Loan Scheme | Development Bank of Wales | 26 September 2026 |
| Octopus Outgoing 12p/kWh | Octopus Energy | 16 September 2026 |
| Solar is special-rate plant (AIA / 50% FYA / 6% WDA) | HMRC CA22335 | 16 September 2026 |
| Business export rates about 3p to 15p/kWh (EDF 15p fixed for its SME customers; British Gas up to 8p; Octopus Outgoing 12p) | Supplier tariff pages read 6 October 2026 | 14 October 2026 |
| Modelled payback 3.5 to 5.5 years: illustrative, 25p/kWh import, 70-80% self-consumption, 2026 installed costs | Site modelling assumptions (stated); DESNZ MCS cost data 2025/26 for sub-50 kW benchmarks | 14 October 2026 |
More questions on commercial solar funding
Is there any government funding for commercial solar panels in 2026?
Not as a capital grant for a private business. The reliefs that exist reduce cost — capital allowances, the business-rates exclusion in England and Scotland, and export income — and public bodies in Scotland can borrow interest-free from Salix while those in Wales can borrow at a fixed 2.45%. The Public Sector Decarbonisation Scheme closed to new applications in November 2024.
What is the difference between commercial solar funding and commercial solar financing?
In practice none: with grants closed, funding a commercial array means choosing a finance route — capital purchase, green loan, hire purchase, finance lease, operating lease or a power purchase agreement — and layering the tax and rating reliefs on top.
Can a business in Scotland get an interest-free loan for solar?
Not through the Business Energy Scotland SME loan at present: the scheme is interest-free (£1,000–£130,000 over eight years) but states it is not accepting new applications for solar PV projects. Scottish public bodies can use Salix's zero-interest loan scheme; private businesses use the standard finance routes.
Is commercial solar financing worth it in 2026?
For most profitable UK trading companies with daytime electricity demand and a usable roof, yes — and the finance route decides by how much. Modelled on 2026 prices, a capital purchase or green-loan-funded array pays back in roughly three and a half to five and a half years before tax on a site that uses most of its own generation at a 25p/kWh commercial import rate; the Annual Investment Allowance then relieves the whole cost in year one for a tax-paying owner. A power purchase agreement is cash-positive from the first bill at the cost of ownership and the allowances. The honest framework:
| Situation | Verdict | Route to model first |
|---|---|---|
| Profitable trading company, owner-occupier, ten or more years on site | Strong case | Capital purchase or green loan — keep the allowances and the export income |
| Profitable company, capital committed elsewhere | Strong case | Green loan or hire purchase; priced off Bank Rate (3.75%, 16 September 2026) |
| Tenant on a short lease, or a landlord-tenant split | Conditional | Operating lease or a landlord-funded array with a rent adjustment |
| Charity, loss-making company or non-taxpayer | Conditional | A route where the funder claims the allowances and prices them in: lease or PPA |
| Site exporting most of its generation (little daytime demand) | Weak | Export is worth 3p–15p/kWh against 25p/kWh avoided import: size to demand or do not proceed |
| Roof needing structural work, or a constrained grid connection | Weak until resolved | Price the works and the DNO offer before any finance offer is made unconditional |
When it is not worth it, we say so: a modelled payback beyond the roof's remaining life, a DNO export cap that strands half the array, or a tenancy that ends before the finance does are the three positions where the right answer is to wait or to change the structure. Sources for the modelling assumptions are in the claims table above; the payback calculator runs them on your numbers.
Read next: commercial solar financing in 2026: what lenders check before they say yes, and the commercial solar finance companies guide for who offers each route.
