Solar PPA vs loan: why specialist green finance is often the best choice
- Gary Carter
- Jun 12
- 3 min read
Updated: Jun 30
When it comes to funding solar, not all finance is built the same.
Most business leaders evaluating solar quickly face the question of whether to fund the project through a traditional loan or use something more specialist.
Specialist green finance is designed specifically to make renewable energy projects happen with flexibility, speed, and commercial logic. Unlike traditional loans, which often make projects harder to approve, green finance structures are engineered around one goal: enablement.
Let’s compare how traditional loans, stack up with specialist green finance like PPA’s and asset finance options.
Solar PPA vs loan: the traditional loan is familiar, but frustrating
A traditional loan might feel like the obvious path. You borrow capital, pay interest, and repay over a fixed term.
But when applied to solar:
It requires 100% CapEx investment
VAT is usually paid upfront
It's inflexible; one structure, one repayment model
There’s no link to the project’s energy savings
It’s always on your balance sheet
You get the money. You get the fixed terms. Take it or leave it.
Loans don’t want the project to succeed, they want repayment. That’s a key difference.
Specialist green finance: built for flexibility
Green finance is engineered around the success of the project. It’s designed to:
Match repayment terms to energy savings
Reduce risk by aligning cost to ROI
Offer balance sheet flexibility (on or off-balance sheet structures)
Offer VAT-inclusive or deferred options
Provide short-term or long-term term lengths
Be fixed-rate, inflation-linked or flexible
Whether you want to own the system or lease it, green finance makes it affordable, accountable, and cash-flow-friendly.
At Optify, we structure projects that are cash-positive from day one often without your business paying a single penny upfront.
Where a PPA fits in
If ownership isn’t a priority, power purchase agreements can be a great route.
A funder pays for the system
You buy the power it generates, at a pre-agreed (lower) rate
There’s no capex or loan to repay
You avoid maintenance costs and responsibility
But:
You don’t own the asset
It’s a long-term commitment (often 25 years)
You trade long-term ROI for short-term ease
PPA is simplicity, not control. Great for some, limiting for others. There are pro's and con's of all funding options for renewable energy projects; whichever option is chosen, there will be trade offs.
In our experience, the best way to maximise the benefits you'll get from a project and minimise downsides from funding trade offs is to match the funding option to your business goals and objectives, not what a funding provider wanted to sell you.
This idea is inherent in our methodology, The Optify Edge, which mandates that the project is aligned to the clients commercial objectives in order to be successful. By looking across the entire green funding market, you're assured that you'll have funding options that meet what you're looking to achieve, will minimise trade offs and optimise your lifetime savings from the project.
The takeaway: know your objectives
If your business..... | Then consider..... |
Wants long-term savings and ownership | Green finance (hire purchase or lease) |
Can’t deploy capex or wants hands-off | PPA |
Wants flexibility in accounting or cash flow | Green finance |
Prefers known, rigid repayment | Traditional loan (but beware ROI trade-offs) |
How Optify helps
We’re not a finance broker or installer, we’re your commercial advisor.
Our feasibility studies:
Model all funding options for your site and objectives
Show ROI over time for solar PPA vs loan vs green finance
Help you build a watertight business case for decision-makers
Deliver solutions where every element is optimised for value
We’ve seen businesses unlock seven-figure lifetime savings with no capex and full flexibility.
Explore your funding options and discover the value you could unlock with renewable energy
Read our full comparison guide to explore in detail the relevant options for funding a renewable energy project.
Try our free Renewable Energy Feasibility Kickstarter Tool to model what your lifetime savings could be with various funding options.
Final thought
Traditional finance is about repayments. Green finance is about outcomes and getting projects done. Don’t let inflexible terms block a project that could transform your energy costs and sustainability goals.