Commercial solar panels are a strategic investment that can cushion big and small UK businesses from rising energy costs while helping meet sustainability commitments.
The government’s new Solar Taskforce highlights the untapped potential of installing solar panels on commercial buildings, warehouses, schools, and car parks, describing it as one of the best investments available.
Commercial solar panels can reduce your business’s energy bills, make you money by exporting excess power to the grid, and ensure you stay competitive in an evolving market where consumers actively choose environmentally responsible businesses.
Best of all, you’ll benefit from various incentives that make it easier and more affordable for businesses to invest in commercial solar panels.
Quick Takeaways:
- Commercial solar panels can cut your business’s energy costs and protect against future price hikes.
- They’re suitable for retail stores and supermarkets, warehouses, farms, offices and corporate buildings.
- Pricing can range from around £730 to £1000 per kilowatt for a typical commercial solar panel.
- You can purchase commercial solar panels through self-financing, Power Purchase Agreements (PPAs), or regional government grants.
What are Commercial Solar Panels?
Commercial solar panels are photovoltaic (PV) systems installed on business premises to generate electricity from sunlight.
Unlike residential solar panels, which are usually smaller and designed for homes, commercial systems are larger, more powerful and tailored to meet the higher energy demands of offices, warehouses, factories, farms, and other commercial buildings.
Commercial solar panels usually measure around 195cm x 99cm and have power outputs from 400W to 600W per panel.
Commercial-scale solar projects can range from small systems of up to 50kW, which would require around 125 solar panels, to large projects on industrial premises of up to 5MW or even larger.
The table below shows how residential and commercial solar panels differ:
| Feature | Commercial Solar Panels | Residential Solar Panels |
|---|---|---|
| Size | Larger | Smaller |
| Power Output | Higher (400-600W per panel) | Lower (250-400W per panel) |
| Installation | Rooftop or ground-mounted | Mostly rooftop |
| Usage | Business operations, large-scale power generation | Household electricity |
| Cost | Higher due to scale | Lower upfront cost |
Where Are Commercial Solar Panels Used?
Commercial solar panels are widely used across various industries, including:
- Retail and Supermarkets – Reducing electricity costs for large chains.
- Factories and Warehouses – Powering machinery and lighting in high-consumption environments.
- Farms and Agriculture – Operating irrigation systems, refrigeration, and processing equipment.
- Offices and Corporate Buildings – Cutting down on energy bills while supporting sustainability goals.
Commercial solar systems can be installed on flat or sloping roofs, even if they’re not south-facing.
Panels can be installed with ballast, on a mounting rack, or integrated as part of the roof by replacing tiles. If your business has free adjacent land, you can install a ground-mounted system.
Installing solar panels above a car park is also an option, although it is more expensive. There are now many ‘carports’ around the UK.
For example, EvoEnergy designed and constructed an innovative ‘Hyperhub’ carport alongside Monks Cross Park and Ride in York. It consists of 4 Rapid (50kW) and 4 Ultra Rapid (150kW) charging points, covered by a solar canopy (100kWp).
The project aims to reduce carbon emissions, increase air quality, and pave the way for infrastructure supporting the next generation of electric vehicles while offering better-than-market pricing for EV charging.
The table below shows examples of the size of typical commercial solar panel projects based on 400W panels:
| Size (kW/MW, panels) | Example site | Area needed for panels |
|---|---|---|
| 50kW / 125 panels | Business or retail unit | 180m2 |
| 100kW / 250 panels | School, council building, swimming pool | 360m2 |
| 500kW / 1250 panels | Hospital, cinema, leisure centre | 1,800m2 |
| 1MW / 2,500 panels | Warehouse, university, manufacturing facility | 3,600m2 |
| 5MW / 12,500 panels | Multiple buildings, a large distribution centre, a port | 18,000m2 |
What Are the Benefits of Commercial Solar Panels for UK Businesses?
Cost Savings
Electricity bills are one of the most significant overheads for businesses, especially if you run a large commercial premises.
