The Case for Business Solar – Daily Business

Households have the Ofgem price cap. Businesses don’t. Firms agree their electricity contracts directly with suppliers, so a renewal at the wrong moment can leave a company paying a high rate for years. The latest government figures show what that looks like. Between April and June 2026, small UK businesses paid an average of 28.59p per kWh for electricity, and micro businesses 38.36p, according to the Department for Energy Security and Net Zero (DESNZ). Those figures include the Climate Change Levy but not VAT. For firms looking to take some control of that cost, rooftop solar is often written off as something for homeowners, or as unsuited to Scotland’s weather. The numbers suggest both assumptions deserve a second look.

Photo by Gustavo Fring: https://www.pexels.com/photo/two-electricians-standing-near-the-solar-panels-4254157/

Daytime Use Changes the Maths

The biggest difference between home and business solar is timing. A household uses most of its electricity in the morning and evening, so much of what its panels generate during the day is exported to the grid, often for a few pence per unit. Most businesses are busiest while the sun is up. Offices, shops, workshops and warehouses run lighting, computers, machinery and refrigeration through the working day, which is when panels produce most of their output. Every unit used on site replaces one bought at the full business rate, including the levy.

Solar Output in Scotland

The weather objection is weaker than many people think. DESNZ tracks meter readings from thousands of home solar systems, and in both 2023/24 and 2024/25 the typical Scottish system produced more electricity per kilowatt of panels than the typical London system. In 2024/25, Scotland’s typical system ran at a load factor of 8.50%, against 8.31% in London. London still comes out slightly ahead over the longer run, by around 2.4% on average across 14 years. But the gap is small, and panels need daylight rather than heat. Scotland’s long summer days help offset its shorter winter ones.

What the Numbers Look Like

Take a 50 kW system, a common size for a larger office or light industrial unit. At the output Scottish systems recorded in 2024/25, which was the dullest year for sunshine since 2012/13, it would generate around 37,000 kWh a year. If the business uses 70% of that on site at 27.67p per kWh, the average for small to medium firms, and exports the rest at a cautious 5p, the saving comes to around £7,800 a year. With typical installed costs of £33,000 to £60,000 for a system that size, simple payback falls somewhere between four and eight years. Those figures move with the premises. A micro business paying nearer 38p per unit would save more on every kWh it uses. An office closed at weekends would export more of its output, which lowers the return unless a battery stores the surplus for the working week.

Writing Off the Cost

Tax relief can shorten that payback further. HMRC classes solar panels as “special rate” expenditure, which on its own earns only a 6% writing-down allowance each year. HMRC guidance also confirms that the Annual Investment Allowance (AIA) can be set against special rate items, which is the faster route for most firms. The AIA lets sole traders, partnerships and companies deduct the full cost of qualifying plant and machinery from their profits in the year of purchase, up to £1 million. For a company paying the 25% main rate of Corporation Tax, a £40,000 system claimed in full through the AIA could reduce that year’s tax bill by up to £10,000.

The saving is smaller at the 19% small profits rate, and the allowance only helps a business with taxable profits to set against it. Firms should check the position with their accountant before committing. Solar Panels Edinburgh has published a fuller guide to commercial solar costs and tax relief, including worked examples for 10, 50

and 100 kW systems. VAT works differently from domestic installations. The 0% rate on solar applies to homes and certain charity buildings, so business installations carry 20% VAT, which VAT-registered firms can usually reclaim.

Fewer Planning Barriers

Planning rules have also eased. Since May 2024, permitted development rights in Scotland have covered rooftop solar on non-domestic buildings with no upper limit on system size, replacing the previous 50 kW cap.There are exceptions. Listed buildings, World Heritage Sites and sites within 3km of an aerodrome still need planning permission, as do panels on the front of a building, or a side facing a road, in a conservation area. In Edinburgh, that includes the Old Town and most of the New Town, which sit within the World Heritage Site, and business premises close to Edinburgh Airport. Grid connection is the other step to plan for. Systems above 16 amps per phase, or 11.04 kW on a three-phase supply, need a G99 application to the local network operator, SP Energy Networks in central and southern Scotland. That covers most commercial installations, and approval must come through before the system is switched on. Firms that lease their premises will also need their landlord’s agreement.

A Cost Businesses Can Control

Jibreel Rana, Co-Founder of Solar Panels Edinburgh, said: “Many business owners we speak to assume solar is really for homes, or that Scotland is too far north for it. The figures say otherwise. A business that uses most of its power during the working day gets far more from each panel than a typical household does, and the tax position often makes the investment easier to justify.” Energy prices for businesses will keep moving with the market. Generating part of a firm’s own electricity on its roof fixes the cost of that share for the life of the panels, which commonly carry warranties of 25 years.

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