Alectrona
Commercial solar finance · over 50 kWp · outside MCSCommercial solar is a capital asset that pays you back every year for a quarter of a century. So the funding question is not "can we afford it", it is "which route keeps the most of the return in your business". Buying it outright keeps nearly all of it.
This section is built the way we actually advise: the capex case first, then the tax and export rules that decide how much of that return you keep, then a straight answer on the alternatives for a business that will not commit the capital.
There is nothing between you and the money a solar system saves when you own it. No funder taking a margin, no monthly finance charge, no unit rate to buy back. You hold a quarter-century asset from the day it is commissioned, and the saving on your import bill is yours in full for its whole working life.
On balance sheet (you own the asset)
Businesses with the capital to invest. The best return: you own a 25-year asset from day one and keep every saving and every pound of tax relief. It is the route we recommend wherever the capital is available.
A commercial array is generating plant with a design life of roughly 25 years. Once it has covered its own cost, every further year of generation is margin, and it is your margin.
Capital allowances follow ownership. Buy the system and the first-year deduction is yours; let a funder own it and the relief is theirs.
When to add storage, when to extend onto a second roof, who maintains it and what happens at end of life. A funder’s agreement decides those for you.
Every unit the array generates and the building consumes displaces a unit bought at your full delivered import rate: commodity, network charges, levies and supplier margin, stacked. A displaced unit is worth all of that rather than the wholesale price, and it never shows as income, because it is a cost that did not occur. The same unit sold to the grid earns a fraction of it, which is why we size an array against your half-hourly demand.
Electricity is one of the few material costs a business cannot fix beyond its current contract. Buying converts part of that repriced revenue cost into a capital cost settled on the day it is commissioned, so whatever your tariff does at renewal, the share of demand the array covers is already paid for. On a plan several years out, certainty on a volatile line is often worth more than the size of the saving in year one.
Capex is the right call where the return the system earns beats what the same money earns, saves or costs elsewhere in the business, and that is the comparison a board should be handed. One distinction belongs in the paper too: the asset is depreciated over its useful life in the accounts, while the relief is taken up front through capital allowances, so the accounting charge and the tax effect do not move together.
None of these is a way to pay for the system. They are the tax, rating and export rules that sit on top of a bought one, and together they are the difference between a case that works on paper and one that works in the accounts. Capital allowances and VAT carry enough detail to need a page each. Business rates and export are set out in full below instead, because on both the honest answer is specific to your property and your connection rather than a figure anyone could publish. We set all four out before you commit rather than after.
Start with capital allowances. It is the relief that makes the capex case what it is: solar PV is a special-rate asset, and the Annual Investment Allowance brings a 100% first-year deduction within the £1m annual limit forward into the year you buy rather than spreading it over many. It also follows ownership, which is precisely why it belongs to buying outright and not to a funder’s deal. This is indicative, not tax advice.
How the tax relief works on a bought system. Solar PV is a special-rate asset; the Annual Investment Allowance gives a 100% first-year deduction within the £1m annual limit. Full expensing does not apply to solar.
Indicative, not financial or tax advice. Confirm the position with a qualified accountant or tax adviser. Your figure comes from a survey-led PV*SOL model.
Capital allowances in detailHow VAT applies to commercial solar and recovery for a VAT-registered business. The zero-rate for installations applies to residential, not commercial, so commercial buyers should confirm their own position.
VAT in detailSolar PV is a special-rate asset, so full expensing does not reach it. The Annual Investment Allowance does, giving a 100% first-year deduction within the £1m annual limit, which pulls the relief into the year of the spend rather than spreading it across many. Two conditions decide whether it is worth anything: taxable profit to set the deduction against, and allowance headroom after your other capital spend. How capital allowances work on a bought system.
The zero rate most people have heard about is a domestic relief and does not reach a commercial installation, so VAT is charged at the standard rate on our work. Where your business is VAT-registered and the system serves taxable activity, that input VAT is generally recoverable through your normal return, so the figure that belongs in the business case is the net cost. Recovery is not automatic, and any partial exemption bears on it. The VAT position on a commercial system.
