How much does solar asset finance cost?
The honest answer: less than the energy it saves you, if it's structured well. Here's what drives the cost of financing commercial solar in 2026 — and how to read the total cost of credit. To convert a capital cost into a monthly figure and a cost per kWh, use the solar finance calculator.
The "cost" of solar asset finance has two parts: the cost of the system (typically £700–£1,300 per kW installed for commercial rooftop, falling with scale) and the cost of the finance on top. This page is about the second part — because the system cost is the same whoever funds it, but the cost of credit, and what you can claw back in tax, varies a lot by route.
What drives your finance rate
There's no single "solar finance rate". The rate a lender offers depends on:
- Your covenant strength — filed accounts, trading history and balance sheet. Stronger covenants get finer rates.
- The term — longer terms lower the monthly payment but increase the total cost of credit.
- Security — unsecured facilities cost more than secured; some are backed by the Growth Guarantee Scheme.
- Deal size — larger facilities usually attract keener pricing per pound.
Two funders will price the same project differently, so it is worth holding more than one quote for the same structure rather than taking the first facility offered. Ask each funder for the total cost of credit — the sum of all repayments minus the amount financed — in writing, so you can compare like with like against paying cash.
The number that matters: repayment vs saving
For a well-structured deal the test isn't the headline rate — it's whether the monthly repayment sits below the energy the system saves and earns. On most £30k–£1m projects over a 5–7 year term, it does, which makes the project cash-flow positive from month one. Try the figures yourself on our finance calculator.
How tax cuts the real cost
On an ownership route — hire purchase, an equipment loan or cash — the Annual Investment Allowance lets a profitable company deduct 100% of the system cost (up to £1m) from taxable profit in year one. At the 25% main rate of corporation tax, that's up to a quarter of the cost back. Net of that relief, an owned solar system is materially cheaper than the headline price — a benefit a PPA funder keeps for themselves.
A worked example
A £160,000 rooftop system, financed over 6 years on hire purchase at an indicative 8.5% APR, works out at roughly £2,820 a month (about £203,000 repaid in total, so a total cost of credit near £43,000). If the system saves and earns around £41,000 a year — about £3,400 a month — the project is cash-flow positive by roughly £580 a month from the start, before counting the up-to-£40,000 of year-one AIA relief. Run your own numbers on the calculator; a funder's quote then replaces every assumption with your real figures.
Does the cost differ in Scotland, Wales or Northern Ireland?
The finance itself is priced the same way across the UK, and capital allowances and VAT (20% on a commercial install, reclaimable if you are VAT-registered) do not change at the border. What changes is the saving side of the sum, which decides whether the repayment sits below the benefit:
- Generation. PVGIS models about 1,044 kWh per kWp a year in Cardiff, 922 in Belfast, 908 in Edinburgh and 855 in Glasgow at the optimal tilt. A Glasgow array earns roughly 18% less per kWp than a Cardiff one, so the same finance term carries a thinner margin. In the East Midlands the figure is about 995 in Derby and 994 in Nottingham.
- Export income. The Smart Export Guarantee covers Great Britain only. In Northern Ireland, export is paid at supplier rates instead, such as Power NI's 11.88p/kWh for 1 October 2026 to 30 September 2027.
- Business rates. Scotland excludes on-site renewable generation and storage plant from valuation until 31 March 2035 (SSI 2023/32), Wales excepts qualifying renewable plant until the same date (SI 2023/1229), and in Northern Ireland plant up to 50kW is not rateable.
- Public lending. In Wales, the Development Bank of Wales Green Business Loan Scheme offers discounted fixed interest for solar PV, so price it against hire purchase on the same quote. In Scotland, Business Energy Scotland's interest-free SME Loan is not currently accepting solar PV applications.
Sources read 3 November 2026: PVGIS v5.3 API, ofgem.gov.uk, powerni.co.uk, legislation.gov.uk, finance-ni.gov.uk, developmentbank.wales and businessenergyscotland.org. Our grants and funding guide covers each nation's schemes.
Cost profile by funding route
Hire Purchase
Spread the cost, own the system at the end, and claim the capital allowances as if you bought it for cash.
- Typical term
- 2–7 years
- Deposit
- 0–20% (often one payment in advance)
- Capital allowances
- You claim them — HMRC treats hire purchase as an outright purchase
Finance Lease
Use the system and deduct the rentals; the lender owns it and usually passes the tax-allowance benefit back through lower payments.
- Typical term
- 3–10 years
- Deposit
- Typically 3 months' rentals in advance
- Capital allowances
- Normally claimed by the lessor and reflected in lower rentals — unless it is a long-funding lease
Operating Lease
The lowest-commitment rental route — pay for use, deduct the rentals, hand it back or extend at the end.
- Typical term
- 3–7 years
- Deposit
- Low — often 1–3 months in advance
- Capital allowances
- None for the lessee — rentals are a deductible revenue expense; the lessor keeps the allowances
Capital Purchase
Buy outright for the best lifetime return — the benchmark every financed route is measured against.
- Typical term
- n/a — single payment
- Deposit
- 100% up front
- Capital allowances
- Maximum benefit — full AIA in year one, 50% FYA above the cap, then 6% writing-down allowances
Refinance & Sale-and-Leaseback
Release the capital tied up in a solar system you already own, then keep using it under a lease.
- Typical term
- Agreed with the funder, usually several years
- Deposit
- n/a — you receive a lump sum
- Capital allowances
- The sale is a disposal. An operating leaseback can trigger a balancing charge; a finance leaseback is taxed as a long funding lease, which usually offsets it but limits rental deductions to the interest element
Green Equipment Loan
An unsecured or lightly-secured business loan for solar — you own the kit outright from day one.
- Typical term
- 1–7 years
- Deposit
- Usually none
- Capital allowances
- You own the system, so full AIA / 50% FYA is available exactly as with a cash purchase
Cost questions
How much does it cost to finance commercial solar?
Finance rates depend on your covenant strength, the term and the structure, but the test that matters is whether the monthly repayment is lower than the energy the system saves you. On most £30k–£1m projects over a 5–7 year term it is, which is why they are cash-flow positive from month one. Ask any funder for the total cost of credit in writing and compare it against paying cash.