Solar Carport Direct Capital Purchase

Direct capital purchase is usually the financially strongest route for commercial solar carport projects, provided the buyer has the capital available and the year-one profit to absorb AIA tax relief. The buyer pays the full capex upfront, owns the asset, claims 100% Annual Investment Allowance in year one (recovering up to 25% of capex as corporation tax saving), and keeps every kWh of generation savings for 25-30 years.

How capital purchase works

The simplest route: the buyer contracts with an installer for the agreed turnkey capex (UK market range typically £950-£1,300/kWp) and pays in milestones. A common pattern is a 10% deposit, 40% at design sign-off, 40% at start of build and 10% at handover, but each contract differs. The buyer owns the carport from handover and claims 100% AIA against corporation tax at year-end. From year two there are no payments, only generation savings; the manufacturer's panel performance warranty typically runs for 25 years.

AIA tax benefit — the key driver

Annual Investment Allowance is the UK's 100% first-year capital allowance for plant and machinery. Permanent from April 2023 at £1m per company group per year. On £400k of commercial carport capex, AIA claims £400k against profit, saving £100k of corporation tax at the 25% main rate. Effective post-tax capex: £300k, not £400k.

Capital purchase economics — worked example

Illustrative figures, not a quote: a £400k commercial solar carport in 2026, 300 kWp, 200 bays. Pre-tax capex: £400,000. AIA tax saving year 1: £100,000 (at 25% main rate). Effective post-tax capex: £300,000. Annual saving (75% self-cons + 25% export at SEG): £170,000. Simple payback: 2.35 years. After-AIA payback: 1.76 years. Years 2-25: pure generation savings totalling ~£4.5m at 2% RPI escalation. 25-year NPV at 8% discount rate: £2.2m.

When capital purchase is the right route

Capital purchase tends to suit a buyer who: (1) has at least £200-£500k of working capital available; (2) has year-one taxable profit sufficient to absorb the full AIA claim; (3) wants the highest absolute 25-year return rather than the best cashflow profile; (4) has surplus capex that does not yield >10% elsewhere; (5) is comfortable owning a 25-year asset; (6) wants maximum independence from third-party PPA providers.

AIA stacking — when to spread capex

If AIA is constrained (£1m group cap, or limited year-one profit), consider phasing the carport: 50% capex in Year 1 (claim full AIA), 50% in Year 2 (claim again). For £2m+ projects, this can be material. Note: the timing trick only works if the second phase is genuinely a separate project — HMRC scrutiny applies to artificial splits.

Capital purchase vs alternatives

Compared to asset finance over 25 years, capital purchase delivers a better NPV on these assumptions, because it avoids the interest cost of finance. Compared to a PPA, it delivers ~60-70% better 25-year NPV (a PPA gives up generation upside). The trade-off is always cashflow risk: capital purchase puts £300-400k out the door in year 1.

What to ask before paying a deposit

Ask the installer for a fixed turnkey price with inclusions and exclusions listed, a payment schedule tied to milestones, the warranties in writing (panels, inverters, structure and workmanship), a capital allowance cost breakdown for your accountant, and a programme that shows its dependencies on planning and the DNO connection offer. Check the installer's accreditations and insurance, and who will act as principal contractor under CDM 2015.