Most commercial solar enquiries we receive at FLD in 2026 start with the same question: should we buy the system outright, finance it, or take a PPA?
There is no universally correct answer. The right structure depends on capital availability, tax position, tenure of the building, and how the business values certainty of cashflow against return on capital.
Outright purchase
If your business has the capital and can absorb a 2.5 to 4 year post-tax payback, outright purchase is mathematically superior. You own the asset from day one, you keep 100% of the generation and export revenue, and you claim 100% first-year Annual Investment Allowance relief against corporation tax under current rules.
The total internal rate of return on a commercial 250 kWp system in South Wales typically sits between 22% and 28% post-tax over 25 years.
Asset finance
Asset finance over 3 to 7 years spreads the capital cost while preserving ownership. Monthly repayments are normally structured to be less than the annual electricity saving, so the system generates positive cashflow from month one. Interest is tax-deductible as a normal business expense.
Power Purchase Agreement
A PPA moves solar from a capital decision to a utility decision. FLD or a partner funder owns and maintains the system for the duration of the agreement, typically 10 to 25 years. Your business pays only for the electricity the system generates, at a fixed unit rate that is RPI-indexed but guaranteed to be lower than your grid tariff for the term.
The right answer for most owner-occupied factories and farms in South Wales is outright purchase when capital allows. The right answer for tenanted sites, capital-constrained businesses, and public-sector clients who cannot carry the asset on balance sheet is a PPA.
