How to lease solar panels for commercial buildings: a guide to asset finance options
Want to go solar without upfront capital? You’re not alone.
More UK businesses than ever are exploring renewable energy but for many, the upfront cost of solar panels is still the biggest barrier.
That’s where asset finance comes in.
At Optify, we help organisations structure self-funding renewable energy solutions using models like asset leasing and hire purchase, so they can benefit from immediate energy savings without tying up capital.
This guide will explain:
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How solar leasing works
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The difference between hire purchase and lease finance
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Pros and cons of each
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What businesses should consider before choosing a funding route
If you’re searching for how to fund a renewable energy project for your business, this is the place to start. We’ve created a series of comparison guides on other forms of solar funding as well, linked at the bottom of this guide.
What does it mean to lease solar panels?
Leasing solar panels means you use a finance provider to pay for the installation, and you repay the cost in monthly instalments over a fixed term (usually 5–7 years).
This allows your business to:
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Avoid capex and without being tied in to long term finance arrangements
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Stay cash flow positive
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Spread the cost over the useful life of the system
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Access the energy savings immediately
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Make a conscious decision about whether you want the asset to sit on your balance sheet or not
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Decide how you want to account for the VAT
In most cases, the energy bill savings exceed the monthly lease payments, making the project cash-positive from day one.
Hire purchase vs asset lease: what’s the difference?
Feature | Hire purchase | Asset lease |
|---|---|---|
Flexibility | Fixed path to ownership | More flexible, sometimes cheaper monthly payments |
End of term | You take ownership for a nominal fee | Option to extend lease or purchase at market value |
VAT treatment | VAT due upfront | VAT paid monthly on lease instalments |
Balance sheet treatment | Appears as an asset from day one | May be off balance sheet (subject to accounting method) |
Ownership at end | You own the asset after final payment | You return the asset or agree a purchase for a nominal sum |
Pros and cons of asset finance approaches
Hire purchase
Pros
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You own the system at the end
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Long-term savings are yours
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Easier to calculate ROI over 25+ years
Cons
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Larger upfront VAT payment
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May affect balance sheet and borrowing position
Asset lease
Pros
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No upfront VAT
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Off-balance-sheet potential (speak to your accountant)
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Lower monthly payments in many cases
Cons
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You don’t own the system unless you negotiate to buy it later although ownership can be achieved with a nominal payment
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May be slightly less predictable long-term
What should your business consider?
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Cash flow priorities: do you need to avoid all upfront costs?
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Accounting treatment: how does your business handle capital assets and VAT?
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Ownership strategy: do you want to own the system long-term or just benefit from the energy?
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Energy savings vs finance cost: the goal is a project that pays for itself from the savings and striking the perfect balance between lifetime savings and your other business priorities and requirements
At Optify, we’re not here to sell you panels, we’re here to help you structure the most financially attractive project possible.
We:
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Model savings across hire purchase, asset lease, and PPA
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Factor in VAT, accounting, and commercial preferences
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Select the best-fit funding partner for your circumstances
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Build a watertight business case so the project gets approved
We’ve seen projects deliver seven-figure lifetime savings with no upfront investment required.
How Optify helps you choose the right funding route
FAQ
Further resources: see how leasing options compare with other funding methods
Specialist green finance
See our funding comparison and see why specialist green finance is a better fit for renewable energy projects than traditional loan finance
Final word
There are many variables that affect which funding option is right for you. By considering every angle, you can achieve a funding structure where solar can pay for itself and deliver huge upside to you P&L without having to fund the project yourself.
Let us help you choose the route that aligns with your business strategy.
You can see our comparison guides [here] for an independent, impartial view on how the various renewable energy funding options can work for you, according to your specific business requirements.