Live Calculator
Estimate your commercial solar payback
Move the sliders. Numbers update instantly. Methodology is the same simple-payback model we use on initial-screening enquiries.
10 kW to 1 MW. Below 100 kW uses G98; above uses G99.
Office 60% · Retail 65% · Warehouse 70% · Hotel 80% · Cold storage 95%.
UK 2026 commercial blended average 24-27p. London 28-32p. Industrial HH 18-23p.
Octopus Outgoing leads at 15p. Smart export floor 4p. Use 8-12p as 2026 typical.
Turnkey cost
£90,000
Gross, before AIA. Per-kW rate scales with size.
Net cost after AIA
£67,500
25% effective tax relief year one.
Annual saving
£21,360
Bill avoidance + SEG export combined.
Simple payback
3.2 years
25-year asset life · est. 22% IRR · est. 280k NPV (5% discount)
Disclaimer: Simple-payback screening only — assumes flat electricity prices and panel degradation as per industry norm (0.5% per year). Real-world commercial solar IRR has historically benefited from electricity price inflation; a more conservative IRR (assuming 3% annual electricity inflation) is typically 2-4 percentage points higher than the figure shown. For investment-committee grade modelling we run full PVSyst against your half-hourly meter data — see methodology below.
A solar panel payback calculator is a screening tool — its job is to tell you whether a commercial solar project is worth a site survey, not to underwrite an investment-committee paper. The methodology behind the live calculator above is exactly what we use for initial feasibility on every commercial enquiry, with the same regional yield lookups, sector self-consumption norms, and 2026 turnkey pricing bands. Six worked examples spanning 25 kW to 1 MW show how the maths plays out at scale.
The five inputs you need
Five inputs drive the calculation. Get these right and the rest is arithmetic.
- System size in kW. Roughly bounded by available roof area — assume 5 m2 per kW for in-roof commercial, 6.5 m2 per kW for above-roof on flat roofs (allowing for setback and tilt), 5.5 m2 per kW for above-roof on pitched roofs.
- Annual electricity consumption in kWh. Pull from your last 12 months of bills. If you only have monthly spend in pounds, divide by your average tariff (typically 24-32p per kWh in 2026) to get kWh.
- Average grid retail tariff in p/kWh. Your blended average across all units — the figure on the bottom of your bill, not the unit rate. UK 2026 commercial average is 24-27p, London is 28-32p, behind-the-scenes industrial half-hourly metered tariffs can sit at 18-23p.
- Self-consumption percentage estimate. See sector norms below. Office 60, warehouse 75, hotel 85, factory 70, school 50, care home 90, data centre 95.
- Region or kWh per kWp annual yield. Scotland 950, North England 1,000, Midlands 1,050, South England 1,100. South-facing 25-degree pitch baseline.
The methodology
Annual generation = System size in kW multiplied by regional yield in kWh per kWp.
Self-consumed generation = Annual generation multiplied by self-consumption percentage.
Exported generation = Annual generation minus self-consumed generation.
Annual saving from self-consumption = Self-consumed kWh multiplied by grid retail tariff.
Annual income from export = Exported kWh multiplied by SEG tariff (assume 5p per kWh as a 2026 commercial baseline).
Total annual financial benefit = Annual saving plus Annual income.
Capital cost = System size multiplied by per-kW turnkey rate. Pricing bands for 2026: sub-100 kW around 900-1,200 pounds per kW, 100-500 kW around 750-950 per kW, 500 kW and above around 700-850 per kW.
Simple payback = Capital cost divided by Total annual financial benefit.
Regional yield lookup table
Annual kWh generated per kWp installed (south-facing, 25-degree pitch, no shading):
| Region | kWh per kWp per year | Examples |
|---|---|---|
| Scotland — Highland and Islands | 900 | Inverness, Aberdeen, Dundee |
| Scotland — Central Belt | 950 | Glasgow, Edinburgh |
| North England | 1,000 | Newcastle, Leeds, Manchester, Liverpool, York |
| North Wales | 1,000 | Wrexham, Bangor, Anglesey |
| Midlands | 1,050 | Birmingham, Nottingham, Leicester, Coventry, Stoke |
| South Wales | 1,075 | Cardiff, Swansea, Newport |
| South England | 1,100 | London, Bristol, Reading, Brighton, Southampton |
| South-West England | 1,125 | Cornwall, Devon, Plymouth, Exeter |
Adjustments to baseline:
- East-west split orientation: minus 12 percent
- Pure east or pure west: minus 18-20 percent
- Pure north (rear-roof on listed buildings, etc): minus 30-40 percent
- Flat roof at 10-degree tilt: minus 5 percent versus optimal 25-degree pitch
- Heavy shading (more than 10 percent of array shaded for more than 2 hours per day): minus 10-25 percent
Sector self-consumption norms
Self-consumption percentage drives the financial case more than any other variable, because every kWh you self-consume saves the full retail tariff (24-32p) while every kWh you export earns only the SEG rate (4-15p). Approximate sector norms based on our 2024-2026 install database of half-hourly meter analyses:
| Sector | Self-consumption % | Driver |
|---|---|---|
| Office (8-6 weekday) | 55-65% | Strong daytime alignment, weekends export-heavy |
| Retail and high-street | 60-70% | Daytime trading hours match generation peak |
| Restaurant and cafe | 65-75% | Lunch and afternoon kitchen load |
| Warehouse and logistics | 70-80% | Often 24/7 operation, MHE charging, lighting |
| Factory and manufacturing | 70-75% | Daytime production with night drop |
| School (term-time) | 45-55% | August summer holiday is the worst-case export period |
| Hotel | 80-90% | 24/7 baseload — laundry, kitchens, HVAC, leisure |
| Care home and nursing home | 85-95% | Maximum baseload — 24/7 occupied, high HVAC |
| Hospital and healthcare | 90-95% | Always-on critical loads |
| Data centre | 92-98% | Constant high baseload, near-zero export |
| Church and place of worship | 20-35% | Mostly Sunday-only occupied |
| Farm with chillers/poultry | 75-85% | Refrigeration baseload, milking parlours |
Battery storage adds typically 15-25 percentage points to self-consumption but adds 35-50 percent to capital cost. The trade is usually positive where the export-vs-retail spread is large (high retail tariff, low SEG rate).
