Solar funding, allowances and grants

The tax reliefs, export income and grant routes that improve the economics of commercial solar — and how each one stacks with asset finance. Updated for 2026.

Realistic expectations first. Most UK businesses fund solar without any grant, and you should plan on that basis. On 3 November 2026 there was no national capital grant for commercial rooftop solar: the Industrial Energy Transformation Fund is closed with no successor, the Public Sector Decarbonisation Scheme stopped taking new applications in November 2024, and almost all the council and combined-authority business energy grants paid for by the UK Shared Prosperity Fund have closed or been spent. In the devolved nations, Wales's Ynni Cymru round closed on 21 May 2026, Invest NI's Energy Efficiency Capital Grant is paused, and Business Energy Scotland's SME Loan is not taking solar PV applications. The handful of local grants still open are capped, first come first served or tied to one area, and any grant reduces the capital allowances you can claim. Treat a grant as a bonus, not the plan.

Sources read 3 November 2026: GOV.UK (Industrial Energy Transformation Fund closure notice; PSDS Phase 4; UK Shared Prosperity Fund prospectus), gov.wales (Ynni Cymru 2026 to 2027), investni.com (Energy Efficiency Capital Grant), businessenergyscotland.org (SME Loan).

Funding commercial solar isn't only about borrowing. The bigger levers for most businesses are the tax allowances and the export income — and the crucial point is that both belong to the system's owner. Fund the system through asset finance and you keep them; sign a PPA and the funder keeps them instead.

The tax reliefs are set out in full elsewhere: solar is special-rate expenditure, so it takes the Annual Investment Allowance or the 50% first-year allowance, and it does not qualify for full expensing. Our guide to capital allowances on solar panels has the arithmetic and shows who claims under each finance route. This page covers the schemes that sit alongside them: the Smart Export Guarantee pays the owner for exported electricity (see Smart Export Guarantee payments for businesses), and the Growth Guarantee Scheme helps lenders fund SME projects that might otherwise stall.

Where a grant is genuinely open, it can usually be combined with these reliefs: the grant funds part of the project, asset finance covers the balance and the AIA reduces the net cost of the part you paid for. One watch-point: if a system was grant-funded, check the grant's clawback terms before any later refinance or sale-and-leaseback. Before planning around a grant, see our guide to solar grants for business for how to confirm a scheme is genuinely open. Here are the routes that apply.

Funding routes for this sector

Annual Investment Allowance (AIA) — 100%

All UK businesses paying income or corporation tax. Solar PV qualifies as special-rate plant and machinery; AIA gives 100% relief on up to £1m of qualifying capex per year.

Value: Up to 25% of the system cost back as tax relief for a company paying the 25% main rate, in year one.

The £1m AIA limit is permanent. Available on owned systems — hire purchase, equipment loan or cash purchase — not on PPAs, where the funder claims it.

Official information →

50% First-Year Allowance (special rate)

Companies (corporation-tax payers) investing in special-rate plant and machinery, which includes solar PV, above their AIA.

Value: 50% of the qualifying cost deducted in year one, with 6% writing-down allowances on the balance thereafter.

Made permanent when the 1 April 2026 sunset was removed by the Autumn Finance Bill 2023. Note: solar does NOT qualify for 100% full expensing — that is main-rate only.

Official information →

Smart Export Guarantee (SEG)

Solar PV (and wind, hydro and anaerobic digestion) in Great Britain with a total installed capacity of up to 5 MW. Up to 50 kW the installation and installer must be MCS-certified or hold an equivalent certification; from 50 kW to 5 MW the installation must be suitably certified, and your supplier decides how it satisfies itself.

Value: No fixed rate: each licensed supplier sets its own export tariff, which only has to be above zero. Compare current tariffs before you choose.

SEG payments go to the person entitled to seek payment for the installation, normally its owner. Under hire purchase, a loan or a cash purchase that is your business; under a PPA it is normally the funder, and under a lease the agreement decides, so check it. This export income is part of the case for owning.

Official information →

British Business Bank — Growth Guarantee Scheme

UK smaller businesses (turnover up to £45m on a group basis) with a viable proposal, borrowing through an accredited lender. The government guarantees 70% of the lender's outstanding balance after recoveries; the borrower stays 100% liable.

Value: Facilities up to £2m per business group. Asset finance can start at £1,000; term loans and overdrafts start at £25,001. Term loans and asset finance run from three months to six years under the current terms.

Successor to the Recovery Loan Scheme (from 1 July 2024). Personal guarantees are at the lender's discretion, but a principal private residence cannot be taken as security. Longer terms (up to ten years) and a higher turnover limit (£54m) were announced in July 2026 and are being implemented by accredited lenders, so check the current terms with the lender. Source: British Business Bank, read 14 October 2026.

