The upfront costs and payback periods of commercial solar panels have significantly dropped over the past decade, making them a more attractive and affordable investment for businesses looking to reduce their electricity costs and carbon footprint.
According to a UK Parliament research briefing, current energy bills are 43% above the winter 2021/22 levels.
With no price cap on non-domestic energy, increases in business energy bills could be even larger, affecting the economic viability of many businesses and ultimately leading to higher consumer prices.
With the unprecedented electricity price increases only partly reversed and little prospect of returning to pre-energy crisis prices, solar power has moved from a green add-on to a boardroom discussion about cash flow.
Unlike fluctuating wholesale rates, a rooftop solar array generates predictable output for 20–25 years.
Suppose you’re considering investing in commercial solar panels. In that case, it’s vital to consider the hard numbers, including capital outlay, generation potential, electricity offset, and the time it would take to recoup your investment.
Key Takeaways:
- Common commercial solar panel systems for SMEs are 20 kWp, 50 kWp, and 100 kWp.
- Costs can range between £1,250 per kW for small systems (20–50 kWp) and £850–£1,300 per kW for larger rooftops (100 kWp+).
- Payback periods depend on factors like usage profile, tariff rates, export prices, and smart energy controls.
- Simple payback periods average 6–10 years for well-sized systems.
- Financing options include outright purchase, asset finance, and PPAs.
- Maintenance costs are low but should be budgeted for.
- Batteries only improve payback in cases with high evening demand or peak tariff avoidance.
Why Businesses Should Consider Commercial Solar Panels
Electricity is now one of the largest operating expenses for many firms, and cutting costs is no longer optional.
Data from the UK Government’s Quarterly Energy Prices (Q1 2025) shows that non-domestic consumers are paying around 18.5p per kWh before taxes and levies.
Add the Climate Change Levy, with a rate of £0.00775 per kilowatt hour (kWh), and the prices rise to around 19.3p per kWh.
This adds up quickly and impacts most businesses. Statistics from a small business survey conducted by the Department for Business and Trade show that the most frequently mentioned major obstacle to success by small, medium-sized, and micro businesses was the level of energy prices.
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Installing solar allows your business to generate its own electricity on-site, reducing reliance on volatile energy markets.
Every unit of power you use directly offsets grid import costs, and you don’t have to worry about fluctuating prices.
Best of all, you can sell the excess electricity your panels generate through the Smart Export Guarantee (SEG). Solar also aligns with net-zero targets, strengthens sustainability credentials, and future-proofs energy budgets.
The result is a rare combination of environmental responsibility and financial sense that includes lower bills, lower carbon emissions, and predictable returns.
Understanding Capex Ranges (kW vs kWp)
Capex ranges refer to the capital expenditure costs you can expect when installing a commercial solar system.
Two terms are key when considering solar: kW and kWp. kW refers to the inverter or system’s rated power, while kWp (kilowatt-peak) is the installed solar array’s maximum capacity. Business cases are based on kWp because it drives energy yield.
Government data on the cost per kW of solar panel installations shows that the median cost for a 10 to 50 kW system in 2024/25 is around £1,256 per kW.
Thanks to economies of scale, the price for larger arrays of 100 kWp and above is usually lower, with prices typically falling in the range of £850–£1,300 per kW.
Factors like the size of your system (measured in kWp), site conditions (roof strength, shading, access), and installer pricing will impact the final price.
Understanding capex per kWp allows businesses to compare quotes fairly and judge whether returns align with expectations, rather than just counting panels or headline prices.
Typical System Sizes for SME Commercial Solar Panels
Most small and medium-sized enterprises (SMEs) don’t need massive solar farms.
A rooftop array in the 20–100 kWp range is usually the sweet spot and can be enough to meet typical power needs.
To put this in context, UK solar yields average around 900 kWh per kWp per year for a well-sited array. That means:
- A 20 kWp system can generate around 18,000 kWh (20 x 900) annually, ideal for small offices or workshops.
- A 50 kWp system can generate around 45,000 kWh annually, suitable for a larger retail site or warehouse.
- A 100 kWp system can generate around 90,000 kWh annually, a good match for medium industrial or logistics premises.
Choosing the right system size depends mainly on how much electricity your business uses during daylight hours. Since the rates for exporting electricity are usually lower than those of purchasing or importing from the grid, you’ll get the best value through self-consumption.
You should map your business’s daily load against daylight hours and size the system so that you consume most of the generated power on-site.
Payback Drivers for Commercial Solar Panels
Payback is the time it takes for your solar investment to cover its upfront cost through savings and export income.
For most UK SMEs, it depends on several key factors:
Self-Consumption
The amount of solar power you use on-site is the single most important driver. Every kilowatt-hour (kWh) of solar you use directly offsets grid electricity at your tariff rate.
If your business runs equipment, refrigeration, lighting, or HVAC during the day, you’ll likely use 60–85% of your solar generation on-site.
The more you consume directly, the faster the payback. Businesses with low daytime demand may only self-consume 35–40%, which lengthens the return period.
Your Import Tariff (Avoided Cost of Electricity)
Your savings depend on what you currently pay for electricity. Although non-domestic electricity unit rates are usually lower than domestic rates, the overall bill is usually higher due to additional costs from the Climate Change Levy and higher VAT rates. Each solar kWh displaces more cost, giving you a quicker payback.
