# On-Balance-Sheet vs Off-Balance-Sheet Solar: How the Funding Route Shows in Your Accounts

Whether solar sits on your balance sheet depends on how you fund it. Buying the system outright puts an asset on the balance sheet. A PPA is generally treated as buying electricity, so it stays off the balance sheet as an operating cost. Accounting rules vary, so confirm treatment with your accountant.

## What does on-balance-sheet solar mean?

If you buy the system outright, or fund it with hire purchase or certain leases, you generally recognise it as an asset you own or control. That asset appears on the balance sheet, you claim depreciation and any capital allowances, and any borrowing to fund it shows as a liability.

This route suits a business with capital to deploy and a tax position that benefits from owning the asset. You take the output risk and the maintenance, and you keep all the savings. Whether the numbers work depends on your accounts and cash position, which your accountant can model.

## Why is a PPA usually off-balance-sheet?

Under a PPA you do not own the system; a third party owns it and sells you the electricity it produces. In broad terms that makes your payments an operating cost for power used, rather than an asset and a matching liability, so the equipment stays off your balance sheet.

The practical effect is that headline gearing and asset values are not moved by the system, while you still get electricity at a fixed rate at least 30% below the grid. How any given PPA is treated depends on the contract and the accounting standard that applies to you.

## Which route is better for your accounts?

There is no single answer. Off-balance-sheet treatment can help a business that wants to protect borrowing capacity or avoid capital outlay, while ownership can suit one that values the asset and the allowances. The right choice turns on tax, cash flow and how you report to lenders or investors.

Accounting standards on leases and service contracts change, and the classification of a specific deal can hinge on its exact terms. Do not rely on this guide as accounting advice. Confirm the treatment of any funding route with your accountant before you decide.

## Frequently asked questions

**Does a PPA count as debt on my balance sheet?**

Generally no, because you are buying electricity rather than borrowing to buy equipment, so a PPA is usually an operating cost rather than a liability. Classification depends on the contract terms and the accounting standard you follow, so ask your accountant to confirm for your business.

**Can I move an owned solar system off my balance sheet later?**

Some arrangements, such as sale-and-leaseback, can change how an asset is held, but they carry their own tax and accounting consequences. There is no general guarantee. If restructuring an existing system matters to you, take advice from your accountant before making any change.

---

Source: [On-Balance-Sheet vs Off-Balance-Sheet Solar: How the Funding Route Shows in Your Accounts](https://ppafunding.com/guides/on-balance-sheet-vs-off-balance-sheet-solar) · Author: PPA Funding team · Updated: 2026-08-03

PPA Funding is an independent introducer operated by DVC Group Ltd (Companies House 10462808), Shrewsbury — not the installer or the funder. The service is free to use; a commission may be earned from partner funders at no extra cost. Content is educational and is not financial or tax advice.