Independent · Qualified · Whole-of-market advisory
The clean energy market has never offered more ways to finance solar, batteries and low-carbon heat — but more choice doesn't always mean more clarity. The wrong funding model can cost your organisation tens of thousands of pounds over a decade.
Whether you run a school, a care home, a commercial estate or a manufacturing site, the question of how to fund clean energy is often more consequential than which technology to choose. A well-structured Power Purchase Agreement can deliver better long-term value than an outright purchase in the wrong circumstances — and vice versa. The devil, as always, is in the detail.
The five models below dominate the UK market. Each has genuine merit. Each also has traps for the unwary.
The Five Principal Funding Routes
01 — Power Purchase Agreement (PPA)
A third party installs and owns the asset; you buy the electricity it generates at a fixed or index-linked rate — typically 20–40% below grid tariff. No upfront cost, no maintenance liability.
- ✔ Ideal for organisations with no capital budget but strong energy bills
- ✔ Savings from day one
- ✘ Long contract terms (10–25 years). Building ownership changes can complicate exit
- ✘ Savings depend on the contracted rate — get this wrong and it's locked in
02 — Operating Lease
You lease the equipment and pay a fixed monthly charge. The lessor retains ownership. Under IFRS 16, larger organisations must now capitalise most leases — but for smaller entities it remains genuinely off-balance-sheet.
- ✔ Predictable costs. Preserves capital
- ✔ Equipment can often be upgraded mid-term
- ✘ You don't own the asset at the end
- ✘ Total payments usually exceed purchase cost over term. IFRS 16 has changed the accounting picture for many
03 — Subscription / Energy-as-a-Service
A newer model, increasingly offered for solar + BESS combinations. You pay a monthly subscription; the provider handles everything — installation, monitoring, maintenance, performance guarantees.
- ✔ Maximum simplicity. Guaranteed performance
- ✔ Suits organisations with limited technical resource
- ✘ Often the most expensive route in pure cost-per-unit terms
- ✘ Provider quality varies enormously. Check performance guarantee thresholds carefully
04 — Asset Finance / Hire Purchase
A lender funds the asset; you repay over 3–10 years and own it outright at term end. The asset sits on your balance sheet and generates returns for its full 25-year operational life.
- ✔ You capture the full long-term value
- ✔ Best total cost of ownership for creditworthy organisations with a long horizon
- ✘ Requires balance sheet strength
- ✘ Monthly repayments must be serviced regardless of generation performance
05 — Outright Purchase / Capital Expenditure
You fund the asset from reserves or capital budget and own it outright from day one. Solar PV typically delivers 8–15% IRR in the UK, with payback periods of 5–9 years depending on site consumption profile and export arrangements. For organisations with the capital and a 20+ year horizon, this is almost always the highest-value route — but it demands the right procurement process to protect that return. Public sector organisations should also explore Salix Finance as a zero-interest funding route.
- ✔ Highest long-term return. Full control
- ✔ Eligible for Enhanced Capital Allowances and, in some cases, Salix Finance (public sector)
- ✘ Capital intensive. Opportunity cost of deploying reserves
- ✘ Full performance and technology risk retained by you
"There is no universally 'best' funding model. There is only the best model for your specific organisation, your balance sheet position, your tenure of occupation, your tax position, and your appetite for long-term contractual commitment. Anyone who tells you otherwise is selling, not advising."
— Philip Emsley, Director, UEC Energy · ESOS Lead Assessor LA180002 · dipACEA · MEI · MEMA
How the Models Stack Up at a Glance
| Factor | PPA | Op. Lease | Subscription | Asset Finance | CapEx |
|---|---|---|---|---|---|
| Upfront cost | ✔ None | ✔ None | ✔ None | △ Low | ✘ High |
| Long-term value | △ Good | △ Moderate | ✘ Limited | ✔ High | ✔✔ Highest |
| Balance sheet impact | ✔ None | △ Varies (IFRS 16) | ✔ None | ✘ Yes | ✘ Yes |
| Maintenance responsibility | ✔ Provider | △ Shared | ✔ Provider | ✘ You | ✘ You |
| Flexibility / exit options | ✘ Low | △ Moderate | △ Moderate | △ Moderate | ✔ Full |
| Suitable for public sector | ✔ Yes | ✔ Yes | ✔ Yes | ✔ Yes | ✔ Yes (incl. Salix) |
| Typical contract term | 10–25 yrs | 3–10 yrs | 3–10 yrs | 3–10 yrs | N/A |
Why Independent Advice Matters More Than Ever
The clean energy market is now populated by a mix of genuine specialists and sales-led organisations whose primary interest is in closing a particular product. A solar installer promoting its own PPA, a leasing company pushing its own hire purchase product, or an energy-as-a-service provider with only one offering — none of these is well-placed to give you whole-of-market counsel.
At UEC Energy, we hold no product allegiance. We are an independent advisory practice with over 17 years' experience in energy efficiency, carbon compliance and clean energy deployment across commercial, public sector and institutional clients. Our work spans ESOS Lead Assessor audits, SECR reporting, solar and BESS procurement, and dynamic grid trading strategy — which means we understand the full energy picture for your organisation, not just the technology on your roof.
We also operate as programme advisors to RECfA (Renewable Energy Coalition For Academia), a DfE and DESNZ-supported initiative enabling schools, colleges and universities to access clean energy deployment — meaning our public sector clients benefit from routes and frameworks not visible in the open market.
The right funding model for your organisation exists. Finding it requires an honest assessment of your energy consumption profile, your financial position, your occupancy arrangements, and your carbon reporting obligations. That is exactly what we do.
Not Sure Which Model is Right for You?
A 30-minute conversation with our team costs you nothing and could save your organisation significantly over the life of any clean energy contract. We will give you a straight answer — not a sales pitch.
Request a Free Funding Review →About UEC Energy
UEC Energy Ltd provides independent energy advisory, ESOS compliance, carbon reporting, and renewable energy project development services across the UK. Philip Emsley (ESOS LA180002, ACSAP, dipACEA, TM44 L3/L4, MEI, MEMA) leads the firm's advisory practice and is also Head of Operations for RECfA (Renewable Energy Coalition For Academia), a DfE and DESNZ-supported programme enabling schools, colleges, and universities to deploy onsite clean energy.