An array fixed to your roof raises plant and machinery questions for the Valuation Office Agency, and generation used on the site where it is produced has historically been treated differently from plant installed to sell power. Rooftop solar sized to power your own building is generally installed to offset the electricity you would otherwise import rather than to run a generating business, which is the distinction that treatment turns on. The rules have moved across rating lists and the answer turns on your own rating entry, so we raise it at survey rather than publish a rate that may not apply, and your surveyor, rating adviser or accountant confirms what applies to your site. Next to the capital-allowances relief and the saving on your import bill it is a smaller, property-specific factor, and it rarely decides a funding route on its own.
Power sent to the grid earns far less per unit than power you avoid buying. That single fact sizes the array: we design to your demand curve first and treat export as the way to monetise what is genuinely left over. It also gives you a test to apply to any proposal, including ours, because a case leaning on export volume is built on the cheaper of the two units. A design that chases export income over on-site use is the wrong design.
The routes are a Smart Export Guarantee tariff from a licensed supplier, a commercial export agreement, or selling at wholesale through an arrangement that suits your meter and your volumes. Which fits depends on the site and on the surplus it actually produces. Rates vary by supplier and by arrangement and they change, so we will not quote a figure here; we model the realistic split between self-consumption and export from your own roof and demand, and how the income is treated in your accounts is for your accountant or tax adviser to confirm. On a system you have bought outright the surplus and the income from it are yours, alongside the capital allowances and the saving on the units you never import. Under a funder’s agreement the position changes again, because the funder owns the system and typically takes the generation, so the export income largely benefits them rather than you.
The volume you can push back is limited by what the network operator has granted at your connection point, and a case that assumes everything the array produces can be sold is a case with no ceiling in it. We model against the export the connection actually permits, so the figure in the proposal is bounded by the same limit the site will run under. It is a second reason a better export deal moves the case less than it looks: the rate applies only to the units the connection lets you sell, after your own demand has taken the rest.
All four apply in this form only to a system you own. Under a funder’s agreement the allowances follow the owner and the export income usually does too, which is the mechanism behind our preference for capex.
Plenty of businesses have a good roof and no appetite for the capital, and an unfunded roof generates nothing. So we arrange the alternatives and we are straight about what each one costs you. Leasing and hire purchase spread the payments while you keep the asset. Under a power purchase agreement the funder owns the array and takes most of the long-term return in exchange for putting up the money. Grants are real but narrow, and most private commercial sites do not qualify.
On or off balance sheet, by agreement
The routes for a business that will not commit the capital, set side by side with buying outright. Leasing and hire purchase keep you as the owner; under a PPA the funder takes most of the long-term return.
Whether a PPA or lease sits on or off your balance sheet under IFRS 16 depends on the contract; ask your auditor.
Leasing, hire purchase and PPA in detailAn honest account of what genuinely exists, such as PSDS/Salix, the IETF and UKSPF for eligible bodies. Most private commercial sites do not qualify, and we tell you straight whether yours does.
Grants in detailPayments are spread while the array generates from the first day, so the bill saving carries part of the cost and a well-sized system can sit close to cash-flow neutral early in the term. You remain the owner, and subject to how the agreement is written the tax position stays with you. The finance charge is a real cost that buying outright does not carry, and that is the whole of the trade.
There is no capital outlay at all. A funder owns and maintains the array on your roof and you contract to buy the units it produces, usually below your grid rate. Because you do not own the asset you do not claim the allowances on it, and the agreement typically runs well beyond a decade, so the unit rate, the escalator and how it is indexed, the roof licence, the insurance position and the end-of-term options are where the value moves. Whether it sits on or off your balance sheet is decided by the contract, which is your auditor’s call rather than ours.
None of that makes a PPA the wrong answer. An unfunded roof generates nothing, and a funded roof returning a modest share beats an empty one. The straight version is that the route asking least of you returns least to you. The full side-by-side is on leasing, hire purchase and PPA.
Grants come up in almost every first conversation, so here is the position without the varnish. There has never been a general grant for solar on a privately owned commercial roof. The schemes people have in mind were built for the public estate and for energy-intensive industry.
