What's the cheapest way to fund commercial solar in the UK?

Outright CAPEX gives the lowest lifetime cost per kWh because you avoid all financing margin and you keep 100% of the savings, capital allowances and REGO benefits. If capital is constrained, asset finance is the next-cheapest route over a 5–10 year horizon; PPA and EaaS trade a portion of lifetime saving for zero capital and zero risk.

What's the difference between EaaS, PPA and CAPEX?

CAPEX means you pay upfront and own the asset. PPA means a third party owns the generation asset and you pay only for the kWh it produces, at a fixed discount to grid. EaaS bundles generation, storage, EV charging, monitoring and O&M into a single fixed unit rate per kWh delivered — a fully-managed energy service rather than a single-asset contract.

Which funding route is best for multi-site operators?

EaaS or a portfolio PPA usually wins for multi-site rollouts because the commercial structure scales across the estate with one contract, one billing model and one accountable provider — instead of running separate CAPEX business cases for every site.

Is EaaS off-balance-sheet?

EaaS is typically treated as a service contract and sits off balance sheet, but treatment depends on the specific contract terms tested against IFRS 16 (whether the customer controls use of an identified asset). Always have the draft contract reviewed by your auditor before signing.

Does asset finance affect our gearing or covenants?

Yes — asset finance is debt on the balance sheet and counts toward gearing and covenant tests. The asset itself usually acts as security, so impact on unsecured borrowing capacity is limited, but the lender's terms must be modelled against existing covenants before signing.

Can we exit a PPA or EaaS contract early?

Yes — break clauses are standard in both. The cost depends on the residual value of the asset and outstanding finance, both of which are modelled openly at signing. Strong contracts publish the break-cost curve year-by-year so there are no surprises.

What is take-or-pay and should I be worried about it?

Take-or-pay clauses require the customer to pay for a minimum volume of energy whether they consume it or not. Strong EaaS contracts size minimum volumes to your historical consumption with safety margin, and treat take-or-pay as a fallback position, not a default obligation. Insist on transparent demand-modelling at procurement.

What happens if we sell the site or our lease ends?

Two protections are standard: lease-aligned contract terms (so the funding term matches your tenure), or assignment rights (the contract transfers to the next occupant). Both are negotiated at signing and should be confirmed before agreeing to a long-term structure.

Are public-sector grants for solar and decarbonisation still available in 2026?

Yes — Salix, the Public Sector Decarbonisation Scheme (PSDS) and Welsh Government Energy Service all continue to fund eligible public-sector and community schemes, alongside Ynni Cymru in Wales and various local authority programmes. Application windows are competitive and time-limited; we help eligible bodies prepare and submit bids.

Who pays — landlord or tenant — in a commercial lease?

Both models are workable. Landlord-funded CAPEX/PPA recovers through service charge or a green-lease uplift; tenant-funded asset finance is common where the tenant captures the energy saving directly. A green-lease addendum sharing benefits between landlord and tenant is increasingly the cleanest commercial solution.

Can charities and not-for-profits fund solar without surplus capital?

Yes. Ynni Cymru in Wales, community-energy share offers, Salix-style interest-free loans, and EaaS contracts all provide routes for charities to deploy on-site renewable energy with little or no upfront capital.

Commercial energy infrastructure on a UK business site

Funding

How to fund your energy solution — every route, explained.

Q: Can I claim capital allowances on a CAPEX solar project?

Yes. Most rooftop solar PV qualifies for UK capital allowances. Under current full-expensing rules, eligible companies can deduct 100% of qualifying plant-and-machinery spend against corporation tax in the year of investment — confirm eligibility and timing with your tax advisor.

CAPEX, asset finance, PPA, Energy-as-a-Service, operating lease or public grants. Six legitimate routes to fund on-site energy infrastructure, compared side-by-side, with worked examples from real UK projects.

In short

UK businesses fund commercial energy projects in six main ways: CAPEX (outright purchase), asset finance (loan or hire purchase), Power Purchase Agreement (pay per kWh), Energy-as-a-Service (fully bundled fixed unit rate), operating lease (monthly rental), and public grants (Salix, PSDS, Ynni Cymru). The right choice depends on capital availability, balance-sheet preference, site tenure and how much operational risk you want to carry.

This page is the long-form answer — written for CFOs, finance directors and energy managers procuring an on-site energy solution in 2026. Worked examples are drawn from live Nuvolt projects.

Quick chooser

Pick the priority that matters most.

Maximum lifetime saving

Cash-rich businesses with a 10+ year horizon.

Spread the cost, keep ownership

Want to own at the end without deploying capital today.

Zero CAPEX, pay per kWh

Don't want to own — just want cheaper, cleaner power.

Fully managed energy service

No capital, no risk, no O&M — fixed unit rate, day-one savings.

At a glance

Six funding routes, compared side-by-side.

