"No upfront cost" solar is genuinely available to UK businesses in 2026 through three distinct financial routes: Power Purchase Agreement (PPA), Operating Lease, and Asset Finance / Hire Purchase. All three deliver a working solar PV system on your roof with no cash outlay at install. They differ materially in who owns the asset, who claims the capital allowance, who carries the operating risk, what the long-term cost is, and how easy it is to exit if circumstances change. This page lays out all three side by side, plus a fourth comparison point — cash purchase with the AIA tax saving — so you can see the genuine cost trade-off across the four routes. We work with PPA providers, asset finance brokers, and lessors across the UK and have no preference for one route over another; the right answer depends on your business profile.
The four routes for commercial solar finance
Route 1: PPA (Power Purchase Agreement)
Under a PPA, a third-party provider funds, owns, installs, and maintains the solar PV system on your roof. You buy the kWh generated at a discounted rate — typically 5 to 12 percent below current grid retail. You sign a long-term contract (15 to 25 years) committing to purchase whatever the system generates, at the agreed tariff schedule. At end of term, ownership transfers to you (sometimes for £1, sometimes at fair market value) or the provider removes the system.
The provider takes responsibility for everything — install, monitoring, cleaning, fault repair, inverter replacement, decommissioning. You take responsibility for nothing operational. Suits businesses with reliable load profiles, long property tenure (lease over 15 years or freehold), and limited capex appetite. UK 2026 active providers include Atrato Onsite Energy, Bluefield Solar, Custom Solar, NextEnergy Capital, Foresight, plus utility-led offerings from E.ON Onsite Power and EDF Energy Services.
Route 2: Operating Lease (off balance sheet)
A lessor (specialist asset finance company) buys the solar PV system and leases it to you for a fixed monthly payment over a 7 to 10 year term. The asset stays on the lessor's balance sheet — yours stays clean, which matters for businesses targeting specific gearing or balance sheet metrics. Lease payments are tax-deductible operating expenses. At end of term the asset returns to the lessor, who typically offers a peppercorn renewal or asset sale at fair market value.
Suits businesses that prefer off-balance-sheet treatment, typically larger commercial groups with sophisticated finance functions and IFRS reporting. The new IFRS 16 lease accounting standard has reduced the off-balance-sheet appeal somewhat (more leases now go on balance sheet under IFRS 16) but operating lease structures still offer flexibility on de-recognition and end-of-term ownership.
Route 3: Asset Finance / Hire Purchase
The cash-equivalent route. A finance company buys the system, you make monthly payments over 5-10 years, the asset technically belongs to the finance company until the final balloon payment, then ownership transfers to you. Cash-flow positive from month one — the monthly finance payment is consistently lower than the monthly bill saving on a properly sized system. You claim the 100 percent Annual Investment Allowance because you become the asset owner over the financing term.
Suits profitable Ltd Cos with corporation tax exposure who want full ownership, full AIA capture, and long-term low-cost solar — but cannot or will not deploy capital upfront. Hire Purchase is the most flexible commercial finance route in our experience and the one we most often recommend over PPA for businesses with long-term tenure.
Route 4: Cash + AIA (the comparison point)
Pay for the system upfront from cash reserves. Claim the 100 percent AIA in year one — at the 25 percent corporation tax rate, that means a £200k install gives a £50k cash tax saving in the first year, effectively reducing the net capex to £150k. The system pays back in 4-7 years (depending on size and load profile), then generates ~£15k-30k+ per year of free electricity for the remaining 18-21 years of useful life.
Strongest IRR by a margin — typically 14-22 percent IRR over 25 years versus 6-9 percent equivalent on PPA. Only viable if you have the cash and corporation tax to absorb the AIA. See /capital-allowances-solar-panels/ for the AIA mechanics.
Comparison table
| Route | Capex | On balance sheet | Tax treatment | Term | Best for |
|---|---|---|---|---|---|
| PPA | £0 | No | kWh expense (cost of energy) | 15-25 yrs | Long lease, can\'t use AIA, low operational appetite |
| Operating lease | £0 | No (varies under IFRS 16) | Lease payment expense | 7-10 yrs | Off-balance-sheet preference, large groups |
| Asset finance / HP | £0 | Yes (over term) | AIA + finance interest | 5-10 yrs | Profitable Ltd Cos wanting full ownership |
| Cash + AIA | Full | Yes | 100% AIA year 1 | n/a | Strongest IRR if affordable |
What to ask a PPA provider before signing
Six questions to nail down before any signature:
1. Year-1 tariff and current import rate comparison. What is the per-kWh PPA rate in year 1, and what is your current blended import rate including standing charge and TNUoS/DUoS? Aim for PPA at 8-15 percent below import for a clean discount. See /tnuos-duos-charges-2026/ for the import side.
