Solar farm finance in the UK: what a ground-mount project costs, earns and borrows

What a solar farm costs to build and run

The reference cost set for UK ground-mount solar is Arup's 2024 assessment for DESNZ, published in final form on 14 July 2025, for projects above 5 MWp in 2023 prices (sample 11 to 225 MWp, median 52 MWp). Its central case is a total of £659 per kWp installed; the low and high cases bracket £526 and £788.

Land take is about six acres per megawatt for existing projects (Solar Energy UK's figure, cited by Carbon Brief on 25 August 2022), so a 5 MWp site needs roughly 30 acres and a 50 MWp site around 300.

Where the revenue comes from

Two historic routes are closed: the Renewables Obligation closed to new capacity on 31 March 2017 (existing ROCs run for 20 years), and the Feed-in Tariff closed to new applicants on 1 April 2019. A new project has the four live routes above.

Land: lease or own

Most UK solar farms are built on leased land. The published benchmarks are dated and should be treated as such: subsidy-free solar rents “anywhere between £850 and £1,100 per acre per annum” with revenue top-ups of around 4–6% of developer revenue (Stephens Scown, published December 2021, reviewed September 2023), and rents “in excess of £800 an acre, and can be £1,000” with a revenue share at least matching the base rent (Farmers Weekly business clinic, June 2020). Leases run 30 to 50 years, options typically require construction within one to three years, and a co-located battery usually adds rent per megawatt. For the landowner the lease is income; for the developer it is an operating cost that sits outside the Arup opex figures above.

How the debt is sized and what the equity carries

A lender to a solar-farm SPV advances senior debt against the revenue it can rely on: a CfD or a long-dated corporate PPA counts in full, a merchant tail is discounted, and the loan is sized so that forecast cash after operating costs covers debt service with a margin the bank sets. Pre-development spend, planning risk and the grid connection deposit are carried by the equity until consent and a connection offer are in hand; construction is then funded by the debt and equity together against the EPC contract, and the loan converts to a term facility at commissioning. Interest is priced off Bank Rate (3.75% on 16 September 2026) or SONIA plus a project margin.

Tax follows the same rules as a rooftop array: the plant is special-rate expenditure, so a company claims the Annual Investment Allowance on the first £1m and the 50% first-year allowance above it (see the capital allowances guide); in England the generation and storage plant is excluded from the rating valuation until 31 March 2035 while the land itself remains rateable (see business rates and solar panels); and the output is a standard-rated supply of electricity for VAT.

Planning and grid

• A ground-mount scheme needs full planning permission. Under the Development Management Procedure Order 2015 the determination period is 13 weeks for a major application (a site of one hectare or more) and 8 weeks otherwise; the real timetable is set by surveys and consultation, not the statutory clock.
• From 31 December 2025 the Nationally Significant Infrastructure Project threshold for solar in England is 100 MW (SI 2025/694), up from 50 MW; schemes above it go through the development consent process rather than the local authority.
• The grid connection is the longest lead item and the second-largest cost line. A connection offer with a firm date is a condition of every lender's credit approval; the offer, not the planning consent, usually sets the financial close date.

Worked illustration: a 5 MWp site on 30 acres (modelled, not a client engagement)

At the Arup central case a 5 MWp solar farm costs about £3.3m to build (£2.6m to £3.9m across the low and high cases). Year-one output at the central load factor is roughly 5,350 MWh. Priced at the AR7a clearing level of £65.23 per MWh — a 5 MWp site sits below the CfD threshold, so in practice this is a PPA price in line with it — revenue is about £349,000. Operating costs at £9,300 per MWp come to £46,500 and rent on 30 acres at £1,000 an acre to £30,000, leaving an operating surplus of roughly £272,000 before finance, tax and degradation: about 8.3% of the central capex, 10.4% at the low case and 6.9% at the high. That is the number a lender sizes debt against and an equity investor compares with the alternatives; the price assumption and the land cost are the two inputs that move it most.

Assumptions are stated so that each can be replaced. For an estate weighing a solar farm against rooftop arrays on its buildings, the six rooftop financing routes and the agricultural solar finance guide cover the smaller end.

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.