Commercial solar projects in 2026 are funded through a different stack than residential. The headline financial levers are capital allowances at the 25% corporation tax rate, Free Commercial Solar (PPA) for zero-upfront installs, asset finance and lease options for cash-flow positive structures, and public-sector funding routes for schools, councils, NHS and charity properties. This page covers the funding landscape for UK businesses, agricultural operations, public bodies and community organisations considering commercial solar (and increasingly battery storage) in 2026.
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| Funding lever | Who it is for | What you get |
|---|---|---|
| Capital allowances | All UK businesses paying corporation tax | 25% main rate tax relief on the full install cost, often in year one |
| Annual Investment Allowance (AIA) | Most businesses below the threshold | 50% first-year relief plus the remaining 50% written down over subsequent years, up to £1 million |
| Free Commercial Solar (PPA) | Businesses wanting zero upfront cost | Solar installed at no capital cost, electricity at ~50% below grid for 10-25 years |
| Asset finance | Businesses wanting cash-flow positive structures | Fixed monthly payments, often less than the energy saving from day one |
| Lease structures | Businesses preferring off-balance-sheet | Fixed monthly cost, full operational benefit |
| Public Sector Decarbonisation Scheme (PSDS) | Schools, councils, NHS, public sector | Grants up to 100% of qualifying retrofit costs |
| Salix loans | Public sector and not-for-profit | Interest-free loans for energy efficiency and renewable installs |
| Charity VAT relief | Registered charities | Reduced or zero VAT on qualifying installs |
Most commercial customers we install for end up using two or three of these in combination. The right combination depends on the size of the business, the cash position, the tax circumstances and the asset profile.
For UK businesses paying corporation tax, capital allowances are typically the biggest single funding lever on a commercial solar install.
Under the current corporation tax regime, the main rate is 25% on profits above £250,000. Plant and machinery investment (including commercial solar PV, battery storage, EV chargers and heat pumps) qualifies for capital allowances at the 25% main rate.
For most installs this means the business can offset 25% of the full install cost against corporation tax, often in year one of the install. On a 250 kW commercial solar install at £125,000, the corporation tax relief is around £31,250 in year one if Annual Investment Allowance (AIA) applies.
AIA (Annual Investment Allowance) lets businesses claim a significant first-year deduction (currently 50% on plant and machinery, with the remaining 50% written down over subsequent years) up to £1 million per year. Most residential-scale to mid-scale commercial solar installs sit within AIA, meaning the customer claims the full install cost against year-one profits.
For installs above £1 million in a single tax year, the remainder of the cost is written down through standard capital allowances over multiple years.
We model capital allowance treatment for every commercial install at proposal stage so the customer can see the post-tax cost figure alongside the headline figure.
The most important development in commercial solar funding since the FIT era. The Power Purchase Agreement (PPA) structure removes the capital barrier entirely.
How it works:
The host (your business) does not pay any upfront capital. The host does not take on any maintenance or warranty risk. The host benefits from cheaper electricity from day one. For businesses with capital constraints, or businesses that prefer to use available capital for core operations rather than infrastructure, PPA is the answer.
See Free Commercial Solar (PPA) detail for the full mechanics, including how PPA interacts with leased premises (tri-party agreements between tenant, landlord and funder).
For businesses that want to own the asset outright but prefer cash-flow positive structures over capital outlay:
Spreads the install cost across a fixed term (typically 5-7 years) with monthly payments. The energy bill saving from day one is generally larger than the monthly finance cost, so the install is cash-flow neutral or positive from month one. The business owns the asset, claims the capital allowances, and the asset is on the balance sheet.
Is similar to asset finance but the asset stays off the customer's balance sheet for accounting purposes. Some customers prefer this for return-on-capital metrics or simpler financial reporting. Lease tends to be slightly more expensive than asset finance over the life of the agreement, but the structural simplicity suits some businesses.
We arrange both through specialist UK funding partners. The application takes 2-4 weeks for typical commercial sizes.
For schools, academies, councils, NHS estates, charities and community buildings, several dedicated funding routes apply.
Public Sector Decarbonisation Scheme (PSDS)
provides grants to public-sector bodies for energy-efficiency and decarbonisation works. Funding rounds typically open annually with detailed application requirements. The PSDS has funded multi-million-pound heat decarbonisation projects across UK public estates.
Salix loans
provide interest-free loans to public bodies for energy efficiency projects, including solar, battery storage and heat pumps. The loan is repaid from the energy bill savings, making it effectively cash-neutral from day one.
Charity VAT relief
reduces or eliminates VAT on qualifying installs for registered charities, on top of the 0% energy-saving materials relief.
Multi-Academy Trust (MAT) procurement frameworks
allow groups of schools to procure energy-efficient infrastructure at scale through national framework agreements. We work to several of these frameworks.
Local authority Section 106 obligations
sometimes route to renewable energy infrastructure on community buildings as part of broader development conditions.
Take a UK manufacturing facility, 250 kW commercial solar install paid through asset finance.
That is the headline arithmetic. The exact figures depend on the site, the load profile, the tariff and the financing structure. We model your specific install during the assessment using your actual electricity bills.
| Component | Amount |
|---|---|
| Full install cost | £125,000 |
| Annual generation (East Anglia) | ~245,000 kWh |
| Annual self-consumption (manufacturing load) | ~210,000 kWh (~86%) |
| Avoided grid cost (at 28p/kWh) | £58,800/year |
| Annual saving on grid imports | £58,800 |
| Asset finance over 7 years (~6% APR) | ~£21,000/year |
| Net cash flow year one onward | +£37,800/year positive |
| Capital allowances (AIA, 25% tax rate) | -£31,250 (recovered in year one) |
| Effective post-tax install cost | £93,750 |
| Effective payback (post-tax, on net cash flow) | ~3.0 years |
| Operational life | 25+ years |
Site assessment and feasibility analysis, including roof structural review, planning checks where needed, and DNO grid capacity review
Capital allowance modelling in the proposal, with post-tax cost and effective payback figures
PPA application and funder coordination for zero-capex routes
Asset finance and lease application through specialist UK funding partners
DNO G99 grid connection application for larger installs
MCS commercial certification of the install
PSDS application support for public sector projects
Salix loan application for eligible bodies
Charity VAT registration where applicable
You assign one project owner from your team. We handle the rest with them.
No direct grant for owner-occupied commercial premises. Capital allowances and PPA are the dominant funding mechanisms. Public sector and charity bodies have access to PSDS and Salix.
Yes. Commercial solar PV qualifies as plant and machinery for AIA purposes. The allowance covers up to £1 million per year of qualifying investment, at 50% first-year deduction (with the remaining 50% written down over subsequent years).
Limited - some small commercial premises qualify under the same BUS criteria as residential. Larger commercial heat pump installs typically go through PSDS (public sector) or capital allowance routes (private sector).
Generally no, because the PPA funder owns the asset, not the host. The PPA funder claims the capital allowances. The host benefits through cheaper electricity rather than tax relief.
We arrange tri-party agreements between tenant, landlord and PPA funder. The structure depends on lease terms, but PPA on leased premises is common and we have delivered many.
4 to 7 years on capital purchase with full self-consumption, less on PPA (cash positive from month one), 5 to 8 years on asset finance. Operational life is 25+ years on the panels.
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