Our Growth Guarantee Scheme guide for solar →

Official information →

Combined-authority & regional decarbonisation grants

Mostly closed. The UK Shared Prosperity Fund money behind most council and combined-authority business energy grants has ended, and on 3 November 2026 only a few local routes were confirmed open: the West Midlands Combined Authority's BEAS3 service (seven boroughs, launched 29 October 2026) and Sheffield's Low Carbon Project (Sheffield premises only, almost fully committed).

Value: BEAS3: grants up to £100,000, match rate not yet published. Sheffield: 50% of cost, £1,500 to £30,000, work complete by December 2026. Elsewhere in England: none confirmed open.

Grants can usually be combined with asset finance to fund the non-grant portion. Watch grant clawback terms before any later refinance or sale-and-leaseback.

Official information →

If a grant doesn't fit: the routes that usually do

For most projects the realistic question is not which grant, but which way of paying. Each route below works without any public money, and this site explains how each one works; it is not a lender or broker and does not arrange finance.

Hire purchase or an equipment loan. The business owns the system, so it claims the capital allowances (100% Annual Investment Allowance on up to £1m a year) and keeps any export income. See how solar hire purchase works.
A finance or operating lease. Rentals instead of a purchase price, useful where the business cannot use the allowances itself; under a lease the lessor normally claims them. Our solar lease guide covers both types.
A power purchase agreement. No upfront cost: a funder owns the panels and sells you the power, and keeps the allowances and export income. The asset finance vs PPA comparison sets out what you give up.
Capital allowances on an owned system. Solar is special-rate plant, so it takes the AIA and then a 50% first-year allowance for companies, not full expensing; the capital allowances guide has the arithmetic.
Paying cash. If reserves allow, compare the simple payback with the cost of credit on the finance calculator.

England: the local routes confirmed open

Only a few local routes were confirmed open when we checked on 3 November 2026:

West Midlands Combined Authority BEAS3 (launched 29 October 2026): businesses in Birmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and Wolverhampton; grants of up to £100,000 with solar PV and battery storage among the measures. The match rate and application window were not yet published.
Sheffield Low Carbon Project: SMEs with premises in Sheffield, up to 50% of cost from £1,500 to a £30,000 cap, work complete by December 2026. The council describes it as almost fully committed.
Mayor's Green Finance Fund (London): loans, not grants, for public sector organisations, colleges and museums, with expressions of interest open until 31 January 2027. Private businesses are not listed.
Great British Energy Community Fund: for incorporated community organisations, not businesses, and it closes on 12 November 2026.

The Local Growth Fund goes to mayoral authorities to spend on their growth plans; it is not a grant businesses apply to. Sources: WMCA bulletin (29 October 2026), sheffield.gov.uk, london.gov.uk, gbe.gov.uk and GOV.UK, read 3 November 2026.

In Scotland, Wales and Northern Ireland

Capital allowances, VAT (20% on a commercial install, reclaimable if you are VAT-registered) and the finance products themselves work the same way across the UK. What differs by nation is the public support, the business rates treatment and the export income.

Scotland

Business Energy Scotland's SME Loan is open on a rolling basis (interest-free, up to £100,000 of loan, up to 8 years) but is not accepting new solar PV applications, and pays no cashback on batteries.
The Scottish Industrial Energy Transformation Fund is closed. The CARES Community Buildings Fund is for non-profit organisations only (up to £80,000 at 80%).
On-site renewable generation and storage plant on non-domestic property is excluded from rates valuation until 31 March 2035 (SSI 2023/32). The Smart Export Guarantee applies.

More detail is in our guide to funding solar in Scotland.

Wales

The Development Bank of Wales Green Business Loan Scheme is live and names solar PV: discounted fixed interest, capital repayment holidays, loans of £1,000 to £1.5m over up to 15 years (Senedd written answer WQ96151).
Ynni Cymru's 2026/27 round closed on 21 May 2026 with no further round announced, and Business Wales offers advice rather than a solar grant.
Public bodies can borrow through the Salix Wales Funding Programme at a fixed 2.45% (interest-free only on the Invest to Save strand). Qualifying renewable plant is excepted from rates valuation until 31 March 2035 (SI 2023/1229), and the Smart Export Guarantee applies.

Northern Ireland

There is no Smart Export Guarantee in Northern Ireland. Export is paid at supplier-set rates: Power NI pays 11.88p/kWh for 1 October 2026 to 30 September 2027.
Invest NI's Energy Efficiency Capital Grant is paused with no reopening date. Power NI's Commercial Energy Saving Scheme (NISEP, a 20% grant, solar PV capped at £30,000) is closed for applications for 2026/27; the next round is expected in April 2027, subject to funding approval.
Generating plant up to 50kW is not rateable. Under the Growth Guarantee Scheme, borrowers in scope of the Northern Ireland Protocol face a lower £1m facility cap.

Sources read 3 November 2026: businessenergyscotland.org, gov.scot, legislation.gov.uk, developmentbank.wales, gov.wales, salixfinance.co.uk, powerni.co.uk, investni.com, finance-ni.gov.uk and british-business-bank.co.uk.