Export Income (SEG Tariffs or PPAs)
Surplus power exported to the grid earns money under the Smart Export Guarantee (SEG). Larger businesses with more leverage can sometimes negotiate a Power Purchase Agreement (PPA) at a better rate.
While helpful, export income is generally less valuable than self-consumption, because the price is lower than your import tariff.
Installation Cost (Capex per kWp)
The upfront cost per kWp directly impacts payback. The lower your installed cost per unit of capacity, the faster you recover investment.
Bigger systems often enjoy economies of scale, which is why a 100 kWp rooftop system may pay back faster than a 20 kWp system.
Site Performance (Yield and Shading)
A well-oriented, unshaded roof can achieve around 900 to 1,000 kWh/kWp/year. Poor roof angle or shading reduces yield, slowing payback.
Using an MCS-certified installer ensures you get a Photovoltaic Geographic Information System (PVGIS)- based performance estimate for accurate analysis and optimisation.
Smart Controls and Load Shifting
Businesses that actively manage when they use power can shorten payback.
Timers on equipment, charging EVs during solar hours, or pre-cooling storage spaces all help push self-consumption higher.
Even a 10–15% shift in usage can save you thousands of pounds over the system’s life.
Example Payback Scenarios for Commercial Solar Panels
Here are sample numbers using conservative assumptions such as a yield of 900 kWh/kWp/yr, an import avoided cost of 19.3p/kWh, an export rate of 12p/kWh, and 60% self-consumption.
| System (kWp) | Capex Estimate | Generation (kWh/yr) | Annual Savings & Export Income | Simple Payback |
| 20 | £25,000 | 18,000 | £2,950 | 8.5 years |
| 50 | £63,000 | 45,000 | £7,370 | 8.5 years |
| 100 | £100,000 | 90,000 | £14,740 | 6.8 years |
If self-consumption rises to 85%, payback drops to ~7 years. If it falls to 35%, payback lengthens to 9–10 years.
The principle is clear: the more solar power you use directly, the faster you break even.
For many businesses, this is achievable with careful load management and planning.
Financing Options for Commercial Solar Panels
1. Cash Purchase
Paying up front offers the fastest return on investment. The system is yours from day one, and all bill savings and export income flow directly to your business.
Pair this with tax relief, such as the Annual Investment Allowance (AIA), which usually allows most SMEs to deduct the full system cost from taxable profits in the first year.
2. Asset Finance or Leasing
If you want to spread the cost, asset finance lets you repay over five to ten years.
Leasing or hire-purchase agreements reduce upfront spending and align repayments with the savings you make from lower bills.
3. On-Site Power Purchase Agreements (PPAs)
Under a PPA, a third party installs and owns the solar system on your roof.
You buy the electricity it generates at a price lower than your current grid tariff, removing the need for capital investment.
Maintenance, Risks, and Operating Costs for Commercial Solar Panels
1. Routine Maintenance
Solar panels need very little upkeep. Most systems run for decades with only occasional inspections, cleaning, and performance monitoring.
2. Inverter Replacement
You’ll need to replace your inverter once every 12–15 years. Factoring this into lifetime cost planning avoids surprises.
3. Roof Suitability and Health and Safety
Before installation, the roof’s structural integrity and condition must be checked. Weight, wind load, and safe access for installers and future maintenance all need approval.
4. Grid Connection Risks
Approval from the local Distribution Network Operator (DNO) is required. For larger systems, you may need to reinforce the local grid, adding time and cost. Early engagement reduces delays.
Batteries: When They Make Sense with Commercial Solar Panels
Adding a battery to a commercial solar system can boost self-consumption.
According to the Energy Saving Trust, adding a battery to a solar system and incorporating a smart time-of-use tariff can boost self-consumption and lower reliance on more expensive electricity during peak periods. It can also help to shorten the payback period.
However, batteries may not always be the best use of capital. Batteries only store surplus solar for later use and are most valuable when your business has evening or early morning demand, such as cleaning crews, refrigeration, or EV charging.
If your daytime load already consumes most solar production, a battery may add little value.
The best strategy is to install solar first, measure performance, then assess whether storage will genuinely improve your returns.
Final Thoughts
With UK businesses facing high and unpredictable energy costs, commercial solar panels are a practical investment and sustainability measure.
Most systems deliver well over a decade of low-cost electricity after the initial return period.
If your business has a steady daytime electricity demand, solar panels can help replace grid imports and save you money.
FAQs on Commercial Solar Panels Costs and Payback Periods
How Long is the Warranty on Commercial Solar Panels?
Most commercial-grade solar panels come with a 25–30 year performance warranty guaranteeing at least 80% of their rated output by the end of the period.
How Long Until Commercial Solar Panels Pay for Themselves?
Most UK commercial systems pay back in 6–10 years, depending on system size, self-consumption, and your electricity tariff. Larger systems with high daytime usage often recover costs faster.
What Happens to Excess Electricity my Business Doesn’t Use?
Any surplus generation is exported to the grid. Under the Smart Export Guarantee (SEG), your business will be paid for each unit exported.
Sources and References:
- UK Parliament – Domestic energy prices
- Department of Energy Security and Net Zero (DESNZ) – Quarterly Energy Prices June 2025
- GOV.UK – Climate Change Levy rates
- Department for Business and Trade – Longitudinal Small Business Survey: SME Employers (businesses with 1 to 249 employees) – UK, 2023
- GOV.UK – Solar photovoltaic (PV) cost data
- GOV.UK – Claim capital allowances
- Energy Saving Trust – Energy storage options explained