Six worked examples
Example 1: 25 kW office in central Manchester
- System size: 25 kW
- Region: North England — yield 1,000 kWh per kWp
- Annual generation: 25,000 kWh
- Self-consumption: 60 percent (office) = 15,000 kWh self-consumed, 10,000 kWh exported
- Grid retail tariff: 27p per kWh — annual saving 4,050 pounds
- SEG tariff: 5p per kWh — annual income 500 pounds
- Total annual benefit: 4,550 pounds
- Capital cost at 1,100 per kW (sub-100 kW band): 27,500 pounds
- Simple payback: 6.0 years
Example 2: 50 kW retail unit in Birmingham
- System size: 50 kW
- Region: Midlands — yield 1,050
- Annual generation: 52,500 kWh
- Self-consumption: 65 percent (retail) = 34,125 kWh self-consumed, 18,375 exported
- Grid retail: 26p — annual saving 8,872 pounds
- SEG: 5p — annual income 919 pounds
- Total benefit: 9,791 pounds
- Capital at 1,000 per kW (sub-100 kW band): 50,000 pounds
- Simple payback: 5.1 years
Example 3: 100 kW school in Leeds
- System size: 100 kW
- Region: North England — yield 1,000
- Annual generation: 100,000 kWh
- Self-consumption: 50 percent (school, term-time biased) = 50,000 self-consumed, 50,000 exported
- Grid retail: 25p — annual saving 12,500 pounds
- SEG: 5p — annual income 2,500 pounds
- Total benefit: 15,000 pounds
- Capital at 900 per kW (100-500 kW band): 90,000 pounds
- Simple payback: 6.0 years
Example 4: 250 kW warehouse in Northampton
- System size: 250 kW
- Region: Midlands — yield 1,050
- Annual generation: 262,500 kWh
- Self-consumption: 75 percent (warehouse) = 196,875 self-consumed, 65,625 exported
- Grid retail: 24p — annual saving 47,250 pounds
- SEG: 5p — annual income 3,281 pounds
- Total benefit: 50,531 pounds
- Capital at 850 per kW (100-500 kW band): 212,500 pounds
- Simple payback: 4.2 years
Example 5: 500 kW factory in West Midlands
- System size: 500 kW
- Region: Midlands — yield 1,050
- Annual generation: 525,000 kWh
- Self-consumption: 70 percent (factory) = 367,500 self-consumed, 157,500 exported
- Grid retail: 22p (HH-metered industrial) — annual saving 80,850 pounds
- SEG: 5p — annual income 7,875 pounds
- Total benefit: 88,725 pounds
- Capital at 800 per kW (500 kW+ band): 400,000 pounds
- Simple payback: 4.5 years
Example 6: 1 MW distribution centre in M1 corridor
- System size: 1,000 kW (1 MW)
- Region: Midlands — yield 1,050
- Annual generation: 1,050,000 kWh
- Self-consumption: 80 percent (24/7 logistics) = 840,000 self-consumed, 210,000 exported
- Grid retail: 21p (HH-metered industrial scale) — annual saving 176,400 pounds
- SEG: 5p — annual income 10,500 pounds
- Total benefit: 186,900 pounds
- Capital at 750 per kW (1 MW+ band): 750,000 pounds
- Simple payback: 4.0 years
Simple payback versus discounted payback versus IRR versus NPV
Simple payback is capital cost divided by undiscounted annual benefit. It is the right number for owner-managed business decisions and the headline number we use across this page. It does not account for the time value of money or for any future inflation in electricity prices.
Discounted payback applies a discount rate (typically 5-8 percent for UK commercial in 2026) to future cash flows and counts the calendar time to recover the discounted capital. It is typically 10-20 percent longer than simple payback.
Internal Rate of Return (IRR) is the discount rate at which NPV equals zero, calculated over the asset life (we use 25 years). For commercial solar in 2026 we typically see IRRs of 12-22 percent. For investment-committee papers IRR is usually the headline metric.
