Green business finance for solar, heat pumps and energy efficiency

The strongest cases are those where the saving is large, predictable and starts on day one. That depends more on how your business uses energy than on the technology.

• Rooftop solar PV on daytime-heavy sites. Cold stores, food processors, manufacturers, dairy farms and distribution centres use most of their power during daylight, so most generation offsets electricity bought at full price rather than being exported for less.
• Battery storage alongside solar. Useful where generation peaks at midday but demand peaks later, or where a site can avoid peak-time charges. The business case is more sensitive to tariff assumptions.
• Heat pumps replacing oil, LPG or old gas boilers. Works best in buildings with reasonable insulation and heating systems that can run at lower flow temperatures.
• LED lighting and controls. Often the fastest payback, particularly in warehouses and car parks with long operating hours.
• EV chargers for company or visitor vehicles. Often financed alongside the vehicles; see our page on electric car finance for business.

A shop or office that closes at weekends and uses little power at midday will export more of its solar output, so its savings case is weaker, even though the panels cost the same.

Three things can reduce the net cost, and lenders will want to know which you are relying on.

• Grants. Some smaller non-domestic buildings in England and Wales can qualify for a Boiler Upgrade Scheme grant towards a heat pump, paid through the installer, which reduces the amount to finance. Local and devolved schemes come and go, so check what is open before committing. Our guide to grants vs loans covers how the two can combine.
• Export payments. Surplus solar power can earn payments from an energy supplier under the Smart Export Guarantee, subject to eligibility, including installer certification for smaller systems. Tariffs are set by suppliers and can change, so a prudent case treats export income as a bonus.
• Capital allowances. Companies buying new plant may be able to claim generous first-year relief, and some energy equipment falls into the special rate pool. The ownership structure you choose affects who claims; see asset finance and capital allowances and take advice from your accountant.

Most failed green projects fail on practical points rather than credit. Before a lender will commit, and before you should, check the following.

• Roof condition and life. Panels are expected to last decades. If the roof will need replacing within the agreement, removing and refitting panels adds cost. Fragile or asbestos-cement roofs need a structural survey.
• Your lease. Tenants need landlord consent, and a lease with only a few years left is a problem if the finance runs longer. Fixed equipment can become the landlord's property, so some lenders ask for a landlord's waiver.
• Grid connection. Larger systems need approval from the local distribution network operator before connection, which can take time and occasionally limits export.
• Planning. Many rooftop systems on commercial buildings are permitted development, subject to limits; the Planning Portal guidance for non-domestic solar sets out when permission is needed. Listed buildings and conservation areas need more care.

Installers and energy contractors borrow for different reasons. Panels, inverters, batteries and heat pumps are bought upfront, often on short supplier terms, while commercial customers pay in stages with retentions held back. Vans, access equipment and test gear are needed before the work starts.

• Stock and supplier payments: stock finance or a revolving facility can carry inventory ahead of a busy period or a bulk-buy discount.
• Waiting to be paid: invoice finance can release cash against completed commercial work. Stage payments and retentions on construction-style contracts are harder to fund and need a specialist.
• Vans and equipment: hire purchase or leasing, the same way any trade funds its fleet.

Lenders look at certification with MCS and the relevant consumer code, how deposits from domestic customers are protected, warranty liabilities, and how dependent the order book is on grant schemes that can change with policy. Our electrical contractor finance and energy services finance pages cover these businesses in more depth.

Renewable energy finance is usually available to established UK limited companies, LLPs, partnerships and sole traders with at least one or two years of filed accounts, a site they own or lease for longer than the agreement, and trading that covers the repayments without relying on projected savings. Farms, manufacturers, cold stores and other high daytime users tend to present the strongest cases. Tenants can qualify with landlord consent and enough lease left to run. Younger businesses and those with adverse credit can still be considered, but lenders often ask for a larger deposit, a shorter term or a stronger guarantee. Installers qualify on a different basis: certification, trading record, order book and how well their debtor book is spread.

A straightforward hire purchase or lease for a rooftop solar, battery or LED project typically takes one to three weeks from a complete application to a signed agreement, provided the quote, accounts and energy data are ready. The practical checks usually take longer than the credit decision: a roof or structural survey, landlord consent and any landlord's waiver, and approval from the distribution network operator for larger systems can each add several weeks. Bigger whole-site schemes, and cases where the lender wants an independent review of the savings projection, often take longer. Payment to the installer is normally made in agreed stages or on completion, so build that into the installation programme.

On hire purchase and leasing, the security is normally the equipment itself: the lender owns or has title to the panels, inverters, batteries or heat pumps until the agreement ends. Because installed kit has limited resale value once removed, smaller companies are often also asked for a personal guarantee from the directors. Where a large share of the cost is labour, cabling or roof work, lenders may ask for a bigger deposit or fund that part with an unsecured loan, again usually guaranteed. Tenants may need a landlord's waiver so the lender can recover fixed equipment. Larger programmes can be secured on property you own through a charge or a mortgage top-up, which puts the building at risk. Our guide to personal guarantees explains what you are signing.

Savings projections are estimates. Energy prices, tariffs and your own usage can change, and a project that looks self-funding on paper can leave a net monthly cost. Inverters and batteries usually need replacing before the panels wear out, so budget for it. Tie-in matters too: a finance term longer than your lease, or a power purchase agreement that outlives your plans for the building, can complicate a future sale or move. Paying from reserves avoids finance costs if the business has comfortable cash, and a grant-funded project may need less borrowing than first quoted.