Feature	CAPEX	Asset finance	Power Purchase Agreement	Energy-as-a-Service Most popular	Operating lease	Grants & public funding
Upfront cost	100% upfront	Deposit (often £0)	£0	£0	£0	£0 (funded)
Ownership	You own it	Yours at end of term	Investor (then optional buyout)	Provider (optional residual buy)	Lessor (handed back)	You own it
Balance sheet	On balance sheet	Debt on balance sheet	Off balance sheet (typically)	Off balance sheet (typically)	Off balance sheet (IFRS 16 subject)	On balance sheet
Typical term	25–30 yrs (asset life)	5–10 yrs (then owned)	15–25 yrs	10–25 yrs	5–10 yrs	Project-specific
Day-one savings	After payback (3–7 yrs)	Net of finance cost	Yes — month one	Yes — month one	Net of rental	Yes — month one
Maintenance	Your responsibility	Your responsibility	Investor's responsibility	Provider's responsibility	Negotiable (often included)	Your responsibility

CAPEX (outright purchase)

Own the asset. Keep every pound of saving.

CAPEX funding means your business pays the full cost of the energy system upfront from its own balance sheet, owns the asset from day one, and keeps 100% of the energy savings, ROC/REGO benefits and capital allowances for the life of the system (typically 25–30 years for solar).

Upfront

100% upfront

Ownership

You own it

Day-one savings

After payback (3–7 yrs)

Best for

Profitable UK businesses with surplus cash or undeployed reserves
Owner-occupiers with a 10+ year horizon at the site
Companies that want maximum lifetime NPV and full ROC/REGO ownership
Buyers happy to take performance, insurance and O&M risk in-house

Asset finance (loan or hire purchase)

Spread the cost. Own it at the end.

Asset finance funds a commercial energy project through a secured loan or hire-purchase agreement, typically 5–10 years, where the lender's security is the asset itself. You make fixed monthly repayments out of operating energy savings and own the asset outright once the agreement ends.

Upfront

Deposit (often £0)

Ownership

Yours at end of term

Day-one savings

Net of finance cost

Best for

Businesses that want eventual ownership without deploying capital today
CFOs whose hurdle rate is lower than the financed project IRR
Sites with strong, predictable daytime load (savings cover repayments)
Groups that already use asset finance for plant, vehicles or IT

Power Purchase Agreement (PPA)

Pay per kWh. No CAPEX. No ownership.

A Power Purchase Agreement (PPA) is a long-term contract under which a third-party investor funds, owns and operates an on-site generation asset and sells the electricity it produces to you at a fixed price per kWh — typically 15–35% below your current grid tariff — for 15–25 years.

Upfront

£0

Ownership

Investor (then optional buyout)

Day-one savings

Yes — month one

Best for

Sites with strong daytime load that can use most of what's generated
Tenants or short-lease occupants who can't justify CAPEX
Public bodies and charities outside the corporation-tax shield
Buyers who want a clean, single-line energy cost on the P&L

Energy-as-a-Service (EaaS)

Fully bundled. Fixed unit rate. Day-one savings.

Energy-as-a-Service (EaaS) is a long-term contract where a third party designs, funds, owns, builds, operates and maintains your on-site energy assets — solar, battery, EV, controls and monitoring — and you pay a single fixed unit rate per kWh delivered, 15–35% below your current grid tariff, for the life of the contract.

Upfront

£0

Ownership

Provider (optional residual buy)

Day-one savings

Yes — month one

Best for

Businesses without internal energy expertise or surplus capital
Multi-site operators wanting one commercial model across the estate
CFOs who prefer operating expenditure to capital expenditure
Public sector and large corporates with off-balance-sheet preferences

Operating lease

Use the asset. Rent it monthly. Hand it back.

An operating lease funds the energy system through a fixed monthly rental paid to a leasing company that owns the asset, typically over 5–10 years. You use and benefit from all the energy generated, but you do not own the asset and you hand it back (or renew) at the end of the term.

Upfront

£0

Ownership

Lessor (handed back)

Day-one savings

Net of rental

Best for

Businesses prioritising operating-expenditure treatment over ownership
Sites where the asset will be obsolete or replaceable inside 10 years
Companies already using operating leases for vehicles, IT or plant

Grants & public funding

Public capital for public-sector and community schemes.

UK grant funding routes — including Salix, the Public Sector Decarbonisation Scheme (PSDS), the Welsh Government Energy Service, Ynni Cymru and a range of Local Authority programmes — provide non-repayable capital, interest-free loans or feasibility funding to public bodies, charities and community organisations delivering decarbonisation projects.

Upfront

£0 (funded)

Ownership

You own it

Day-one savings

Yes — month one

Best for

Public-sector bodies: NHS Trusts, local authorities, schools, universities
Welsh public bodies and community groups (Ynni Cymru, WGES)
Charities and community-energy organisations
Salix-eligible projects: heat decarbonisation, low-carbon retrofit

Decision framework

Four questions that point to the right route.

