Sell Your Roof or Fund It Yourself? Commercial Solar Funding Compared

Every commercial solar conversation eventually arrives at the same fork: do you write the cheque yourself, or let someone else fund the array in exchange for the economics. For an owner, landlord or investor this is not a “green” decision — it is a capital allocation decision with consequences for your asset’s value, your tax position, your lender relationship and what you hand back at the end of the lease. The technology is largely the same whichever route you pick. The contract is what differs, and the contract is where the money sits.

There are three structures worth comparing seriously: owner-funded (you buy the system), a developer-funded roof lease (you “sell the roof” — grant a lease of the roof or airspace and a third party owns and operates the array), and a Power Purchase Agreement (a developer funds and owns the system on your roof and sells the power on-site). Each one moves the capex, the control and the upside to a different party.

Owner-funded: you keep the economics, you take the risk

If you fund the system, you own it. You pay the capex up front — roughly £700–£1,100 per kWp ex-VAT, falling with scale, so a 250kWp commercial array lands around £150,000–£240,000 — and in return you keep every pound of value the system produces. That value is the displaced grid import (self-consumed solar offsets electricity at around 24–28p/kWh in 2026 depending on your tariff band) plus export income under a Supplier-set Smart Export Guarantee tariff, typically 12–16p/kWh.

The case for owning it yourself is the after-tax return. Solar PV is a special-rate asset (an integral feature), but it qualifies for the Annual Investment Allowance — 100% first-year relief on up to £1m of qualifying spend, which is permanent. That can knock a year or two off a payback that otherwise sits in the 4–8 year range. Note the trap: this is the AIA route, not “full expensing”, which only gives a 50% First-Year Allowance on special-rate assets and is unavailable on anything bought to lease out. If you are an owner-occupier with the load to soak up the generation, owning is almost always the strongest position — you capture 100% of the economics and the asset sits on your balance sheet improving the building’s EPC and its appeal to a future buyer. Our capital allowances guide for owners walks through which relief applies to which ownership structure.

The case against is simple: it is your capital, your G99 grid application, your maintenance liability and your risk if generation underperforms. Some owners would rather that sat with a specialist.

Sell the roof: a developer-funded roof lease

“Selling the roof” is shorthand for granting a lease — usually of the roof space or the airspace above it — to a developer who funds, installs, owns and operates the array for the lease term (commonly 20–30 years). You take a rent, or a peppercorn plus discounted power, and you put no capital in. At the end of the term the system is removed or transferred to you.

The attraction is zero capex and zero operational responsibility. The cost is control and upside. Because you do not own the asset, you do not get the capital allowances — the developer does. Your return is the rent, not the energy economics, and rent for roof space is modest next to the value of self-consumed generation. You are also granting a long lease over part of your building, which has real consequences: it can require lender consent (most commercial mortgages restrict granting leases or interests without the lender’s approval), it touches your buildings insurance (the insurer needs to know there is a third-party-owned system penetrating the roof), and it creates a reversion question — what condition the roof is in when the array comes off, and who pays to make good. Get the dilapidations and reinstatement obligations wrong and you inherit a problem in 25 years.

There is also a tax point owners miss: granting a lease for a premium can attract SDLT, and the lease itself sits on your title and shows up in due diligence when you sell. A roof lease is a genuinely useful tool — particularly for a landlord who cannot or will not deploy capital — but it is a property transaction, not a quick win. Read our roof lease vs PPA vs licence guide before you sign anything, because the legal wrapper you choose (lease, licence or PPA) changes who carries which risk.

PPA: someone else funds it, you buy the power

A Power Purchase Agreement keeps the array on your roof, funded and owned by a developer, but instead of paying you rent they sell you (or your tenant) the electricity it generates, usually at a fixed or indexed rate below grid price. You put in no capex, you pay only for power consumed, and you get a discount on your import without owning anything.

The honest limit of a PPA is the “no sun, no power, no payment” reality — you only pay for what is generated, but you also only save when the sun shines, and the developer keeps the difference between their cost of capital and your tariff. Over 20 years that margin is the price of not funding it yourself. PPAs work best where there is strong, predictable daytime load to self-consume the output, because self-consumption — not export — is the number one driver of value in any of these structures (30–50% on solar alone, rising to 60–80% with battery). For a landlord, a PPA can be structured to supply a tenant directly via a private wire, which neatly addresses the split-incentive problem. As with a roof lease, the contract typically needs lender and insurer sign-off, and you will want clean terms on what happens at the end and on any change of building ownership.

The three routes side by side

How to choose

The decision usually comes down to three questions. Do you have the capital, and is solar the best home for it against your other uses — if yes, and you occupy or your tenant has the load, owning captures the full after-tax return. Do you want zero capex and zero operational involvement and are content to take rent rather than energy value — a roof lease fits, provided you handle lender consent and reversion properly. Or do you want someone else to carry the funding and generation risk while you simply buy cheaper power — a PPA fits, particularly where a private wire to a tenant solves a split-incentive headache.

What you should never do is sign a developer-funded structure without reading the lease, the reversion clause and the change-of-control provisions as carefully as you would any other 25-year interest over your building. The headline “free solar” pitch is real, but the value you give up is also real, and it is permanent for the life of the contract. Our owners’ due diligence guide sets out exactly what to check before committing — grid position, roof condition, lender and insurer requirements, and the small print that decides who benefits.

Talk it through against your actual numbers

The right structure depends on your tariff, your load profile, your tax position and your lender’s appetite — none of which a generic comparison can settle. We model owner-funded, roof-lease and PPA options side by side on your real consumption data and tenancy structure, so you can see the after-tax position for each before you decide. Request a quote and funding comparison and we will engineer the ownership and lease structure so the right party pays and the right party benefits.