2. Escalator clause. What is the annual rate inflation? Fixed 2 percent? RPI-linked? Capped at 3 percent? RPI-linked is the riskiest for the customer because UK RPI has run at 4-11 percent in 2022-2024 — a fixed 2-3 percent escalator gives you predictability.
3. Term length. 15 years? 20 years? 25 years? Longer terms generally mean lower year-1 tariff but more total cost and less flexibility. We typically advise 15-20 years for commercial customers.
4. Buyout schedule. What is the buyout option price in year 5, year 10, year 15, year 20, and at end of term? Compare against the system\'s book value at each point. A reasonable buyout schedule should converge towards £1 by end of term and offer fair-market-value buyout from year 10 onwards.
5. Building sale provisions. What happens if you sell the building? Two options typically: (a) the buyer assumes the PPA contract, (b) the seller pays out the remaining contract NPV. Clarify upfront, especially if the building may be sold mid-term.
6. Performance guarantees. If the system underperforms the provider\'s generation model, you should not pay for energy that did not generate. Confirm a generation guarantee clause that adjusts the tariff or includes free remedial work if generation falls more than 10 percent below model.
PPA risks worth flagging
Tariff escalator outpacing grid price falls. If wholesale electricity prices fall and grid retail rates drop in real terms (as they did in 2014-2018), an RPI-linked PPA tariff continues to escalate. After 7-10 years the PPA tariff can exceed grid retail, at which point the customer is paying a premium for green energy they could buy more cheaply elsewhere. Mitigated by negotiating fixed escalator (2-3 percent) rather than RPI-linked.
You don\'t own the asset. The system is on your roof but it is not yours. You cannot modify it, expand it, or remove it without the provider\'s consent. If you want to add battery storage in 5 years\' time, the PPA provider has a right of first refusal and may charge a premium for the integration.
Tied to the property. Selling the building or relocating the business mid-term is messy. The buyout schedule may not be commercially favourable for an early exit; the property buyer may not want to assume the PPA.
Contract complexity. PPA contracts run 50-150 pages. Many contain provisions that are favourable to the provider — guaranteed minimum offtake clauses, indexation clauses that compound, exclusive use covenants. Have your commercial solicitor review before signing.
UK 2026 PPA market
Active PPA providers operating in UK commercial in 2026 include:
Atrato Onsite Energy. Listed investment trust, focuses on onsite PPA for SMEs and mid-market businesses. Typical project size 100kW-2MW.
Bluefield Solar Income Fund. Listed investment trust, expanding from utility-scale into onsite commercial. Project sizes typically 250kW upwards.
Custom Solar. Independent installer-financier with structured PPA offering, project sizes 50kW-500kW, strongest in the SME segment.
NextEnergy Capital. Specialist solar fund expanding from utility-scale into commercial PPAs, project sizes 200kW upwards.
Foresight Group. Multi-asset infrastructure investor with commercial solar PPA arm.
E.ON Onsite Power. Utility-led PPA wrapping E.ON\'s install, finance, and operations capabilities.
EDF Energy Services. Utility-led PPA from EDF, often combined with EDF supply contracts for integrated commercial energy procurement.
The PPA market matures every year. Tariffs in 2026 are 8-12 percent more competitive than 2023 driven by higher inverter and panel volumes, falling install costs, and increased provider competition. Worth running multiple quotes simultaneously — providers price differently based on portfolio fit and concentration limits.
Authority resources
Companies House lookup for PPA provider due diligence: Companies House. HMRC capital allowances guidance for the AIA: HMRC Capital Allowances. MCS-listed installer database: MCS Certified. Federation of Small Businesses guide to commercial finance: FSB.
Related decision pages
PPA service page for our PPA-specific offering. Finance options for the broader finance comparison. Commercial solar finance for the full financing decision framework. Capital allowances for the AIA mechanics. Cost guide for what an installation costs. Grants and funding for grants that complement finance routes. Are commercial solar panels worth it for the underlying ROI question. SEG tariff comparison for export income. TNUoS and DUoS charges for import-side context. Maintenance.
