Whether to purchase and benefit from Accelerated Capital Allowances (ACA) or choose a Power Purchase Agreement (PPA) when installing commercial solar panels depends on your company’s financial position, strategic goals, and appetite for upfront investment.

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Here is a simple break-down of each benefit to a UK business:

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🟩 Option 1: Accelerated Capital Allowances (ACA)

This refers to the Full Expensing or First-Year Allowances available in the UK.

 

✅ Benefits:

1. Immediate tax relief:

   • As of 2023, companies can deduct 100% of the cost of qualifying plant and machinery (including solar panels) in the first year via full expensing.

   • This reduces your Corporation Tax liability significantly in year one.

2. Asset ownership:

   • You own the solar system, which adds to your fixed assets.

   • You benefit directly from reduced energy bills, potential revenue from selling excess power, and Renewable Energy Guarantees of Origin (REGOs).

3. Carbon reduction + brand value:

   • Helps achieve ESG goals and enhance corporate reputation.

   • Eligible for certain green incentives or grants in some regions.

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⚠️ Considerations:

• Requires upfront capital (or financing).

• You’re responsible for maintenance and performance risk (outside any warranty and/or service agreement with the installer).

• If the business isn't making enough profit to use the full allowance, the benefit is delayed.

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🟨 Option 2: Power Purchase Agreement (PPA)

A PPA involves a third-party provider installing, owning, and maintaining the solar system. You buy the energy at an agreed fixed (usually lower) rate for a long term (e.g. 15–25 years).​​

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✅ Benefits:

1. No upfront cost:

   • Installation and maintenance costs are covered by the provider.

   • Great for cash preservation and predictable energy pricing.

2. Energy savings without CapEx:

   • You get cheaper green electricity compared to grid rates.

   • Fixed rates protect you from market volatility.

3. No responsibility for maintenance:

   • The provider handles all servicing and performance risks.

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⚠️ Considerations:

• You don’t own the system, so no capital allowances.

• Long-term contract obligations (can be restrictive if you move premises).

• Potentially smaller savings over time vs owning outright.

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Details as of April 2023 subject to change, update and action by Government. Always consult your financial advisor for the latest financial rules and the best way for your organisation to install a solar array.