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A lease means the business pays for use of the system under agreed terms, with ownership and end-of-term options set out in the contract. A PPA, or Power Purchase Agreement, usually means a third party funds, owns and maintains the system while the site buys the electricity it generates. PAYG, or pay-as-you-go solar, is a more flexible service-led model where payments may be linked to generation, consumption or a monthly service charge, but it is less standardised in the UK commercial rooftop market." } }, { "@type": "Question", "name": "Which commercial solar finance option gives the best long-term savings?", "acceptedAnswer": { "@type": "Answer", "text": "Asset finance often gives the strongest lifetime savings for owner-occupiers or stable tenants that can support repayments, use a high proportion of solar electricity on site and want to own the system after the finance period. This is because the business can continue benefiting from generated electricity for many years after the main finance cost ends. A PPA, lease or PAYG arrangement may still be better where preserving capital, avoiding ownership responsibility or simplifying operation is more important than maximising long-term return." } }, { "@type": "Question", "name": "Is a commercial solar PPA really no upfront cost?", "acceptedAnswer": { "@type": "Answer", "text": "A commercial solar PPA can involve little or no upfront capital cost because the system is normally funded by a third-party investor. However, it is not free solar. The business commits to buying electricity from the system under a long-term contract, usually with rules covering the unit rate, indexation, metering, roof access, maintenance, buyout rights, assignment and termination. The value of a PPA depends on whether the agreed electricity price remains attractive over the contract term and whether the site can reliably use the generated power." } }, { "@type": "Question", "name": "Who owns the solar panels under each finance model?", "acceptedAnswer": { "@type": "Answer", "text": "Under asset finance, ownership depends on the finance structure and may sit with the business from the start or transfer at the end of the agreement. Under a lease, the lessor often retains ownership unless the contract includes a purchase option or transfer mechanism. Under a PPA, the third-party investor or provider usually owns the solar asset. Under PAYG, ownership varies by provider, so the contract should clearly state who owns the equipment, who can remove it, and what happens at the end of the term." } }, { "@type": "Question", "name": "What information is needed to compare solar finance proposals properly?", "acceptedAnswer": { "@type": "Answer", "text": "The most useful information includes 12 months of electricity bills, half-hourly consumption data, current import tariff, export assumptions, MPAN and metering details, roof plans, roof age, structural information, asbestos records where relevant, property ownership or lease details, landlord consent position, insurance requirements and any planned changes to electricity demand. Half-hourly data is especially important because annual electricity use alone does not show when power is being consumed, and solar savings depend heavily on daytime self-consumption." } }, { "@type": "Question", "name": "Why is self-consumption so important for commercial solar?", "acceptedAnswer": { "@type": "Answer", "text": "Self-consumption is important because electricity used on site usually has a higher value than electricity exported to the grid. If a business avoids buying electricity at its import rate, the saving is often much greater than the payment it would receive for surplus exported power. Two sites with the same system size and generation can have very different returns if one uses most of the solar output during the working day and the other exports a large share." } }, { "@type": "Question", "name": "How much electricity does a commercial solar system generate in the UK?", "acceptedAnswer": { "@type": "Answer", "text": "A UK commercial rooftop solar system is often modelled at around 750 to 1,000 kWh per kWp per year, depending on location, roof orientation, pitch, shading, layout and equipment design. For example, a 200 kWp system might generate roughly 150,000 to 200,000 kWh per year before allowing for degradation and site-specific losses. Southern locations and well-orientated roofs often perform toward the higher end of the range, while shaded, complex or northern sites may generate less." } }, { "@type": "Question", "name": "What costs should be included in a commercial solar finance comparison?", "acceptedAnswer": { "@type": "Answer", "text": "A fair comparison should include installation cost, finance repayments or PPA payments, interest, maintenance, monitoring, inverter replacement, insurance implications, grid connection costs, export limitation equipment if needed, roof survey costs, access equipment, lifecycle degradation and end-of-term costs. It should also show who receives export income, who is responsible for faults, who pays if panels need to be removed for roof repairs, and whether payments increase through indexation." } }, { "@type": "Question", "name": "Can tenants install commercial solar panels?", "acceptedAnswer": { "@type": "Answer", "text": "Tenants can often install commercial solar panels, but they usually need landlord consent and may also need approval from a mortgagee, superior landlord or managing agent. The remaining property lease term must be long enough to support the solar contract, especially for a PPA or lease. Tenants should review break clauses, dilapidations, assignment rights, reinstatement obligations, roof access rights and what happens if the business moves before the solar agreement ends." } }, { "@type": "Question", "name": "What role does the roof condition play in choosing a solar finance option?", "acceptedAnswer": { "@type": "Answer", "text": "Roof condition can decide whether a project is viable at all. If the roof is old, fragile, asbestos-containing, shaded, structurally limited or likely to need replacement during the