𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

Energy bills have become one of the harder costs for small businesses to predict. Unlike households, firms are not protected by the domestic energy price cap – meaning a sharp rise in wholesale prices can feed through more directly when contracts are renewed.

This has made solar panels a more serious option for small and medium-sized businesses looking to take control of their overheads. For some, installing solar panels on the roof of an office, shop, warehouse or workshop can cut the amount of electricity they need to buy from the grid and make future bills easier to forecast.

But solar is still a major investment, and it won’t make sense for every business. The payback depends on the building or premises, the cost of installation, how much electricity your business uses and, crucially, when it uses it.

For SMEs with suitable premises and strong daytime electricity demand, solar panels can be worth investing in. For businesses that rent, use little power during daylight hours or may move premises soon, the ROI calculation is less straightforward.

Why are more businesses looking at solar panels?

The business case for solar panels has changed in recent years because electricity has become a more visible risk on the balance sheet. Even when market prices fall, many SMEs remain exposed to contract renewals, standing charges, network costs and wider energy market volatility.

Solar panels do not remove that exposure entirely. Most businesses will still need to buy electricity from the grid, especially in the evening, in winter or during periods of heavy use. But every unit of electricity generated and used on-site is one that your business doesn’t need to import.

There is also a reputational benefit. Cutting emissions can help a company meet its own sustainability targets, strengthen tenders and appeal to customers who want to buy from more responsible businesses. For most SMEs, however, the main appeal is likely to be simpler: lower electricity bills and more control over an increasingly volatile cost.

The key question is when your business uses electricity

The strongest returns usually come when a business can use most of the electricity its solar panels generate. That makes solar especially suitable for companies that operate during daylight hours.

Everything you need to build, launch and grow online

LEARN MORE

ADVERTISEMENT

Everything you need to build, launch and grow online

LEARN MORE

ADVERTISEMENT

An office running laptops, lighting, servers and air conditioning may be a good fit. So might a shop, cafe, warehouse, farm, workshop or small manufacturing business. Firms with refrigeration, machinery, pumps, charging equipment or high daytime lighting demand may also be able to use a large share of their own solar power.

The case can be weaker for businesses that use most of their energy in the evening, have low overall electricity demand or operate from premises with limited roof space. A heavily shaded roof, an ageing roof covering or a short lease can also make the investment harder to justify.

Ownership matters too. A business that owns its building has more control over the decision. A tenant will usually need landlord permission, and it may not be worth investing if the company expects to move before the system has paid for itself.

How much could your business save?

There is no single answer, because the savings depend on the size of the system, the price paid for electricity, the installation cost and how much of the generated power is used on site.

Commercial solar payback periods are often estimated at around five to 10 years, although some high-usage businesses with suitable premises may see a faster return, while lower-usage sites or more complex installations can take longer. A business with high daytime consumption and a suitable roof, for example, will usually see a stronger return than one exporting most of its power back to the grid.

It is also worth looking beyond the headline payback period. Solar panels commonly come with long performance warranties, while inverters and batteries may have shorter warranties and different replacement timelines. SMEs should ask installers to model the expected annual generation, annual savings, export income, maintenance costs and any finance costs before committing.

A credible quote shouldn’t just say how many panels can fit on the roof, but outline how much electricity the system is expected to generate, how much the business is likely to use directly and how the payback has been calculated.

Can businesses sell unused solar electricity?

Businesses that generate renewable electricity may be able to earn money by exporting unused power to the grid through the Smart Export Guarantee. Under the scheme, eligible small-scale generators can be paid by participating electricity suppliers for the electricity they export.

This can improve the financial case, but it should not usually be the main reason for installing panels. Export rates vary by supplier and are generally less valuable than avoiding the cost of buying electricity in the first place.

In other words, solar tends to work best when the business uses the power itself. Export payments are useful, but self-consumption is normally where the bigger savings lie.

What about the upfront cost of installing solar panels?

Commercial solar is a capital investment, so businesses need to look carefully at the full cost. That includes panels, inverters, scaffolding, design, installation, monitoring, grid connection requirements and any electrical upgrades. If the business adds battery storage, the upfront cost will rise again.

Finance options may help spread the cost. Some businesses buy systems outright, while others use loans or leasing arrangements. Power purchase agreements are another option – where a third party funds the installation and the business buys the electricity generated at an agreed rate.

The right structure will depend on cash flow, tax position, building ownership and appetite for a long-term contract. Businesses should also speak to their accountant about capital allowances and how the investment should be treated for tax purposes.

Should your business add a battery?

A battery can help a business store electricity generated during the day to use it later. This may be useful for companies that produce more solar power than they can use immediately, or for firms with evening demand.

But batteries add cost and don’t automatically improve the return. For a business that already uses most of its solar electricity during the day, a battery may have a weaker financial case. For one that exports a large amount of power, storage may improve self-consumption.

The simplest approach is to ask installers for two projections: one with battery storage and one without. That makes it easier to see whether the extra cost is justified.

What should SMEs check before investing?

Before installing solar panels, SMEs should check whether their roof is suitable, how much electricity they use during daylight hours and how long they expect to remain in the building.

They should also compare several quotes and use an accredited installer with experience in commercial systems. The quote should explain what is included, what is excluded, what warranties apply and whether the business needs permission from the landlord, planning authority, network operator or insurer.

Solar can be a strong long-term investment, but it should be treated like any other business purchase. The numbers need to work for the specific premises, not just in theory.

Solar may suit your business if:

Solar may be less suitable if: