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Last updated October 2026.
What drives the return
Payback depends mostly on how much of the generation you use on site, because each self-consumed unit avoids your full unit rate while exported units earn far less. With high daytime use, illustrative figures land around five to seven years before tax. Low daytime demand or heavy export can stretch that well beyond eight.
The return on commercial solar comes almost entirely from one thing: the electricity you generate and use yourself instead of buying from the grid. Every kilowatt-hour consumed on site is worth your full delivered unit rate, typically 20 to 30 pence including network charges and levies. Every kilowatt-hour exported is worth whatever a supplier will pay for it, typically 4 to 15 pence. A system sized so that most of its output is used on site pays back far faster than a bigger one that exports half of what it makes.
- Self-consumption rate. The share of generation used on site. The single most important assumption in any proposal.
- Your unit rate. What the self-consumed electricity displaces, now and over 25 years.
- Export price. What you are paid for the rest, under a Smart Export Guarantee or a PPA.
- Capital cost and tax. Installed cost per kWp, and the capital allowances available in the year of purchase.
- Degradation and maintenance. Output falls roughly 0.5 percent a year; inverters need replacing once in the system’s life.
A worked example
Take a 100 kWp system on a warehouse roof in the Midlands, costing around £90,000 installed. In a typical year it generates about 85,000 kWh. The business runs weekdays with daytime refrigeration and lighting, so it uses 70 percent of that on site and exports the rest.
| Line | Assumption | Annual value |
|---|---|---|
| Self-consumed electricity | 59,500 kWh at 24p | £14,280 |
| Exported electricity | 25,500 kWh at 8p | £2,040 |
| Maintenance and insurance | Allowance | −£900 |
| Net annual benefit | £15,420 | |
| Simple payback | £90,000 ÷ £15,420 | About 5.8 years |
| After capital allowances | The AIA brings about £22,500 of tax relief (at 25% corporation tax) into year one, which helps cash flow, but the savings are taxable too | Close to the pre-tax figure |
Change the self-consumption rate to 40 percent, which is what a business closed at weekends with little daytime load might achieve, and the payback stretches past eight years. Change the unit rate assumption from 24p to 18p and it stretches again. Those two numbers decide the case, and they are the two an installer’s proposal is most likely to flatter.
Want a second opinion on a solar proposal?
Send us the installer’s proposal and your last twelve months of electricity data and we will check the assumptions and give you an independent view of the return. No obligation.
What to challenge in a proposal
Frequently asked questions
What is a typical payback period for commercial solar?
Often around five to seven years for a well-sized system where most generation is used on site, and longer on a business that uses most of its generation on site, depending on unit rate, self-consumption and tax treatment. Longer where export is high or daytime load is low.
What is self-consumption and why does it matter?
The share of solar generation used on site rather than exported. Self-consumed electricity is worth your full delivered rate; exported electricity is worth a fraction of it, so self-consumption drives the return.
Do capital allowances apply to commercial solar?
Yes. Solar is special rate plant, so full expensing doesn’t apply, but the Annual Investment Allowance (up to £1m a year) normally relieves the cost in the year of purchase, and companies can claim 50% on any spend above that. It mainly improves cash flow, so take tax advice for your circumstances. Take tax advice for your circumstances.
How long will a commercial solar system keep producing?
Panels are typically warranted for 25 years with output falling around 0.5 percent a year. Inverters usually need replacing once in that period.
Should we size the system to cover all our consumption?
Usually not. Sizing for high self-consumption, often 70 percent or more of generation used on site, gives a better return than sizing to match annual consumption and exporting the surplus.
Can Clearsight Energy review an installer’s proposal?
Yes. We check the assumptions against your consumption data and contract rates and check the assumptions against your consumption data and contract rates, and compare it with quotes from our vetted installer partners.
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Call us on 020 8036 5715, or email us, and we will take it from there.