Solar panel financing: How to finance your solar panel installation

• The average cost of solar panels is £8,486
• If you don’t qualify for a grant, finance options are available
• Octopus Energy’s buy now, pay later scheme is the latest finance option
• Check with a financial adviser before making a decision

Solar panels will not only reduce your carbon footprint by they can also help reduce your annual energy bills as they rely more on renewable energy than fossil fuels. 

However, the reality is the upfront cost can be a big hurdle for some – especially during the cost-of-living crisis. The average cost of solar panels in August 2024, according to the Microgeneration Certification Scheme (MCS), £8,486, which is quite the investment. 

There are solar panel grants available, such as the ECO4 and ECOFlex schemes, which can help relieve some of the costs involved – but what do you do if you aren’t eligible? 

Instead of giving up, it might be worth looking into the different solar panel finance options, which we’ll go into more in this guide. We’ll explore where you can get solar panel financing, government support, as well as how to apply and what to look out for to ensure you’re getting a good deal.

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What solar panel financing options are there?

Before researching solar panel finance options, it’s worth looking into whether you qualify for any government grants. 

Below is an overview of what’s available, but make sure to check out our guide: How to get government grants and funding for solar panels, as well.  

• ECO4 – This scheme requires medium and large gas and electricity suppliers – including British Gas, EDF Energy, Scottish Power and SSE – to help households with energy-efficiency measures, including free solar panels or partial payment if you are eligible.  
• ECO Flex – If you aren’t eligible for the ECO4 scheme, you might be able to utilise the ECO Flex scheme. The scheme enables local authorities to widen the eligibility criteria and tailor energy efficiency schemes to their area. 
• The Home Upgrade Grant – This grant offers homeowners and landlords up to £10,000 in funding to energy-inefficient households located in 45 selected authorities across England. The scheme will run until March 2025. 
• The Smart Export Guarantee – The scheme enables homeowners to receive payments from energy suppliers from any unused solar-generated electricity they export back to the grid. 
• Solar Together – Solar-Together is a group-buying initiative that allows communities to buy solar panels for their homes at a competitive price.
• 0% VAT on solar panels – Homeowners pay 0% VAT on solar panels until April 2027, compared to 5-20% previously. 

If you aren’t eligible for these, consider looking into a loan or finance. But remember, this isn’t an option for everyone. Consider your financing beforehand or speak to a finance expert before applying. 

The available finance options are:

• Octopus Energy ‘buy now, pay later’ scheme – Earlier this year, Octopus Energy partnered with Zopa Bank to offer a buy now, pay later scheme for solar panels. Zopa Bank will finance the purchase and installation of solar panels for Octopus Energy’s nearly 7 million customers, with the cost spread over up to 84 instalments over seven years at a representative 9.9% APR. 
• E.ON solar panel finance – E.ON offers a finance option, too. You’re able to spread the cost of solar panels over three years, with no upfront payments and a 0% APR representative option. They also offer a deposit option, where you pay a deposit and settle the payment within seven days of installation and is subject to a credit check.
• ScottishPower – ScottishPower announced the launch of consumer finance options last year for the first time. Homeowners will be able to spread the cost of solar and battery storage installations over three-to-five-years, starting at £132.45 a month with no deposit or VAT.
• SolarStyle – The first finance option SolarStyle offers is you’re able to spread the cost of your solar system with up to one year’s 0% APR interest-free credit. Its second option allows you to pay a deposit and within seven days, settle the remaining balance. 
• Sunsave – Sunsave is delivered as a 20-year subscription, which includes the design, supply, financing and installation tailored to your home, plus ongoing monitoring, maintenance and insurance through the Sunsave guarantee for the length of your subscription. It offers long-term financing that spreads the cost over a solar panel system over 20 years, meaning you’ll make smaller monthly payments. 

Affordability will differ from household-to-household, but financing solar panels can be a good way of getting the savings that solar panels offer, while spreading the cost. 

Can I still get solar panels if I don’t qualify for a grant?

The eligibility requirements for grants are quite strict and are geared more towards lower-income households.

Some households who don’t meet the criteria for a grant might struggle with the cost, but they can still benefit from solar panels. 