Research commissioned by Ofgem and DENZ about non-domestic consumers shows that nearly half, or 43%, of businesses, spend up to 10% of their business costs on electricity. 14% spend between 10% and 19%, 7% spend between 20% and 29%, and 8% spend 30% or more on electricity.
By generating free power on-site, you can cut your business’s energy costs and protect against future price hikes.
For example, suppose the cost of producing electricity from a solar system is 10p/kWh, and the cost of buying electricity from the grid is 20p/kWh. In that case, your business can save 50% on the proportion of electricity it uses.
Energy Independence and Stability
Relying on traditional energy suppliers means exposure to rising prices and supply risks. As the UK energy crisis showed, market rates for electricity and gas can change rapidly.
Solar panels give businesses more control over their power and reduce exposure to such volatilities, reducing dependence on the grid and ensuring more predictable energy costs.
Environmental and CSR Benefits
Customers and stakeholders expect businesses to act sustainably. Solar power is zero carbon at the point of generation and can significantly reduce carbon emissions.
This improves the environmental performance of any building on which solar panels are installed and helps companies meet their net-zero goals while enhancing their reputation.
Increased Revenue
Your businesses can also qualify for Smart Export Guarantee (SEG) payments. SEG is a government-backed scheme that allows businesses to earn money by exporting unused energy from commercial solar panels to the National Grid.
Through the SEG, energy suppliers pay businesses for each unit of electricity they export, providing a valuable revenue stream for your company.
Long-Term Investment
Solar panels last 25–30 years and require minimal maintenance. Once the initial cost is covered, businesses benefit from free electricity for decades, making it a smart long-term investment.
Solar panel costs have declined in the last few decades, and the payback period for a commercial solar project can be less than five years.
Your business will benefit from free electricity for years to come, with any increase in other energy prices making solar an even more compelling proposition.
How Much Do Commercial Solar Panels Cost in the UK?
Pricing can range from around £730 to £1000 per kilowatt for a typical commercial solar panel. This means it can cost from around £73,000 to £100,000 to install a 100kW system with 250 panels.
Solar panel costs in the UK have decreased by 60% since 2010, making it one of the most affordable improvements you can make to your business.
According to the International Energy Agency, solar PV is now the cheapest source of electricity in history for projects with low-cost financing, making it more cost-effective than coal- and gas-fired power.
On average, most micro to medium-sized businesses consume around 15,000 to 55,000 kWh of electricity annually, meaning they can expect to spend around £16,000 to £73,000 for commercial panels.
The final cost will depend on factors like your business needs, the system size, the complexity of the project, and your location in the UK. You must also consider other costs:
- Pre-development costs like feasibility assessments, surveys, and planning. Businesses considering installing solar should ensure they discuss the project with relevant partners, such as the local distribution network operator (DNO) and their insurers.
- Legal and professional costs.
- Equipment costs like inverters, cables, and mounting racks.
- Construction and engineering costs like scaffolding erection or use of lifting equipment.
- Costs related to connecting the solar generation system to the electricity network and any processing fees required.
What Are the Best Ways to Finance Commercial Solar Panels?
Self Financing
If your business has enough capital, purchasing solar panels outright can provide the highest return on investment (ROI). It involves paying for the equipment and installation and receiving the full financial benefit of the on-site power.
For example, if the solar panels generate a gross saving of £100,000 a year on the business’s energy bills, you’ll receive the full saving of £100,000.
The business maintains complete control and ownership of the solar asset, and you don’t have to worry about interest or finance costs from other arrangements.
Power Purchase Agreements
You can also secure funding from external investors under a Power Purchase Agreement (PPA). These typically involve a power producer and a customer, where the producer arranges the design and installs the solar system on the customer’s property with little to zero capital outlay.
The business receives a significantly reduced electricity tariff while under contract, offsetting the costs from its energy bills, while the developer gets income from the sale of the generated electricity.
PPAs are long-term contracts that can last for 10 to 25 years, and each contract is adapted to the requirements of both parties. On-site PPAs with solar panels can be large-scale rooftop installations on a commercial site or ground-mounted installations on adjacent land.