A straight account of the Public Sector Decarbonisation Scheme: a heat-led grant for public-sector estates, run by Salix, closed to new applications and being wound down, and not a route a private commercial business can use.
Read the honest accountA straight account of the Industrial Energy Transformation Fund: it is closed, it was built for energy-intensive industry, and even when open it never funded solar panels.
Read the honest accountA straight account of what the UK Shared Prosperity Fund was in Yorkshire, why it never offered a single solar grant you could apply to, and why, as it winds down in 2026, it is not a route a private commercial project should be built on.
Read the honest accountScheme status, eligibility and funding windows change, and a closed window is not the same as a scheme that will reopen. Confirm the position with the scheme itself, and treat any grant as something that improves a sound case rather than the reason for the project.
The organisations that genuinely sit inside these schemes are public bodies: NHS trusts, schools, academies and multi-academy trusts, colleges and universities, local authorities and the emergency services. If that describes you, the funding question and the procurement question arrive together, and both are answerable. See how we respond to tenders and frameworks, and the grants overview for the schemes in full.
For a privately owned site the honest redirect is back to the top of this page. The relief that does reach you is capital allowances on a system you own, available in the year you buy rather than in a window that may never reopen.
However you fund it, the asset on the roof is the same.
These are indicative ranges for a well-matched commercial roof bought outright, framed at the conservative end. The capital-allowances relief is what shortens the payback. Your own figure comes from the survey and the PV*SOL model, never from a rule of thumb.
payback can be as little as ~3 years (including the year-one AIA saving); typically ~3.5–5 years, depending on consumption profile, tariff and roof
around 15–25% IRR over its life / ~25% annual return net of maintenance, after first-year capital allowances
up to ~60% on a well-matched site, more typically ~40–50%, depending on consumption profile and roof space
Representative example, not a quote. Figures assume a well-matched commercial site sized for self-consumption, a typical commercial import tariff, generation modelled in PV*SOL for the specific roof, and the year-one Annual Investment Allowance applied where the route is capex. Actual results depend on your consumption profile, roof space and tariff. Your own figures come from the on-site survey and model.
Indicative, not financial or tax advice. Confirm the position with a qualified accountant or tax adviser. Your figure comes from a survey-led PV*SOL model.
It decides how much of the array’s output the building can absorb, which is the number the return turns on. Annual totals will not do: the same yearly consumption on a weekday day shift and on a continuous seven-day process gives two very different answers.
Before the survey
It gives real roof geometry, pitch and orientation, real obstructions and real shading through the day. A satellite trace misses the plant room, the newer roof lights and the flue that shades a whole string from mid-afternoon, and those are what move a yield figure.
On site
PV*SOL is the bankable-grade software lenders model against, which matters when a board wants the working checked. It gives the generation profile for your roof, the split between self-consumed and exported units, the performance ratio and the shading loss.
After the survey
What the network will let you connect and export sets both the array size and the programme dates, and it usually paces a commercial project rather than lead times. We settle it before a figure is committed to, because a design the network will not accept is not a design.
In parallel
A funding decision is only as sound as the generation figure underneath it, and that figure is only as sound as what went into it. Ours is built from four inputs, and every number in the proposal traces back to one of them.
You receive the system as designed: array size, module and inverter selection, string layout, mounting method and metering arrangement. Against it sits the modelled yield, being annual generation, specific yield, performance ratio, shading loss and the split between the units you consume on site and the units you export. The financial side gives the first-year saving, the cash position year by year across the assessment period, the point at which the asset has covered its own cost, the net position at the end and the operating cost carried through it. The carbon figures sit alongside, because most boards now need them for reporting of their own.
Assumptions are named rather than buried at the back. Your import price, the export arrangement, the inflation assumption, the assessment period and the maintenance allowance are all stated, so your finance team can rerun the case on its own numbers instead of taking ours on trust. We are engineers rather than a finance company, so there is nothing in the route you choose for us; who we are covers the rest.
The maintenance plan is part of the financial case, not a footnote to it.
Tell us about your building and your electricity use. We will survey the roof, model it in PV*SOL, and come back with the capex case set out in full, with leasing and a PPA beside it if the cash flow needs them, so you can choose on the facts.