In this case, options include:

• Subscription – Some companies, like Sunsave, offer a subscription service where you’ll pay a small monthly fee for 20 years, which will include everything you need to finance and maintain your solar panels. Your subscription will end after 20 years, but you’ll keep your solar panels. 
• Installation company financing – More and more installers (national largely) will offer a monthly payment option to help spread the cost of solar panels. Pay attention to the interest rates and carry out an affordability check before committing. 
• Adding to mortgage – According to Otovo UK, many mortgage providers will consider a solar panel installation accretive to the value of your home, like other energy and cost-saving home improvement investments like improved insulation. It is worthwhile asking your mortgage provider to extend the borrowed amount to finance your solar panel installation.  
• Solar loans – Otovo UK also says it’s possible to get a personal loan to finance solar panels. “This type of financial produce can be obtained through a bank or other financial institution and the terms are flexible depending on your credit worthiness and the duration of loan required. One should consider the interest rates which can vary according to the duration of the loan,” its website states.
• Solar Power Purchasing Agreements – This is a contractual agreement between energy suppliers and buyers, making it feasible to invest in solar panels. With a solar PPA, the producer or business arranges the design of it before gaining the necessary permissions and managing the installation of a solar system on your property at little or no cost.  

How do I apply for financing?

It’s recommended you meet with a financial advisor to determine your affordability, but below is an overview of how you can begin to apply for financing:

• Evaluate your financial situation – Review your income and expenses, from mortgage or rental payments to your weekly shop and anything else you have on finance. Also, look at your credit score, as this will impact your options. 
• Research finance options – It’s not a one size fits all and not every finance option will be suitable. Research your options and make a decision based on your financial situation.
• Have the right documents – You’ll need documents exploring your financial situation, usually bank statements, as well as property ownership and your plans on how solar panels will benefit you. 
• Apply – Once you’ve made your decision on which finance option suits you, head to their website and apply. Similarly, work with a finance or mortgage advisor if you plan to get a loan or extend your mortgage. 

How do I know I’m getting a good deal?

This is where working with a professional is a good idea because they will help you get a good deal based on your individual circumstances, but there are things that highlight a better deal than others: 

• Zero deposit – This can be a good deal for initially installing solar panels, as it negates the initial cost, however, check the monthly payments. If they increase significantly, it might not be as good a deal as you think.
• Interest rates – A high interest rate can add hundreds, if not thousands onto your final cost, which will also take longer for you to break even on your solar panels and the savings might be worth it. A low interest rate is better, but a professional will be able to help you find the best interest rate for you. Similarly, some sites offer a repayment calculator based on their interest that you can use to give you a better idea on your repayments. 
• Hidden costs – Check for any hidden costs. These can be anything from interest rates to admin fees and penalty charges. 

It’s important to add that these fees can add to the cost of solar panels, meaning the break even point extends and the savings will be reduced overall. 

Is the government supporting solar?

The Labour government wants to achieve net-zero by 2050 and make the UK a world leader in clean energy by 2030. 

During his first speech as Prime Minister, Sir Keir Starmer pledged that by 2030, the party plans to massively expand the UK’s renewable capability, including double onshore wind, tripling solar and quadrupling offshore wind capacity. 

For solar specifically, since being back in power, Labour approved three nationally significant solar farms in the East of England: Gate Burton Energy Park in Lincolnshire, Sunnica Energy Farm on the Suffolk and Cambridgeshire border and Mallard Pass Solar Project on either side of the East Coast Mainline in Lincolnshire and Rutland. 

Sunnica and Gate Burton will have an energy capacity of 500 megawatts (MW), while Mallard Pass will be 350MW, with Mallard Pass expected to provide clean energy to 92,000 homes over the next 60 years. 

Ed Miliband, secretary of state for energy security and net zero, said: “I want to unleash a UK solar rooftop revolution. 

“We will encourage builders and homeowners in whatever way we can deliver this win-win technology to millions of addresses in the UK, so people can provide their own electricity, cut their bills and at the same time, fight climate change.”

The Labour government has also pledged £1.5bn towards renewable energy projects. The budget will be split into Pots, with £185m for Pot 1, established technologies, such as solar power, an uplift of £65m. 

Summary

• Before researching solar panel finance options, it’s worth looking into whether you qualify for any government grants. 
• If you aren’t eligible for these, consider looking into a loan or finance. But remember, this isn’t an option for everyone. Consider your financing beforehand or speak to a finance expert before applying. 
• Affordability will differ per household, but financing solar panels can be a good way of getting the savings that solar panels offer, while spreading the cost. 
• The eligibility requirements for grants are quite strict and are geared more towards lower-income households. However, some higher-income households and those who don’t quite fall into the lower-income threshold that won’t qualify might still struggle to invest in solar panels. 
• The Labour government wants to achieve net-zero by 2050 and make the UK a world leader in clean energy by 2030.