Quick Answer
Most commercial solar installations achieve payback in 3-5 years with current electricity prices. Businesses with high daytime consumption often see payback in under 3 years.
Detailed Answer
Payback period depends on several factors including electricity consumption patterns, system size, and current energy costs.
Typical Payback Scenarios
- High daytime usage (warehouses, factories): 2.5-3.5 years
- Standard commercial usage (offices): 3-4 years
- Variable usage (retail, schools): 4-5 years
Factors Affecting Payback
Self-consumption rate is the biggest factor. The more solar electricity you use directly, the faster your payback. Battery storage can increase self-consumption to 80%+.
Key Takeaways
- Most commercial solar installations achieve payback in 3-5 years with current electricity prices.
- Businesses with high daytime consumption often see payback in under 3 years.
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Related Questions
Can I claim tax relief on commercial solar panels?
Yes! Commercial solar qualifies for 100% Annual Investment Allowance (AIA), allowing you to deduct the full cost from pre-tax profits in the year of installation. For a £100,000 system, this saves £19,000-£25,000 in corporation tax. This significantly improves ROI.
Are there grants for commercial solar panels?
While most general grants have closed, specific schemes exist for schools (£180m funding pool) and NHS facilities (£100m commitment). The Smart Export Guarantee (SEG) provides ongoing payments for exported electricity. The main financial benefit is the 100% Annual Investment Allowance tax relief.
What is a Power Purchase Agreement (PPA)?
A PPA allows you to have solar installed at zero cost. A third party owns the system and sells you the electricity at a fixed rate, typically 10-15% below grid prices. You save immediately with no capital outlay, but returns are lower than ownership. PPAs suit businesses prioritizing zero upfront investment.
How much can a business save with solar panels?
A typical 50kW commercial system saves 12,000-18,000 annually at current electricity prices. Over 25 years, total savings exceed 300,000 after accounting for installation costs.
Are commercial solar panels eligible for 0% VAT?
Yes, commercial solar installations under 1MW qualify for 0% VAT until March 2027. This represents an immediate 20% saving on your installation cost.
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