Are commercial solar panels worth it? UK payback and ROI, by the numbers

The return on commercial solar is unusually easy to model, because it comes almost entirely from avoiding a cost you already pay: grid electricity. The catch is that the figure for your roof depends on how much you use during daylight, your roof size and orientation, and your tariff — which is why a single quoted payback can be misleading. This guide gives the independent numbers, then the calculator below estimates yours in about a minute.

Is commercial solar worth it in the UK?

For most businesses with a suitable, unshaded roof and meaningful daytime electricity use, it is. The economics turn on self-consumption: every unit you generate and use yourself displaces a grid unit costing 25–30p per kWh, while an effective solar cost of 5–8p does the displacing. Grid prices sit roughly 75% above their pre-2021 level, and non-commodity charges — network, levies and the rest — now make up more than 60% of a typical final bill, so the cost being avoided is large and largely fixed.

Self-generation also avoids the Climate Change Levy of 0.775p per kWh on the units you no longer import. Across UK commercial installs the internal rate of return lands at 10–20% over the system's 25-year-plus life — a return most capital projects a business could otherwise fund struggle to match.

Payback by building type

Payback varies more by what a building does than by where it is. The driver is how much of the generation is used on site during daylight. Operations that run hardest in the middle of the day — warehousing, manufacturing, refrigeration — self-consume the most and pay back fastest.

The pattern is consistent: the closer a building's demand sits to the solar generation curve, the shorter the payback. We work through how this applies to specific premises in our guides for industrial units and offices.

Three real installations and their numbers

Sector averages are a guide; actual projects show how the figures land in practice. Three documented UK commercial installations:

Novatech's 404.3 kWp system in Portsmouth saves around £52,000 a year and paid back in four years, with a projected net benefit of roughly £1.1m over 20 years. Two 500 kW warehouse and logistics arrays — Shawton Energy and Barking Logistics — both paid back in about 4.2 years on annual savings of £85,000 and £45,000 respectively. The spread between those two, on near-identical system sizes, is exactly why a site-specific number matters more than a headline.

What is the 20% rule for solar panels?

The "20% rule" and the "120% rule" are US-origin rules of thumb that circulate widely online but do not govern UK commercial installs. They come from American solar sizing and electrical-code conventions, not British grid rules. In the UK, what actually governs a system is the export limit set under G98 and G99 and the resulting Distribution Network Operator (DNO) approval — not an American percentage rule. Treat the 20% and 120% figures as background, not as anything that constrains a UK project.

Where you do see a "20% rule", it usually means sizing the array to generate about 20% more than your expected consumption (roughly 120% of usage), to absorb everyday losses from wiring, inverter conversion, shading and panel soiling. It is a rough design cushion, not a regulation — and a good UK design sizes to your daytime load and grid position, not to a fixed percentage.

What is the 120 rule?

The "120 rule" (or 120% rule) sits in the same family: a US heuristic, usually cited in connection with electrical-panel and busbar limits, that has no direct bearing on how a UK commercial system is sized or connected. As above, the binding constraints here are the G98/G99 export limits and DNO approval, which determine how much you can export and how the connection is signed off. If an installer leans on a "20%" or "120%" rule to justify a UK design, ask instead what export limit and G99 position the system is being built to.

In its original US form, the 120% rule caps how much solar can be wired into an electrical panel: the main breaker plus the solar breaker must not exceed 120% of the panel busbar rating. UK installations follow the BS 7671 wiring regulations instead, so the American figure has no direct bearing on a British system.

What kills ROI

A handful of site factors do most of the damage to a business case. The common ones:

• Shading — even partial shading from neighbouring buildings, plant or rooflights cuts output disproportionately.
• Single-phase supply — most commercial systems need a three-phase supply; single-phase premises are usually capped at small systems, which limits the return.
• Low self-consumption — a business that uses little power during daylight exports more, and export earns far less than the 25–30p it avoids on import.
• Oversizing for export — building a system bigger than your daytime demand to sell the surplus rarely pays, because export rates are well below avoided import.

Self-consumption: why exporting is plan B

The whole case rests on using your own generation. A self-consumed unit is worth the 25–30p you would otherwise pay the grid; an exported unit earns the going Smart Export Guarantee (SEG) or commercial export rate, which is substantially lower. So the right design fits the system to your daytime load and treats export as a bonus on genuine surplus, not as the plan. This is also why a warehouse running all day beats an office that empties at 5pm on the same roof area.

Export rates vary widely by supplier and contract — typically from around 1p up to the mid-teens per kWh — but in almost all cases they sit well below the 25–30p you avoid by using the power on site. That gap is exactly why self-consumption, not export, drives the return.

Beyond payback: IRR vs other capex

Payback is the headline, but the fuller measure is internal rate of return, because it captures the long tail of near-free electricity after the system has paid for itself. At an IRR of 10–20% over 25 years, commercial solar competes with — and often beats — the other capital projects a business might fund, with the added feature that it hedges a cost (energy) that has proven volatile. The tax treatment improves it further: the £1m Annual Investment Allowance deducts 100% of the cost from year-one profits, worth about 25% of the project back at the 25% corporation tax rate. Our grants and tax relief guide works through that, and our financing guide covers the routes that need no upfront capital at all.

Updated June 2026 · By Taro Schenker, founder of Business Solar Check. We're independent — we don't install solar. Figures are indicative UK averages; your site survey confirms the numbers for your roof.