6 min read
Rising energy costs and available roof or land space have made on-site generation an increasingly practical investment for farms and other businesses, and finance is often structured so that savings help support the repayments.
What it is
Renewable energy finance covers hire purchase, lease or loan arrangements used to fund equipment such as solar panels, battery storage, small-scale wind turbines or anaerobic digestion plant. The structures are broadly the same as for other asset finance, but the assessment often takes expected energy savings or export income into account when considering affordability.
For farms with substantial barn roof space or land not in full agricultural use, this can represent a way of turning an underused asset into an income stream, alongside cutting energy costs.
Who it suits
- Farms with barn or outbuilding roof space suited to solar installation
- Businesses with high energy consumption looking to reduce reliance on grid electricity
- Operations considering battery storage to make better use of self-generated power
- Businesses exploring diversification through renewable generation and, where applicable, export income
How it works
The finance is typically structured as hire purchase or a lease over the equipment installed, with the term often set to broadly match the payback period expected from energy savings, though this is not guaranteed and depends on usage and energy prices.
- Installation cost financed via HP, lease or loan, in the same way as other equipment
- Term often aligned with the expected payback period, though outcomes are not guaranteed
- Ongoing savings or export income can be used by the business towards repayments
- Maintenance and any warranty arrangements should be agreed with the installer separately
Typical terms
| Term | Typical range |
|---|---|
| Term length | 36 to 120 months depending on the installation and structure |
| Deposit | 0% to 20%, depending on the business and equipment |
| Payment frequency | Monthly, quarterly or seasonal for farming businesses |
| End of agreement | As per hire purchase or lease structure chosen |
| Security | The installed equipment, and in some cases the property it is fitted to |
Pros and trade-offs
Where it works well
- Energy savings and any export income can help offset repayments
- Makes use of existing roof or land space
- Reduces exposure to future energy price rises
- Can be structured with the same flexibility as other asset finance
Trade-offs to weigh
- Savings depend on usage patterns and future energy prices, which are not guaranteed
- Installation quality and equipment choice significantly affect long-term performance
- Grid connection and export arrangements can take time to put in place
Worked example
Worked example: barn roof solar installation
- System cost
- £78,000 plus VAT
- Deposit
- £7,800 (10%)
- Term
- 84 months
- Indicative monthly payment
- Approximately £1,010
- Estimated annual energy saving
- Around £9,500, based on current usage and prices
These figures are illustrative only, based on assumed costs, rates and energy prices, and are not a quotation. Actual savings will vary and should be discussed with your installer and accountant.
If you are exploring solar or another renewable installation, we can talk through how finance might be structured around the likely savings.
Next step
Talk through the numbers with us
Send us the details of the asset and we will come back with an indicative figure and a properly structured option from the funder panel. No obligation, and no pressure to proceed.