Gone are the days when you needed £15,000 in savings to go solar. Today, multiple financing options allow many homeowners to install solar for £0 down. However, how you pay determines how much you save.
This guide breaks down the three main ways to finance your system: Cash Purchase, Solar Loan, and Third-Party Ownership (Lease/PPA). Each has distinct pros and cons depending on your financial situation.
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0% VAT & SEG
The UK government currently offers 0% VAT on solar panel installations (saving you 20% upfront). Additionally, the Smart Export Guarantee (SEG) allows you to get paid by energy suppliers for the excess renewable electricity you export to the grid.
Quick Comparison
| Method | Upfront Cost | Lifetime Savings | Incentives | Maintenance |
|---|---|---|---|---|
| Cash Purchase | High (£8k+) | Highest | Keep All (SEG) | You (w/ warranty) |
| Solar Loan | Low (£0 Down) | High | Keep All (SEG) | You (w/ warranty) |
| Lease / PPA | None (£0 Down) | Moderate | Provider Keeps | Included |
Detailed Breakdown
1. Cash Purchase
Buying the system outright provides the best return on investment. You avoid all interest payments and financing fees. Payback periods are typically 6-9 years, after which your electricity is essentially free.
Verdict: Best for maximizing long-term wealth, if you have the savings available.
2. Solar Loan
Solar loans allow you to own the system for £0 down. Monthly payments are often designed to be lower than your current electricity bill. Because you own the system, you eligible for SEG payments.
Verdict: The most popular choice. It swaps your electric bill for a cheaper loan payment, building equity in an asset rather than renting power.
3. Lease or PPA
With a Power Purchase Agreement (PPA) or Lease, a third party installs panels on your roof for free. You simply agree to buy the power they produce at a rate lower than your energy supplier. You don't own the panels, and you don't earn SEG payments.
Verdict: Good for those who want zero responsibility for maintenance or don't want to take out a loan. However, it can make selling your home more complicated.
Which Option is Right for You?
Choose Cash If:
- You have available capital and want a 10-15%+ risk-free return on investment.
- You want a simple transaction with no long-term contracts.
Choose a Loan If:
- You want to own the system and earn export payments but don't want to drain your savings.
- You want to replace your variable electric bill with a fixed monthly payment.
Choose a PPA/Lease If:
- You prefer a simple "subscription" model without owning the hardware.
- You prioritize "peace of mind" and want someone else to be 100% responsible for monitoring and repairs.
Still have questions?
Our AI advisor can provide personalized answers based on your specific situation.