The six commercial solar financing routes compared 2026
| Financing route | Upfront cost | Monthly payment | Who owns the panels | Tax: capital allowances | Best suited to |
|---|---|---|---|---|---|
| Capital purchase (own outright) | 100% of installed cost | None | You (from day one) | 100% AIA year one (or 50% FYA) | Businesses with strong cash reserves and high taxable profit |
| Green loan | Nil | £2,100–£3,200/month per 250kWp (7% APR, 8yr) | You (from day one) | 100% AIA year one | Businesses wanting ownership + AIA without using all working capital |
| Hire purchase (HP) | 0–20% deposit | Slightly lower than green loan | You on final payment | AIA on completion of HP (when title passes) | Businesses wanting AIA at system completion, not at order |
| Finance lease | Nil to first rental | Fixed rental for term (typically 5–10yr) | Lessor owns throughout | Lessor claims AIA (not you) | Businesses wanting fixed monthly cost, on-balance-sheet finance (IFRS 16) |
| Operating lease | Nil | Lower than finance lease | Lessor owns throughout | Lessor claims AIA (not you) | Businesses wanting off-balance-sheet treatment, no residual risk |
| Power Purchase Agreement (PPA) | Zero | Pay per kWh generated (discounted rate) | Developer owns throughout | Developer claims AIA | Businesses wanting simplicity, zero capital, zero maintenance responsibility |
How to choose the right commercial solar financing route
Decision 1: Do you want to own the solar system?
If yes — capital purchase, green loan, or hire purchase. Ownership lets you claim Annual Investment Allowance (100% first-year corporation tax relief), include the asset on your balance sheet (boosting net assets), and pocket 100% of the energy saving without paying a leasing margin or PPA discount. Ownership also simplifies building sales — solar adds to the property value and transfers with the building. If no — operating lease or PPA. Non-ownership simplifies accounting, removes maintenance responsibility, and typically requires less credit approval than a loan or HP.
Decision 2: Is a zero-capital structure essential?
PPA and operating lease both require zero capital. PPA is better for large, constant-consumption sites (above 200kWp at 250,000+ kWh/year) where the developer's return is predictable. Operating lease is better for businesses that want a fixed monthly payment (not variable per kWh) and off-balance-sheet treatment under UK GAAP/FRS 102. Both routes sacrifice the Annual Investment Allowance to the developer/lessor — this is the main cost of zero-capital structures for profitable businesses (the AIA on a £500k system is worth £125,000 in year-one CT relief at 25%).
Decision 3: Public sector body?
If you are an NHS trust, council, university, academy, or other listed public body, the tax allowances behind the six commercial routes do not help you, but the routes themselves (capital budget, lease, PPA) still do. The PSDS (Public Sector Decarbonisation Scheme) paid capital grants for public-sector projects until it closed to new applications in November 2024. PSDS closed to new applications in November 2024 and Phase 4 is its final phase. We could not confirm an open Salix solar loan for English public bodies. This is categorically the best commercial solar financing route for public bodies — it cannot be beaten by any commercial structure.
Commercial solar financing: cashflow comparison 2026
The table below compares the 5-year net cashflow for a 250kWp commercial solar installation (installed cost £212,500; annual energy saving £87,000 at 35p/kWh) under each financing route.
| Route | Year-one CT benefit | Year-one cashflow (net) | Year 2–5 annual cashflow (net) | 5-year net cumulative |
|---|---|---|---|---|
| Capital purchase (AIA) | £53,125 CT saving | £87,000 saving – £212,500 capex + £53,125 CT = –£72,375 | £87,000/yr (no repayment) | £+275,625 |
| Green loan (7% APR, 8yr) | £53,125 CT saving | £87,000 – £29,600 loan (12 mths) + £53,125 CT = £+110,525 | £87,000 – £29,600 loan = £57,400/yr | £+340,525 |
| Hire purchase (8% APR, 7yr) | £53,125 (at handover) | £87,000 – £33,600 HP + £53,125 CT = £+106,525 | £87,000 – £33,600 = £53,400/yr | £+320,525 |
| Finance lease (7%, 10yr) | Nil (lessor claims) | £87,000 – £23,400 lease = £+63,600 | £63,600/yr | £+318,000 |
| Operating lease (7%, 10yr) | Nil | £87,000 – £25,200 lease = £+61,800 | £61,800/yr | £+309,000 |
| PPA (25% discount to 35p = 26.25p/kWh saved) | Nil | £63,250 net saving (no repayment, but lower saving) | £63,250/yr | £+316,250 |
Key insight: green loan finance typically produces the best 5-year cumulative cashflow for profitable businesses because the AIA benefit (year-one CT relief) is added to the energy saving in year one, while loan repayments are lower than the energy saving from year one. Capital purchase is second — better than green loan if cash has no alternative use earning more than the loan interest rate.
