Financing a solar installation in the UK has never been easier — but easier does not always mean cheaper. Understanding the true cost of each payment option over a 10–25 year horizon is essential before you commit.
Option 1: Cash Purchase
Paying outright is the simplest and, mathematically, usually the most profitable option.
Advantages:
- No interest costs
- Full SEG payments retained from day one
- No ongoing monthly commitment
- Maximises return on investment
- Simplest process — no credit application, no ongoing relationship with a lender
Disadvantages:
- Requires capital available upfront
- Opportunity cost — that capital could be deployed elsewhere
For a household with £7,000–10,000 in accessible savings earning 4–5% in a cash ISA, the comparison is actually nuanced. A well-specified solar system might return 8–12% per year through combined bill savings and SEG payments, making it a strong alternative to holding cash in savings. But it depends heavily on your tariff, usage, and system performance.
→ Curious what solar would actually put back in your pocket? Run a free 60-second estimate.
Option 2: 0% Finance Through the Installer
Many UK solar installers offer 0% interest finance, typically over 12–36 months. These schemes are funded by a third-party lender and the cost is subsidised by the installer's margin — meaning the headline quote price may be slightly higher than the cash price for the same system.
Advantages:
- No interest if paid within the promotional term
- Preserves capital for other uses
- Bill savings often begin before the loan is paid off
Disadvantages:
- Some 0% offers revert to high rates (15–30% APR) after the promotional period
- The installer may inflate the installation price to offset the finance subsidy
- Check the Financial Conduct Authority (FCA) authorisation of the lender
- May involve a larger deposit (10–20% upfront)
Always ask for the cash price alongside the financed price and compare both.
Option 3: Green Loans
A number of UK banks and building societies have introduced specific green or sustainable home improvement loan products. These are personal or secured loans specifically for energy-efficiency improvements, often at preferential rates.
Notable UK green loan products (2026):
- Barclays Green Home Improvement Loan
- Nationwide Green Additional Borrowing
- Ecology Building Society mortgages
- Octopus Money energy efficiency products
Advantages:
- Interest rates often lower than standard personal loans (currently 5–8% APR for green loans vs. 7–14% for standard personal loans)
- Longer repayment terms (up to 10 years) reduce monthly payments
- Regulated by the FCA
- Some lenders include professional energy assessment as part of the product
Disadvantages:
→ Before you read on — see what payback looks like for your roof in under a minute.
- Interest is payable — total cost of the system is higher than cash
- Monthly repayments must be factored into budget
- A credit check applies
Cost Comparison Over 10 Years: £8,000 System
| Payment Method | Total Paid | Effective Interest | Monthly Cash Flow Impact | Notes |
|---|---|---|---|---|
| Cash outright | £8,000 | None | £0 (after initial outlay) | Full savings from day one |
| 0% finance (24 months) | £8,000–8,400 | 0–5% (premium) | £333–350/month for 24 months | Watch for post-term rate |
| Green loan (5%, 10 years) | £10,182 | £2,182 total | £85/month | Affordable; interest cost modest |
| Standard personal loan (12%, 7 years) | £11,872 | £3,872 total | £141/month | Not recommended for solar |
The Role of SEG in Financing Decisions
Whichever payment route you choose, register for the Smart Export Guarantee immediately after installation. SEG payments from providers including Octopus, EDF, and others begin from the date of registration. Over a typical year, a 4 kWp system in England might export 1,000–1,500 kWh, worth £100–225 annually at current SEG rates. This income reduces your effective finance cost regardless of payment method.
Practical Advice Before Committing
- Get quotes for cash and finance separately — a significant gap signals price inflation on the financed option
- Check the full APR, not just the promotional rate
- Read the credit agreement for what happens if you want to pay off a green loan early (some charge redemption fees)
- If using a solar PPA instead of a loan, see our dedicated guide to understand the long-term trade-offs