No funding route is universally best. These are the four questions our team works through with every CFO before recommending a structure.

Q01

Do you have unallocated capital you want to deploy into the project?

Yes — we're cash-rich and want maximum lifetime return

→ CAPEX (outright purchase)

No — capital is better used elsewhere in the business

→ Energy-as-a-Service (EaaS)

Q02

Do you want the asset on or off your balance sheet?

On balance sheet — we want to own and depreciate it

→ CAPEX (outright purchase)

Off balance sheet — keep gearing and covenants clean

→ Power Purchase Agreement (PPA)

Q03

How long will you be at this site?

10+ years — full asset life is realistic

→ CAPEX (outright purchase)

5–10 years — we need contract flexibility or assignment rights

→ Operating lease

Q04

Do you want to operate and maintain the asset yourself?

Yes — we have or will hire the engineering capability

→ Asset finance (loan or hire purchase)

No — we want a single supplier accountable for performance

→ Energy-as-a-Service (EaaS)

Public funding & incentives

Grants, tax relief and public-sector schemes.

The UK and Welsh public funding landscape changes every year — here are the schemes most commonly relevant to commercial and public-sector energy projects in 2026. We help eligible organisations prepare and submit bids.

Public Sector Decarbonisation Scheme (PSDS)

Who it's for

NHS Trusts, local authorities, schools, central government estate

What it provides

Capital grant funding for low-carbon heat and energy-efficiency retrofit. Administered by Salix on behalf of DESNZ.

Salix Finance

Who it's for

Public-sector bodies and state-funded schools / colleges

What it provides

Interest-free government loans for energy-efficiency projects, repaid from the resulting energy savings.

Welsh Government Energy Service (WGES)

Who it's for

Welsh public-sector bodies and community organisations

What it provides

End-to-end support — feasibility, business case, funding routes and commercial structuring — for decarbonisation projects in Wales.

Ynni Cymru

Who it's for

Welsh community-owned and not-for-profit energy schemes

What it provides

Capital and revenue funding for community-scale renewable energy and smart local energy systems across Wales.

UK Full Expensing (Capital Allowances)

Who it's for

All UK corporation-tax-paying businesses

What it provides

100% first-year tax deduction on qualifying plant & machinery — including most rooftop solar PV — against UK corporation tax in the year of spend.

Local Authority decarbonisation funds

Who it's for

Businesses and community groups in participating areas

What it provides

Region-specific grants and low-interest loans for SME energy efficiency, solar and EV infrastructure — varies by authority.

Accounting & tax

What your CFO needs to know.

Full expensing on CAPEX. Most commercial rooftop solar PV qualifies for UK capital allowances. Under current full-expensing rules, eligible companies can deduct 100% of qualifying plant-and-machinery spend against corporation tax in the year of investment.

IFRS 16 lease test. Whether a PPA, EaaS or operating-lease contract stays off the balance sheet depends on the IFRS 16 test of whether your business "controls the use of an identified asset" for a period in exchange for consideration. Most well-structured EaaS contracts pass as service contracts, but every contract should be tested by your auditor before signing.

REGO certificates. Under CAPEX, you own all Renewable Energy Guarantee of Origin (REGO) certificates from generated electricity. Under PPA and EaaS, REGO treatment is contractual — insist it's written into the agreement and aligned to your Scope 2 reporting.

This is a plain-language summary for procurement scoping — not tax advice. Confirm specific treatment with your auditor and tax advisor.

Funding FAQs

The questions every CFO asks before signing.

Choosing a route

Balance sheet & accounting

Contract terms

Public & landlord/tenant funding

Take the next step

Want us to model your funding routes side-by-side?

Share your half-hourly data and we'll return a CAPEX, asset finance, PPA and EaaS comparison for your energy solution — usually inside a week.

Keep exploring

How to fund your energy solution — every route, explained.

Pick the priority that matters most.

Maximum lifetime saving

Spread the cost, keep ownership

Zero CAPEX, pay per kWh

Fully managed energy service

Six funding routes, compared side-by-side.

CAPEX (outright purchase)

Best for

Asset finance (loan or hire purchase)

Best for

Power Purchase Agreement (PPA)

Best for

Energy-as-a-Service (EaaS)

Best for

Operating lease

Best for

Grants & public funding

Best for

Four questions that point to the right route.

Do you have unallocated capital you want to deploy into the project?

Do you want the asset on or off your balance sheet?

How long will you be at this site?

Do you want to operate and maintain the asset yourself?

Grants, tax relief and public-sector schemes.

Public Sector Decarbonisation Scheme (PSDS)

Salix Finance

Welsh Government Energy Service (WGES)

Ynni Cymru

UK Full Expensing (Capital Allowances)

Local Authority decarbonisation funds

What your CFO needs to know.

The questions every CFO asks before signing.

Want us to model your funding routes side-by-side?

Related solutions

Commercial Solar PV

Battery Storage

EV Charging