Commercial Solar Financing: Lease, Loan or PPA Compared
Decision details
Fits if: SME owner or authorised building manager comparing a written purchase, loan, lease or energy purchase offer.
Main drawback: This page establishes no standard loan, lease/PPA availability, rate, price or payback.
Compare: total payments, deposits, escalators, asset ownership/transfer, maintenance, export credits, roof access, default and termination.
In this guide
Start with the contract structure
A purchase, bank loan, lease and power purchase agreement allocate payment, asset ownership, maintenance and performance risk differently. The labels alone do not establish that funds are available, that no upfront payment is due, or that one structure costs less. Ask for the proposed agreement and a complete payment schedule before comparing.
Compare equivalent offers
For each proposal, record deposit and fees, periodic payments, escalation, minimum charges, equipment ownership, end-of-term transfer price, maintenance and inverter replacement, export-credit treatment, roof access, insurance, default and early termination. Include taxes only after an adviser confirms the relevant taxpayer, asset and expenditure qualify.
Use the same site and energy assumptions for every case: actual bills and interval usage, voltage class, maximum demand where applicable, operating hours, roof condition and export controls. A bill amount or a generic commercial package band does not determine system capacity, savings or financing eligibility.
Questions for the provider
- What is due before installation and at each payment date?
- Who owns the equipment during and after the agreement, and what is the transfer price?
- Who pays for repairs, monitoring, removal and roof reinstatement?
- How are export credits and tariff changes handled?
- What happens on default, business closure, building sale or early termination?
- Which assumptions support the generation, savings and payment schedule?
Keep provider claims separate from contract terms. Ask for every payment, exclusion and responsibility to appear in writing.
Compare the contract on the same basis
| Comparison field | Record from the contract | Question to resolve |
|---|---|---|
| Payments | Deposit, fees, scheduled payments, minimums and escalation | What is due, and on which date? |
| Asset | Owner during the term, transfer date/price and removal obligations | Who owns and insures it at each stage? |
| Operations | Maintenance, repair, monitoring, export credits and roof access | Which party is responsible, and what is excluded? |
| Exit & tax | Default, early termination, sale/closure and tax treatment | What written clause applies; has an adviser confirmed any tax item? [source] |
Total the buyer’s outflow over the same term
Ask each provider to fill this with payments the business itself must make. Use the same contract horizon and system scope for cash, loan, lease and PPA; leave terms marked “not stated” out of any claimed savings and resolve them before signing.
| Cost or responsibility | Cash purchase / loan | Lease / rent-to-own | PPA |
|---|---|---|---|
| Deposit, application and connection fees | RM ____ | RM ____ | RM ____ |
| Total scheduled payments during chosen term | RM ____ | RM ____ | RM ____ |
| Escalators, minimums and other contract fees | RM ____ | RM ____ | RM ____ |
| Maintenance, insurance, repairs and roof obligations paid by buyer | RM ____ / responsibility ____ | RM ____ / responsibility ____ | RM ____ / responsibility ____ |
| Early exit, building sale, removal or roof reinstatement | RM ____ / clause ____ | RM ____ / clause ____ | RM ____ / clause ____ |
| At term end: owner, transfer payment or renewal | ____ | ____ | ____ |
| Utility bill still payable (separate energy scenario) | RM ____ | RM ____ | RM ____ |
| Known combined amount through term end; unresolved terms | RM ____; ____ | RM ____; ____ | RM ____; ____ |
Use a dated, same-scope cash price and the same generation/load assumptions. Keep energy value separate from contract outflow, and include export credit only after its scheme, tariff class and account treatment are confirmed in writing. Any tax allowance is also a separate eligibility question; do not subtract it until a qualified adviser confirms the taxpayer, asset and qualifying expenditure [source].
Frequently asked questions
Can a business use rent-to-own solar?
That depends on what a provider currently offers and the business/site terms. This page does not verify a standard product. Ask for the actual draft and full schedule before treating rent-to-own as an available option.
Does a PPA mean zero cost upfront?
Do not assume so. Check deposits, connection or application charges, minimum payments, security, escalation and other fees in the actual offer.
How do I compare a PPA with buying?
Compare the full payment schedule over the same period, including fees, escalation, maintenance, export credits, asset ownership at each date, roof obligations and early termination. Use the same generation and tariff assumptions in both cases.
Can I use an advertised package price as my project budget?
No. An advertisement is not a site quote. Request equipment models, inverter kWac, panel kWp, connection, structural work, taxes, exclusions and schedule for your premises.
Does a tax allowance automatically make ownership cheaper?
No. Eligibility and use depend on the current programme, taxpayer and qualifying expenditure. Obtain written confirmation from a qualified tax adviser before including any allowance in a financing comparison [source].