Commercial solar financing: frequently asked questions
Which is cheaper over 25 years: commercial solar financing or buying outright?
Buying outright, for a tax-paying owner-occupier: it keeps the capital allowances, the export income and the asset. Among financed routes a green loan or hire purchase is next, a lease costs more in total for a lower monthly figure, and a PPA is the most expensive over the term in exchange for zero capital and zero asset risk.
How long does commercial solar financing take to arrange?
Two to four weeks for a bank or asset financier on a straightforward credit under £250,000, four to eight for larger or structured deals, and longer for PPAs where the developer's technical due diligence runs alongside the credit decision. Half-hourly consumption data and two years of filed accounts shorten every route.
What is commercial solar financing?
Commercial solar financing refers to the methods UK businesses use to fund a solar PV installation without paying the full upfront capital cost. The six main routes are capital purchase, green loan, hire purchase, finance lease, operating lease, and Power Purchase Agreement (PPA). Each has different tax, balance-sheet, and cashflow consequences — the best route depends on your tax position, cash reserves, accounting treatment, and operational preferences.
Which commercial solar financing companies should I compare?
The right lender depends on the route you choose. For a full directory of UK lenders, leasing specialists, PPA developers and brokers — with an indicative rate-comparison table — see our dedicated guide to commercial solar finance companies. This page focuses on the six financing routes themselves and which one fits your tax position and cashflow.
How long does commercial solar financing approval take?
Green loan approvals from high-street banks typically take 2–6 weeks (credit assessment, legal review). Specialist asset finance brokers can approve smaller loans (£25k–£250k) in 48–72 hours. PPA agreements take 4–12 weeks to structure (site survey, G99 pre-application, contract negotiation). PSDS grant applications took 4–16 weeks from application to letter of offer while the scheme was open. Our approval time guide gives full timelines.
Explore specific financing routes
See the routes worked through with figures in our commercial solar finance case studies, or explore capital free commercial solar.
Commercial solar financing by business type: owner-occupier, tenant, public body & multi-site
The best financing route depends less on the panels and more on who you are – whether you own the building, whether you pay corporation tax, and how many sites you run. The same 250kWp system is financed very differently by an owner-occupied manufacturer, a retail tenant, an NHS trust and a multi-site logistics group. Match your situation to the row below, then read the note beneath it.
| Business type | Typical best-fit route | Key constraint | Tax / AIA position |
|---|---|---|---|
| Owner-occupier (owns building & trades from it) | Capital purchase, green loan or hire purchase | Few – full control of the roof and the asset | Claims 100% AIA (special-rate plant, up to £1m); the asset adds to property value |
| Tenant / leaseholder | PPA or operating lease; green loan only if the lease term comfortably exceeds payback | Needs landlord consent; split-incentive problem; fixtures at lease end | Can claim AIA on plant it funds and uses in its trade – only if it holds a qualifying interest and the lease documents ownership |
| Public body (NHS, council, university, academy / MAT) | Capital budget, borrowing, lease or PPA (PSDS closed Nov 2024); Salix loans in Scotland and Wales | Generally pays no corporation tax | AIA has no value (no tax to relieve); the funding route and energy saving drive the case instead |
| Multi-site / group of companies | Portfolio PPA, master lease or framework asset finance; phased capital purchase | Single £1m AIA shared across the whole group; per-site metering (no cross-site netting) | Spend over £1m in one period drops to 50% first-year allowance + 6% WDA on the residue |
Tenants: the split-incentive problem (and how to solve it)
A tenant benefits from lower bills but does not own the roof; the landlord owns the roof but does not pay the bills. Three ways round it: (1) a PPA or operating lease that sits with the occupier and can be assigned or removed at lease end; (2) a landlord-funded install recovered through a green-lease clause or service charge; or (3) the tenant funds it directly and claims the AIA – but only where the lease term comfortably exceeds the payback and the lease sets out what happens to the panels at the end. Under the CAA 2001 fixtures rules only one party can claim allowances on a given fixture, so agree a capital-allowances / fixtures election in the lease before you install.