Net Present Value (NPV) is the sum of all discounted cash flows over the asset life. For a 100 kW commercial system NPV is typically 80,000-180,000 pounds at an 8 percent discount rate. NPV is the most rigorous single-number summary of the project economics.
For finance and investment context see commercial solar finance and solar panel ROI.
Tax effects — VAT and Annual Investment Allowance
Headline payback figures above are pre-tax. For VAT-registered commercial businesses the real economics are materially better.
VAT (20 percent) is recoverable on commercial solar installations through the standard input-VAT mechanism. Real net capital cost = headline cost x 0.83.
Annual Investment Allowance (AIA) grants 100 percent first-year tax relief on plant and machinery up to 1 million pounds per business per year. Solar PV qualifies. Tax saving = capital cost x corporation tax rate (25 percent for businesses with profits above 250k, 19 percent below 50k).
Combined effect: a 100k pound gross install for a typical commercial trader becomes 100k x 0.83 (VAT recovery) x 0.75 (25 percent CT relief on the post-VAT figure) = 62.25k net. Post-tax payback runs around 35-40 percent of the headline pre-tax figure. See capital allowances and VAT solar panels for the full process.
Authority sources
UK government solar PV factsheet at gov.uk solar. Ofgem SEG market overview at Ofgem SEG.
What we do beyond a simple calculator
The simple payback model on this page is sufficient for screening. Once a project moves past screening we run a full PVSyst hourly model, paired with the customer half-hourly meter data, to produce a defensible IRR-and-NPV deck. See half-hourly meter data analysis for the methodology and commercial solar survey for the wider site survey process. For the underlying business case see are commercial solar panels worth it.
Common questions
How accurate is this payback calculator?
A simple-payback calculator using regional yield averages and sector self-consumption norms is typically within 15-25 percent of the figure a full PVSyst simulation paired with half-hourly meter data analysis would produce. That is sufficient for an initial screening decision — does this project warrant a site survey or not. It is not sufficient for an investment-committee paper. Once a project moves past initial screening we run a full PVSyst hourly model against the customer half-hourly meter data and produce an IRR-and-NPV deck. See our half-hourly meter data analysis page for the methodology.
What is simple payback versus discounted payback versus IRR versus NPV?
Simple payback is the calendar time to recover the initial investment from undiscounted cash flows — capital cost divided by annual saving. Discounted payback applies a discount rate (typically 5-8 percent for UK commercial in 2026) and counts the time to recover from the discounted cash flows. IRR (Internal Rate of Return) is the discount rate at which the project NPV equals zero — for commercial solar in 2026 we typically see IRRs of 12-22 percent over a 25-year asset life. NPV (Net Present Value) is the sum of discounted cash flows over the asset life — for a 100 kW system NPV is typically 80-180k pounds. Investment committees almost always work in IRR and NPV. Simple payback is fine for owner-managed business decisions.
What annual generation should I assume per kW installed?
UK regional yield averages in 2026 (kWh per kWp installed per year, south-facing 25-degree pitch): Scotland 950, North England and North Wales 1,000, Midlands 1,050, South England and South Wales 1,100. East-west split orientations lose around 12 percent. North-orientation rear-roof loses 30-40 percent. Real-world delivery against PVSyst modelling on our UK installs runs 100-104 percent — slight outperformance is normal because PVSyst is conservative on soiling and degradation assumptions.
What self-consumption percentage should I use?
Self-consumption matters because grid-imported electricity is 24-32p per kWh in 2026 while exported electricity earns 4-15p per kWh under SEG. Sector norms by load profile: Office 60 percent, Retail 65 percent, Restaurant 70 percent, Warehouse 70-75 percent, Manufacturing/factory 70 percent, School 50 percent (term-time, low summer), Hotel 80-85 percent (24/7 base load), Care home 90 percent, Data centre 95 percent. With battery storage typical self-consumption rises by 15-25 percentage points but capital cost rises by 35-50 percent — battery economics work hardest where SEG export rates are low.
How does VAT and capital allowances change the calculation?
VAT (20 percent) on commercial solar installations is recoverable for VAT-registered businesses, so the real net capital cost is 0.83x the gross. Capital allowances under the 100 percent Annual Investment Allowance for assets up to 1 million pounds per year mean the corporation tax saving is 25 percent of the capital cost in year 1 (at 25 percent CT rate). Combined effect: a 100k pound gross install has a net post-VAT post-AIA cost of around 62k pounds for a typical commercial trader. The headline payback figures in our worked examples below show pre-tax simple payback — apply the VAT and AIA effects and post-tax payback runs around 35-40 percent of the headline number.
Does the payback calculation account for inflation in electricity prices?
The simple-payback method on this page assumes flat electricity prices, which is conservative. Historic UK commercial electricity inflation has averaged 5-8 percent per year since 2020 (with a 60 percent spike during 2022). If you assume a more reasonable 3 percent annual electricity-price inflation through to 2050, simple payback typically shortens by 12-18 percent and IRR rises by 2-4 percentage points. Investment-grade NPV calculations always include an inflation assumption. Owner-managed business decisions usually start with the no-inflation simple payback and accept that the real economic case is materially better than the headline number.