Commercial solar ROI
Payback periods, savings potential and the factors that determine your return on investment.
By Keith Lin, KLY Energy. Last reviewed: April 2026.
Most UK commercial solar installations achieve payback within 4 to 7 years, with systems continuing to generate savings for 25 years or more. The exact return depends on your energy consumption, tariff, system size and orientation.
Returns
What returns can you expect?
Commercial solar in the UK consistently delivers strong financial returns. A well-designed system generates electricity at a levelised cost of 3 to 5p per kWh — compared to typical commercial grid rates of 20 to 35p per kWh. That gap is your saving.
For a typical 100 kWp rooftop installation purchased outright:
- ◆Annual generation: approximately 85,000 to 95,000 kWh
- ◆Annual savings: approximately 15,000 to 25,000 pounds (depending on tariff and self-consumption)
- ◆System cost: approximately 80,000 to 120,000 pounds
- ◆Payback period: 4 to 7 years
- ◆25-year total savings: 400,000 to 600,000 pounds
- ◆Return on investment: 15 to 25 per cent annual ROI after payback
These figures are based on capital purchase (CapEx). For PPA or lease funding, the financial profile is different — see our funding comparison guide for details.
Key factors
Key factors affecting ROI
Energy consumption pattern
The more solar electricity you consume on site (self-consumption), the greater your savings. Businesses operating during daylight hours — such as offices, warehouses and manufacturing facilities — achieve the highest self-consumption rates, typically 60 to 85 per cent. Electricity you export to the grid earns a much lower return (typically 3 to 6p per kWh) than electricity you use on site.
Electricity tariff
The higher your current grid electricity rate, the greater your savings from solar. Businesses paying 25p or more per kWh see faster payback than those on lower tariffs. Half-hourly metered sites on time-of-use tariffs can benefit further by offsetting the most expensive daytime units.
System size
Larger systems benefit from economies of scale — the cost per kWp decreases as system size increases. However, oversizing the system relative to your consumption leads to more export and lower returns. The ideal system size is matched to your daytime electricity demand.
Roof orientation and pitch
South-facing roofs at a pitch of 30 to 35 degrees produce the maximum annual yield. East-west orientations generate around 85 to 90 per cent of the output of a south-facing system but spread generation more evenly across the day, which can improve self-consumption. Flat roofs use mounting systems to achieve an optimal tilt.
Shading
Even partial shading from nearby buildings, trees or roof plant can significantly reduce output. Modern optimisers and microinverters mitigate the impact, but a shade-free roof will always perform best. A detailed shading analysis should be part of every feasibility study.
By sector
Typical payback by sector
Payback periods vary by sector due to differences in energy consumption patterns, tariffs and available roof space. The table below provides indicative ranges for common commercial sectors.
| Sector | Typical payback | Self-consumption | Notes |
|---|---|---|---|
| Manufacturing | 3-5 years | 70-85% | High daytime consumption, large roof areas |
| Logistics / warehousing | 4-6 years | 60-80% | Large flat roofs, good for solar |
| Retail | 4-6 years | 65-80% | Consistent daytime trading hours |
| Offices | 5-7 years | 55-75% | Good daytime match, smaller roof area per kWh demand |
| Hospitality | 5-7 years | 50-70% | Evening demand reduces self-consumption without storage |
| Public sector | 5-7 years | 60-75% | Schools benefit from summer generation during holidays via export |
Payback periods assume capital purchase (CapEx) and are indicative. Actual results depend on site-specific factors.
Market outlook
Energy price trends and future-proofing
UK commercial electricity prices have risen significantly over the past decade and remain volatile due to global gas market dynamics and carbon pricing. While prices may fluctuate year to year, the long-term trend points upward.
Solar provides a hedge against this volatility. Once installed, the cost of solar electricity is fixed — panels have no fuel cost and minimal operating expenses. This means:
- ◆Your solar electricity cost is locked in at 3 to 5p per kWh for 25+ years
- ◆Every increase in grid electricity prices widens your savings margin
- ◆You are less exposed to wholesale market volatility and policy changes
- ◆Budget certainty improves — your energy cost becomes more predictable
In most scenarios, including moderate grid price reductions, solar-generated electricity is expected to remain competitive with grid supply. However, returns will vary depending on future energy prices, which cannot be predicted with certainty.
Methodology
How to estimate your savings
A reliable savings estimate requires site-specific data. Here is the information you need and how it feeds into the calculation:
Gather your electricity bills
At least 12 months of bills showing your consumption in kWh, your tariff rate and any demand charges. Half-hourly data is ideal for accurate modelling.
Assess available roof space
The usable area of your roof determines the maximum system size. A structural survey confirms the roof can support the additional load. Orientation and pitch are also recorded.
Model generation and self-consumption
Using solar irradiance data for your location, system design software models expected generation hour by hour. This is overlaid with your consumption profile to calculate self-consumption and export volumes.
Calculate financial return
Annual savings are calculated from self-consumed electricity (valued at your grid tariff) plus export income. This is compared against the system cost to determine payback period, net present value and internal rate of return.
We provide this analysis as part of every site assessment — at no cost and with no obligation.
Battery storage
Maximising ROI with battery storage
Battery storage can significantly improve your solar ROI by increasing the proportion of solar electricity you use on site. Without storage, excess daytime generation is exported at low rates. With a battery, that energy is stored and used during peak periods or after sunset.
How batteries improve returns
- ◆Increase self-consumption from a typical 60-70 per cent to 80-95 per cent
- ◆Shift stored solar to peak tariff periods for maximum value
- ◆Reduce maximum demand charges (capacity charges) by peak shaving
- ◆Provide backup power during grid outages, protecting critical operations
- ◆Enable participation in grid balancing services for additional revenue
When does a battery make sense?
Battery storage is most valuable when your business has significant evening or early-morning consumption, when you are on a time-of-use tariff with high peak rates, or when you want to reduce demand charges. For businesses that consume most of their electricity during daylight hours, solar alone may deliver sufficient returns without the additional battery investment.
Learn more about commercial battery storage and how it integrates with solar.
FAQ
Frequently asked questions
Most UK commercial solar installations achieve payback within 4 to 7 years when purchased outright (CapEx). The exact payback depends on system size, energy consumption patterns, electricity tariff, roof orientation and shading. After payback, the system continues generating savings for 20 or more years.
References
Sources
- ◆Ofgem — energy regulation, electricity pricing and market data. ofgem.gov.uk
Want to know what solar could save your business?
Explore rooftop solar, battery storage or see our funding options.
Get a free assessment