Public bodies: why the tax reliefs do not apply to you
NHS trusts, councils, universities, academies and MATs generally pay no corporation tax, so the AIA and the 50% first-year allowance that drive the commercial routes have no value to you. The value driver used to be grant funding: in England the Public Sector Decarbonisation Scheme (delivered by Salix Finance) paid capital grants until it closed to new applications in November 2024. Public bodies now compare capital budgets, borrowing, leases and PPAs. Scotland and Wales run their own Salix-delivered public-sector programmes (see the regional section below).
Multi-site groups: the shared-AIA trap
The £1m AIA is a single allowance shared across a group of companies and across companies under common control – not £1m per site. A retailer rolling out solar across 15 branches at £120k each (£1.8m) in one accounting period claims 100% AIA on only the first £1m; the remaining £800k gets the 50% special-rate first-year allowance with 6% WDA on the residue (illustrative). Phasing the rollout across two accounting periods can preserve full 100% relief on more of the spend. Groups also cannot net export from one site against import at another – each meter is billed separately – so portfolio PPAs and master leases are structured site-by-site under one master agreement. See how this plays out for retail and property portfolios.
Commercial solar financing UK: regional availability & solar financing companies
A common question is whether commercial solar financing differs across the UK. The answer: the commercial routes are UK-wide, but the export and grant layers are devolved. Where you install changes the incentives, not the finance itself.
| Funding layer | England | Scotland | Wales | N. Ireland |
|---|---|---|---|---|
| Green loans, HP, finance / operating leases, asset finance, PPAs | Yes | Yes | Yes | Yes |
| SEG export payments | Yes | Yes | Yes | No – separate NI regime |
| Public-sector grant / 0% loan scheme | None open (PSDS closed Nov 2024) | Scottish public-sector fund (Salix) | Wales Funding Programme (Salix) | Outside PSDS |
Commercial finance is UK-wide. Green loans, hire purchase, finance and operating leases, asset finance and PPAs are offered by banks, asset-finance houses and independent PPA developers across all four nations. There is no postcode restriction – pricing turns on your covenant strength and project size, not your location.
The export layer is regional. The Smart Export Guarantee (SEG) applies in Great Britain only; Northern Ireland sits outside SEG and has its own export-payment arrangements. Because export income affects PPA and self-consumption economics, NI projects should model export separately rather than assume a GB SEG rate.
The grant layer is devolved. The PSDS covered public bodies in England until it closed to new applications in November 2024; Scotland and Wales run their own Salix-delivered public-sector loan programmes on separate budgets and eligibility rules. Northern Ireland public bodies were always outside PSDS.
Choosing between solar financing companies
The UK market splits into four provider types: high-street & challenger banks (green loans and general corporate borrowing); asset-finance houses and brokers (HP, finance and operating leases); PPA developers and funds (zero-capex generation); and Salix (it delivered PSDS grants in England until the scheme closed in November 2024, and runs public-sector loans in Scotland and Wales). Each is incentivised to sell its own product, so a bank quote and a PPA quote are rarely compared on equal terms. This site is not a lender: compare every route across all four provider types so the choice follows your numbers, not a commission. For a provider directory with indicative rates, see our guide to commercial solar finance companies.
Is commercial solar financing available across the whole UK?
Yes. The commercial routes – green loans, asset finance, leases and PPAs – are available UK-wide. Only the SEG export layer (Great Britain only) and the public-sector grant schemes (devolved to each nation) differ by location.
Are there solar financing companies covering Scotland, Wales and Northern Ireland?
Yes. Banks, asset-finance houses and PPA developers operate across all four nations; project pricing depends on covenant strength and size, not region. The only nation-specific bodies are the Salix-delivered public-sector loan schemes in Scotland and Wales.
See also: financing solar across multiple sites across a portfolio or estate.
Finance route checker
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Route chosen? the green loan lender table shows who actually writes these loans and on what terms.
For the practical sequence — tax position, sizing, modelling, term sheets — see how to finance commercial solar panels.
Whoever incurs the spend claims the relief; the rules on capital allowances on solar panels decide which route keeps it.
If you would rather have the six routes ranked for your project than compared in the abstract, use the commercial solar finance options checker.
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