Six ways to finance commercial solar.
From outright capital purchase to zero-capital PPAs, every structure has a clear best-fit case. Here's the honest comparison — economics, mechanics, and trade-offs side by side.
UK commercial solar finance — 2026 funding map
UK commercial solar finance in 2026 spans seven distinct structures, each with different mechanics, tax treatment, balance sheet impact, and best-fit profiles. The right structure for any specific project depends on your tax position, capex availability, balance sheet preferences, occupation horizon, and electricity supply preferences. We model all seven structures against your actual numbers in advisory engagement.
Most UK businesses approach commercial solar finance through an installer or a single lender. Both are commercially aligned with one specific finance route. We sit on your side of the table to recommend the structure that wins on your specific numbers — including recommending you don't proceed where economics don't support it.
The seven UK commercial solar finance structures: capital purchase (cash buy with full tax allowances), green loan (debt-funded ownership preserving tax allowances), finance lease (leasing-company structure with lessee tax-allowance capture), operating lease (off-balance-sheet under FRS 102 small-entity), Power Purchase Agreement (third-party owns and operates; you buy the electricity), asset finance / hire purchase (predictable monthly payments aligned with operating budget), and battery storage finance (combined with solar in specific scenarios).
For most UK profitable trading companies installing commercial solar in 2026, capital purchase delivers strongest lifetime economics — typically 16-22% post-tax IRR over 25 years, payback in 3.5-5 years post-FYA. Green loans provide the next-best alternative for working-capital-constrained operators. PPAs serve covenant-restricted businesses and capital-constrained operators. Operating leases serve covenant-prioritising operators where balance sheet treatment matters. Asset finance serves speed-critical or sub-£100k projects.
Beyond the structure choice itself, finance route selection interacts with: tax allowance capture (50% First Year Allowance extends to 31 March 2026), public-sector funding routes (PSDS for not-for-profits), customer ESG procurement requirements (retailer supply-chain financing), and regional combined-authority programmes. Our advisory approach models these interactions on your specific project rather than treating finance structure as a standalone decision.
Capital Purchase
Indefinite — system life of 25–30 years
Pay cash, own the asset, claim the full tax relief — the simplest structure and almost always the most economic over 25 years.
Best for
Profitable corporation-tax-paying companies with available cash
Green Loans
7–15 years; commonly 10 years
Borrow against the project, retain ownership, smooth the cash impact — green loans typically charge 6–9% APR for solar specifically.
Best for
Profitable companies wanting to preserve working capital
Operating Lease
5–10 years; commonly 7 years
The leasing company owns the system; you pay a fixed annual rent. Off-balance-sheet, fully expensable, but you don't get the FYA.
Best for
Loss-making or low-tax-paying companies (the lessor uses the FYA, you get a lower rent)
Finance Lease
5–10 years; commonly 7 years
Functionally similar to a loan — you pay over time, the asset hits your balance sheet, and you keep the tax benefits, but with leasing-company structure.
Best for
Profitable companies wanting to keep capital allowances
Power Purchase Agreement (PPA)
15–25 years; commonly 20 years
A third party owns and operates the system on your roof; you buy the electricity at a fixed rate. Zero capital, zero responsibility, lower savings ceiling.
Best for
Capex-constrained businesses with strong electricity demand
Asset Finance
3–7 years; commonly 5 years
Catch-all category for hire purchase, equipment finance, and similar structures aimed at SME-scale solar projects below £250k.
Best for
SMEs with smaller commercial systems (50kWp–200kWp)
Battery Storage
Adds material project value in specific scenarios — export-constrained sites, time-of-use exposure, capacity-market eligibility, or resilience-critical operation.