By the PPA Funding team Last updated
Buying commercial solar outright is a capital investment that gives your business an income-producing asset. Instead of paying for electricity, you own the equipment generating it, and the return comes from avoided energy costs over the system's life. The exact figures depend on your usage, tariff and roof.
Owning the asset from day one
With an outright purchase (CapEx), you pay for the system upfront and own it immediately. From that point the electricity it generates is yours, so every unit consumed on site replaces a unit you would have bought. Over a system life of 25 years or more, those avoided costs accumulate into the return on the original outlay.
This is a different proposition from a power purchase agreement, where a funder owns the system and you pay per kilowatt-hour. Ownership means the full financial benefit stays with you and the asset sits on your balance sheet, but it also means you carry the maintenance and the upfront cost. Which suits a business depends on its access to capital and appetite for owning equipment.
How the return is generated
The core return is avoided electricity purchase. The more of your generation you use on site, the more grid electricity you avoid buying, and the stronger the return. Surplus you export earns an additional, usually smaller, payment. As grid prices rise over time, the value of self-generated power tends to rise with them, which can improve the return through the system's life.
Because the benefit is spread over decades, businesses often look at payback period (how long until savings cover the cost) and lifetime return. Both are estimates that hinge on your consumption profile, tariff and future energy prices, none of which are fixed.
Weighing it up honestly
Solar is a long-term investment, not a quick trade, and the case is strongest for businesses that own or hold a long lease on their premises and use a lot of daytime electricity. Set against the upfront cost are ongoing maintenance, eventual inverter replacement and the fact that returns depend on variables outside your control.
The tax and accounting treatment of a capital purchase, including any allowances that may apply, affects the real return and changes over time. Confirm the current position with your accountant before treating any figure as final, and compare the CapEx route against PPA-based and lease options to see which fits your cash flow.
This guide is general information, not financial or tax advice. Your circumstances determine what applies — please confirm with your accountant or advisor. Get a tailored proposal →
Frequently asked questions
Is buying solar outright better than a PPA?
It depends on your priorities. Outright purchase keeps the full financial benefit and gives you the asset, but needs upfront capital and carries maintenance. A PPA needs no capital and a funder handles the system, in exchange for paying per unit. Cash flow and ownership goals decide which fits.
What return can I expect from buying solar?
There is no single figure, because the return depends on how much generation you use on site, your tariff and future energy prices. The main benefit is avoided electricity cost over 25-plus years. Model it on your own usage and confirm the tax treatment with your accountant.
Related guides
- Commercial Solar for Flat and Metal Roofs
- Do Solar Panels Add Value to a Commercial Property? Capital Value, Rent and Lettability
- Commercial Solar Panel Cleaning: Soiling, Lost Output and How Often to Clean
See our funding options, commercial solar and solar by industry pages.