solar contract term, the business should address this before signing. Removing and reinstalling panels later can be expensive, and under a PPA or lease there may also be downtime, compensation or contract extension issues. Roof works are often best completed before the solar installation." } }, { "@type": "Question", "name": "Does a commercial solar project need grid approval?", "acceptedAnswer": { "@type": "Answer", "text": "Many commercial solar projects need notification or approval through the Distribution Network Operator, commonly under G98 or G99 processes depending on system size and connection characteristics. The DNO may approve the proposed export level, require export limitation or specify network upgrade works. Import capacity does not automatically mean export capacity is available, so grid position should be checked before treating a financial model as final." } }, { "@type": "Question", "name": "Are there grants for commercial solar panels in the UK?", "acceptedAnswer": { "@type": "Answer", "text": "For most UK businesses, commercial solar support is more commonly tax-led and export-payment-led than grant-led. There is no broad UK grant scheme that covers most commercial rooftop installations. Tax treatment may involve Annual Investment Allowance, full expensing, writing-down allowances, VAT recovery, business rates and capital allowances, depending on the business, location, ownership structure and contract type. A PPA will usually leave ownership-related tax benefits with the asset owner rather than the host site." } }, { "@type": "Question", "name": "How long are commercial solar PPAs?", "acceptedAnswer": { "@type": "Answer", "text": "Commercial rooftop PPAs are typically long-term agreements, because the third-party investor needs enough time to recover the installation cost and earn a return. The exact term depends on system size, electricity demand, credit quality, roof rights, grid position and funder requirements. A business should treat a PPA as a major energy and property contract rather than a simple electricity tariff, especially where it includes roof access rights, buyout clauses, indexation and assignment provisions." } }, { "@type": "Question", "name": "What happens at the end of a solar finance agreement?", "acceptedAnswer": { "@type": "Answer", "text": "The end-of-term outcome depends on the contract. Under asset finance, the business may own the system outright after the finance term or may have a final payment or transfer process. Under a lease, the business may be able to extend, buy, return or remove the system depending on the wording. Under a PPA, there may be options to buy the system, extend the agreement or have it removed. PAYG contracts vary, so end-of-term ownership, removal costs and renewal terms should be confirmed in writing." } }, { "@type": "Question", "name": "When might asset finance be unsuitable for commercial solar?", "acceptedAnswer": { "@type": "Answer", "text": "Asset finance may be unsuitable where the business has weak cash flow, limited borrowing capacity, uncertain site occupancy, a poor roof condition, low daytime electricity demand or little ability to benefit from ownership-related tax treatment. It can also be less attractive if the business wants to preserve credit capacity for core trading activity. Although asset finance can produce strong lifetime savings, the business carries more responsibility for repayment, maintenance, insurance and performance risk." } }, { "@type": "Question", "name": "When might a PPA, lease or PAYG model be unsuitable?", "acceptedAnswer": { "@type": "Answer", "text": "A PPA may be unsuitable where the site cannot commit to a long-term agreement, roof rights are complicated, credit strength is weak or daytime demand is too low for the proposed system size. A lease may be unsuitable if payments exceed conservative savings, the property lease is shorter than the solar lease or end-of-term obligations are unclear. PAYG may be unsuitable if metering, billing, maintenance, exit fees or ownership terms are not transparent." } }, { "@type": "Question", "name": "Should battery storage be included with commercial solar finance?", "acceptedAnswer": { "@type": "Answer", "text": "Battery storage can improve self-consumption by storing surplus solar electricity for later use, but it is not automatically financially justified. It should be modelled separately using half-hourly consumption data, import tariffs, export value, battery cost, cycle assumptions, degradation, maintenance and available revenue opportunities. For some sites, a smaller solar system without a battery may provide a better return than a larger system with storage." } }, { "@type": "Question", "name": "What should a business check before signing a commercial solar contract?", "acceptedAnswer": { "@type": "Answer", "text": "Before signing, the business should confirm ownership, payment terms, indexation, export income, maintenance responsibility, monitoring, fault response, insurance, roof access, DNO position, tax assumptions, buyout rights, assignment rights, termination costs and end-of-term options. It is also sensible to involve an accountant, solicitor, insurance broker and competent solar designer before committing, because the contract affects property, energy costs, tax, accounting and operational risk." } } ], "about": { "@id": "https://kilowatts.uk/resources/asset-finance-vs-lease-vs-ppa-vs-payg-in-the-uk/#content" } }, { "@type": "WebPage", "@id": "https://kilowatts.uk/resources/asset-finance-vs-lease-vs-ppa-vs-payg-in-the-uk/#webpage", "url": "https://kilowatts.uk/resources/asset-finance-vs-lease-vs-ppa-vs-payg-in-the-uk/", "encoding": [ { "@type": "MediaObject", "encodingFormat": "text/markdown", "contentUrl": "https://kilowatts.uk/resources/asset-finance-vs-lease-vs-ppa-vs-payg-in-the-uk.md" }, { "@type": "MediaObject", "encodingFormat": "application/ld+json", "contentUrl": "https://kilowatts.uk/resources/asset-finance-vs-lease-vs-ppa-vs-payg-in-the-uk.schema" } ], "name": "Asset finance vs lease vs PPA vs PAYG in the UK", "headline": "Asset finance vs lease vs PPA vs 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