Understanding the ROI on commercial solar
Commercial solar panels are one of the strongest capital investments a UK business can make. With current electricity prices, most systems pay for themselves within 4–7 years and continue generating free electricity for another 18–21 years.
Payback period calculation
The payback period depends on three factors: system cost, annual generation, and how much of that generation you use directly (self-consumption rate).
Example: A 100 kWp system costing £85,000 generates approximately 95,000 kWh per year. At 70% self-consumption and grid electricity at 30p/kWh, the business saves £19,950 per year in avoided grid costs. The remaining 30% is exported at 5p/kWh, earning £1,425. Total annual benefit: £21,375. Payback: 4.0 years.
After the AIA tax deduction (saving £21,250 at 25% corporation tax), the effective payback drops to under 3 years.
25-year financial summary
Solar panels are warrantied for 25 years with output guarantees typically at 85% of original capacity after 25 years. Using the example above:
- Total generation over 25 years: ~2.2 million kWh
- Total savings and export income: ~£500,000
- Net profit after system cost: ~£415,000
- Return on investment: ~490%
Factors that improve ROI
- Higher self-consumption: Using more of what you generate avoids buying from the grid at 30p+/kWh rather than exporting at 5p/kWh.
- Battery storage: Storing excess for use during peak tariff periods increases self-consumption to 80–95%.
- Rising grid prices: Every 1p/kWh increase in grid electricity adds approximately £950/year in savings for a 100 kWp system.
- EV charging: Using solar to charge company vehicles displaces fuel costs as well as electricity costs.
Making the business case
For board-level or finance team approval, request quotes through nu.energy. Each installer will provide a detailed financial model including projected generation, savings, payback and ROI specific to your building and consumption profile.