No upfront cost solar — common questions
Is PPA cheaper than buying solar panels outright?
No — buying outright is always cheaper over the system lifetime, by typically 30 to 50 percent. PPA is a service that bundles install, finance, maintenance, and risk transfer; you pay for that bundle through the per-kWh tariff, which exceeds your underlying generation cost. The right comparison is not PPA vs cash, but PPA vs not having solar at all. PPA wins when you cannot or will not deploy capital — businesses with restricted capex, businesses on short leases that prevent capital depreciation, or businesses that have higher-return uses for their cash. For a profitable Ltd Co with surplus cash and a long-term tenure, cash-plus-AIA is materially better. For everyone else, PPA may still be the right answer.
Who pays for maintenance and repairs under PPA?
The PPA provider — they own the asset and bear all operating costs including monitoring, cleaning, fault repair, inverter replacement at end of life, and decommissioning at term end. This is one of PPA’s genuine advantages: zero operating risk to the customer. The trade-off is the per-kWh tariff bakes in the provider’s expected maintenance cost over 20-25 years plus a margin, so you pay for it through the tariff anyway. For owners who lack technical capacity to manage solar O&M themselves, PPA is the simplest operational model.
Can I exit a PPA early if I sell the building?
Most PPA contracts include a buyout option that allows the customer to purchase the system at a pre-agreed schedule of values typically running from year 5 onwards. Early exit before year 5 is usually punitive (you pay the discounted future cash flows of the remaining term — often more than the system’s residual value). At years 5-10 buyout values become more reasonable, typically 60-80 percent of the system’s undepreciated value. Read the buyout schedule carefully before signing — providers vary in how generous or punitive their schedules are. If you anticipate selling the building within the term, PPA is structurally a poor fit; lease or asset finance suits better.
Does a PPA stop me claiming the AIA capital allowance?
Yes — under PPA the third-party provider owns the asset, so they (not you) claim the capital allowance. The 100 percent AIA first-year deduction goes to the PPA provider’s tax position, not yours. Asset finance and hire purchase preserve your AIA claim because you become the owner over the financing term; operating lease transfers AIA to the lessor. For profitable Ltd Cos with corporation tax exposure, the AIA value is substantial — at the 25 percent corporation tax rate, the tax saving on a £200k install is £50k as cash back in the first year. Losing that to the PPA provider is part of the trade-off you accept. See /capital-allowances-solar-panels/.
What happens to the solar panels at the end of a PPA term?
Three options typically: (1) ownership transfers to you for £1 — common on shorter PPAs, generous to the customer, signals the provider has fully amortised the asset; (2) you purchase the system at fair market value — typical on longer PPAs where the asset still has 5-10 years of useful life; (3) the provider removes the system at their cost and the roof is reinstated to original condition. Option 3 is the worst for the customer because you lose the future generation value, but is sometimes mandated by the provider. The end-of-term provisions are negotiable — push for option 1 or 2 in contract negotiations.
Are there UK government grants that combine with no-upfront-cost solar?
In England, broad grants for commercial solar are minimal in 2026 — the major scheme remains the 100 percent AIA capital allowance for businesses buying outright, which is incompatible with PPA. In Wales, Welsh Government Energy Service offers grants and concessional loans specifically targeted at SMEs. In Scotland, Energy Saving Trust SME Loan provides 0 percent interest loans up to £100k. In Northern Ireland, NI Direct Energy Wise Business Programme. None of these grants or loans pair seamlessly with PPA — they typically require customer ownership of the asset, which PPA precludes. Lease-based and asset-financed routes are sometimes compatible. See /grants-and-funding/.
How do I evaluate a PPA tariff before signing?
Six checkpoints. (1) What is the year-1 tariff and how does it compare to your current import rate? Aim for 5-15 percent below current import. (2) What is the escalator clause? Fixed inflation, RPI-linked, or capped indexation? RPI-linked is risky if RPI runs hot. (3) What is the term length? 15-25 years is standard; shorter is rare. (4) What is the buyout schedule by year? (5) Who pays for connection upgrades or grid charges that arise mid-contract? (6) What happens if the system underperforms vs the provider’s generation model? For each year of underperformance the customer should not pay for energy that did not generate. Get all six in writing before signing.