Solar asset finance in London

Whole-of-market commercial solar finance for businesses across London and the wider Greater London area, including Croydon, Bromley, Dartford.

London carries some of the highest commercial energy costs in the country, and for the businesses occupying the capital’s industrial and commercial estates that pressure is precisely why solar makes financial sense. The challenge is rarely whether to install — it is how to fund a six-figure system without draining the working capital a London business needs for rent, stock and payroll. That is the gap asset finance closes. We are a commercial solar asset finance brokerage: we arrange the funding so a business can own its array from day one and pay for it out of the savings it generates, rather than from cash reserves it would rather keep liquid.

With average commercial energy spend in London running at around £95,000 a year, even a partial offset from rooftop solar represents a material line on the P&L. Across the estates that power the capital’s economy — Park Royal, Brent Cross, Greenwich Peninsula, the Old Kent Road industrial area and Stratford — finance directors are reaching the same conclusion: the system pays for itself, so the question becomes which funding route lets them keep the most value on their own balance sheet.

Why London businesses finance solar rather than buy outright

Buying a commercial array outright means committing £100,000 or more of cash to an asset that pays back over years, not months. For a London business already carrying premium rents on space in Park Royal or service-charge obligations around Greenwich Peninsula, that is capital better deployed elsewhere. Asset finance spreads the cost across the life of the system so the array effectively funds itself: repayments are structured to sit below the value of the energy displaced, meaning the project can be cash-flow positive from the first month.

There is a second, less obvious reason. A funded purchase keeps ownership — and therefore the tax reliefs and export income — with the business. That distinction is the whole game when you compare owning via finance against a third-party power purchase agreement, and we cover it in detail below.

Which finance routes suit London firms

Different London businesses need different structures, and the right one depends on your tax position, how long you intend to occupy the building, and whether you want the asset on your balance sheet.

Hire purchase

The most common route for a business that wants to own outright at the end of the term. You spread the cost over a fixed period, take title once the final instalment clears, and — because you own the asset throughout — you claim the capital allowances yourself. A manufacturer on Stratford or a distributor on Park Royal that plans to stay put for the long term usually lands here. See solar hire purchase.

Finance lease

Rentals are fully deductible against profit, and the lessor typically claims the capital allowances and passes the benefit back through lower rentals. This suits a business that wants the savings without the allowances sitting on its own return. See solar finance lease.

Operating lease

An off-balance-sheet route where you rent the system for a defined term and hand it back at the end. No capital allowances for the lessee, but the rentals are deductible — useful for a London tenant on a shorter lease who wants the energy savings without owning the hardware. See solar operating lease.

Equipment loan

A straightforward loan against the solar installation. You own the kit from day one and claim the allowances, while the lender holds security over the asset. See solar equipment loan.

For businesses that have the cash but want to compare the true cost of tying it up, capital purchase is the benchmark every financed option is measured against. And for those who already own an array and want to release the capital locked inside it, sale and leaseback can recapitalise an existing system.

A worked example on Park Royal

Consider a logistics operator on Park Royal — one of London’s largest industrial estates — carrying a commercial energy bill near the city average of £95,000 a year. It specifies a 150kWp rooftop array at an indicative installed cost of £140,000 and funds it on hire purchase over seven years. With a representative structure the monthly repayment lands at roughly £1,950, while the energy the array displaces is worth comfortably more than that each month once you account for daytime self-consumption across a working warehouse roof. The business owns the system throughout, claims the Annual Investment Allowance on the spend, and keeps the Smart Export Guarantee income from any electricity it sends back to the grid. The numbers here are illustrative — your actual figures depend on roof size, usage profile and quoted system cost — but the shape is consistent: repayments below savings, with the tax relief and export income retained in-house.

You can model your own version of this on our finance calculator, and our cost guide breaks down what a commercial system of this scale typically runs to.

Capital allowances and ownership versus a PPA

This is where the funding decision turns into a tax decision. Solar PV is special-rate expenditure. It qualifies for the Annual Investment Allowance (AIA) at 100% on up to £1 million of qualifying spend each year, and for the 50% first-year allowance on expenditure above that threshold. Both reliefs are permanent. Importantly, solar PV does not qualify for 100% full expensing — that relief is reserved for main-rate plant, not special-rate assets like solar.

Who actually claims those allowances depends entirely on how you fund the system:

• Hire purchase, equipment loan or cash purchase — the business owns the asset and claims the capital allowances directly.
• Finance lease — the lessor usually claims the allowances and passes the benefit back through lower rentals.
• Operating lease — no allowances for the lessee, but the rentals are deductible against profit.
• Power purchase agreement (PPA) — the third-party funder owns the array, so the funder claims the allowances and keeps the Smart Export Guarantee income. The business simply buys the power.

That last point is the crux of the argument. A PPA looks attractive because there is no capital outlay, but you give away both the tax relief and the export income to the funder. Owning the system through asset finance keeps the AIA, the 50% FYA and the SEG income with your business — and you still avoid the upfront cash hit. For most London firms with taxable profits, that combination makes ownership the stronger long-term position. We set the two approaches side by side in capital allowances and asset finance versus PPA.

The local net-zero and council policy driver

London’s policy backdrop reinforces the commercial case. The Greater London Authority has set a net-zero target of 2030 — one of the most ambitious among the UK’s major cities — and its London Environment Strategy sets the framework for how the capital decarbonises its buildings and economy. For commercial occupiers, that direction of travel translates into planning expectations and procurement pressure rather than a single grant cheque.

The detail matters. The London Plan supports rooftop solar across both commercial and residential development, and under London Plan Policy SI 2 photovoltaic capacity is expected on all major new commercial schemes — so for a business commissioning or refitting space the question of solar is increasingly built into the planning conversation from the outset. The London Energy Efficiency Fund provides finance to public buildings, signalling the institutional commitment behind the strategy. None of this directly funds a private business’s array, which is exactly why a clear-eyed financing route is the practical answer for firms in Croydon, Bromley, Dartford, Watford and Slough as much as for those inside the capital itself. We keep a current view of the wider support landscape in our grants and funding guide.

Talk to a commercial solar finance specialist

If your business operates anywhere across London or the surrounding belt and you are weighing solar against your energy spend, the most valuable hour you can spend is mapping the funding routes against your tax position before you commit. We will show you what hire purchase, leasing and ownership look like side by side, what stays on your balance sheet, and what the repayments are against your projected savings. Request a quote and we will build the comparison around your roof, your usage and your numbers — no obligation, just a clear view of how a London business owns commercial solar without surrendering the allowances or the export income.