Capital Purchase: Solar Asset Finance

Buying your solar system outright with cash is the benchmark against which every finance route should be judged. It carries no interest, gives the fastest simple payback, and delivers the lowest lifetime cost of energy of any option. If your business has the capital and no higher-returning use for it, a capital purchase is hard to beat.

We include capital purchase in every quote precisely so you can see the true cost of borrowing. Sometimes the right answer is to pay cash; sometimes the tax timing and cash-flow benefits of hire purchase or a lease outweigh the interest. We’d rather show you the honest comparison than push you toward the route that pays us most.

Maximum capital allowances

As the outright owner you get the full benefit of the capital allowances. Solar PV is special-rate expenditure, so the cost qualifies for:

• the Annual Investment Allowance at 100% on up to £1m of spend in the year; and
• the 50% first-year allowance on any special-rate spend above the AIA cap, with 6% writing-down allowances on the balance thereafter.

Both reliefs are now permanent, the 1 April 2026 sunset having been removed by the Autumn Finance Bill 2023. Note that solar does not qualify for 100% full expensing — that relief is for main-rate plant only, and solar is special-rate. It’s a distinction we see misstated constantly; our capital allowances guide explains it properly.

The lowest cost of energy

Because there’s no interest and no lessor’s margin, a cash-purchased system produces electricity at the lowest possible cost per kWh over its life. A typical commercial install pays back in five to eight years on energy savings and export income alone, then continues generating for another 17 to 20 years effectively for free. Over a 25-year horizon, that lifetime saving is usually the largest of any route — which is exactly why it’s the benchmark.

You keep everything

Outright ownership means you keep all the value the system creates: the full bill savings, the Smart Export Guarantee income on exported power, and the asset itself, which adds value to your premises (a better EPC, lower running costs, MEES headroom). Compare that with a PPA, where the funder keeps the asset, the allowances and the export income — the difference over 25 years is stark, as we set out in asset finance vs PPA.

When not to buy outright

Paying cash isn’t always the best use of capital. If the money would earn more deployed in your core business, or if taking £200,000 out of working capital would strain cash flow, financing the system and keeping your cash working can produce a better overall return — even after the cost of borrowing. And if you’ve already bought a system and now want that capital back, refinance or sale-and-leaseback can release it without losing the system.

Already paid cash and want to compare?

If you’re weighing a cash purchase against financing, we’ll build the comparison for you — net cost after allowances, payback, IRR and lifetime saving for each route, side by side. Request a quote and we’ll model it from your numbers.