Your business must meet various requirements to qualify:
- It must have a sufficiently large, time-matched and consistent electricity demand for commercial solar panels to be suitable. For example, a manufacturing plant with high demand during daylight hours.
- It must have a suitable physical location to host the panels on-site for roof-mounted or near the site for ground-mounted systems. You must ensure at least 1 square metre of roof space per kW of solar PV capacity.
- Planning permission for any on-site electricity generation development of 1 MW or more, whether rooftop or ground-mounted.
- An available and affordable connection to the local distribution grid.
PPAs can offer significant benefits for your business, including immediate reduction in energy costs, zero capital investments and limited risk since you’re not paying upfront and are not responsible for maintaining the panels.
Regional Government Grants
Businesses can also access region-specific grants from the government to offset the cost of commercial solar panels. These include:
- The Somerset Community Building Energy Efficiency Grant
The Somerset Community Foundation is offering up to £20,000 in grant funding to help community spaces become more energy efficient. Organisations that run community buildings for the benefit of the local people, including community interest companies, can apply.
If your business trades with a social purpose and is registered in Somaset, you can apply for funding to install commercial solar panels. The grant application deadline is March 2025, and the work must be completed within 12 months after the grant award date.
What Incentives Are Available for Commercial Solar Panels?
The government offers various incentives to encourage businesses to invest in commercial solar panels.
The Annual Investment Allowance
The Annual Investment Allowance (AIA) allows businesses to deduct the full cost of qualifying equipment, including solar panels, from their profits before tax. You can get substantial tax relief through the AIA, reducing the upfront financial commitment of installing commercial solar panels.
If you’re a sole trader or limited company operating since January 2019, you can claim up to £1 million to offset your initial investment costs and shorten the payback period.
Exemption from Climate Change Levy (CCL)
The Climate Change Levy (CCL) is a tax on the energy businesses consume to encourage energy efficiency. Businesses that generate their electricity using solar panels or other low-carbon sources are generally exempt from the Climate Change Levy (CCL) as they are considered small generators.
The exemption aims to encourage the adoption of renewable energy and reduce greenhouse gas emissions. Investing in solar panels and reducing reliance on traditional energy sources allows your business to lower its CCL charges, further reducing operational expenses.
Final Thoughts
Embracing commercial solar panels presents an opportunity to reduce your business’s operational costs, enhance sustainability, and gain energy independence.
Thanks to supportive policies, incentives, and technological advancements that make panels cheaper than ever, now is an opportune time for companies to explore solar energy solutions.
Frequently Asked Questions on Commercial Solar Panels
1. Can I Install Commercial Solar Panels if I Don’t Own the Building?
Yes. You can enter a roof lease agreement with the landlord to use the roof for a solar installation. The same framework can be used for land adjacent to the property you want to install the system.
2. Will Commercial Solar Panels Increase the Value of My Premises?
Yes. An on-site solar system will be a major draw for prospective building owners or tenants. They’ll occupy a higher-quality asset than they otherwise would, and it will reduce their energy costs and carbon emissions compared with non-solar premises.
3. Is There A Risk in Installing Commercial Solar Panels?
The major risk for a commercial solar project is not employing a high-quality installation company to carry out the work and going for the cheapest quote available.
Ensure you do your due diligence and employ a solar company with a proven track record in installations of the scale under consideration.
Sources and References
- https://www.gov.uk/government/news/untapped-potential-of-commercial-buildings-could-revolutionise-uk-solar-power
- https://solarenergyuk.org/wp-content/uploads/2024/07/Case-Study-Hyperhubs.pdf
- https://www.ofgem.gov.uk/sites/default/files/2024-03/Businesses%27 experiences of the energy market 2023 – Main Research Report.pdf
- https://www.iea.org/reports/world-energy-outlook-2020/outlook-for-electricity
- https://www.somersetcf.org.uk/grants-funding/details/community-building-energy-efficiency-grants/
- https://www.gov.uk/capital-allowances/annual-investment-allowance
- https://www.gov.uk/guidance/exemptions-from-climate-change-levy