Solar Financing explained
Solar financing encompasses all the ways to fund a solar installation when you don't want to (or can't) pay the full cost upfront in cash. The right financing option depends on your financial situation, the interest rates available, and how much upfront capital you have.
Common solar financing options:
- Cash purchase: best financial return since you avoid interest, own the system outright, and receive all savings and SEG income. If you have the savings, this is almost always optimal
- Personal loan: fixed-rate loans at 5–12% APR. Check whether monthly loan repayments are less than your monthly energy savings — if so, you're cash-positive from day one
- Green mortgage addition: some lenders allow you to borrow against your home's equity at mortgage rates (3–6%) to fund energy improvements. Lower interest but secured against your home
- ECO4 / government grants: if you're on means-tested benefits, you may qualify for fully funded or heavily subsidised solar under the UK's ECO4 scheme
- Solar lease or PPA: you pay a monthly fee or per-kWh rate rather than owning the system. Simpler but typically less financially rewarding
Always compare the total interest cost of financing against your projected savings to confirm you're net positive over the loan term.