Solar Panels for Business: The UK Commercial Solar Guide

Business solar is a different proposition to domestic solar — larger systems, faster payback, significant tax advantages, and a more complex grid connection process. If you run or manage a UK business and are exploring solar, this guide walks through what makes commercial installations distinct and how the financial case stacks up.

How Commercial Solar Differs from Domestic

Commercial solar looks similar to domestic solar — panels on a roof, an inverter, a meter — but the similarities end there.

System size: Domestic systems typically run from 3 to 6 kWp (kilowatt-peak). Commercial systems commonly start at 10 kWp and extend to 50 kWp, 250 kWp, or beyond for larger sites. A factory, warehouse, or supermarket might install hundreds of kilowatts.

Three-phase supplies: Most commercial and industrial premises have a three-phase electricity supply (as opposed to the single-phase supply in most homes). Three-phase allows larger loads to run simultaneously and requires three-phase inverters that balance generation across all phases.

Grid connection process: Domestic systems under 3.68 kW connect under a simplified G98 notification. Commercial systems almost always exceed the thresholds for G99 — the more detailed application process involving your Distribution Network Operator (DNO). G99 requires a formal application, engineering assessment, and approval before installation. This typically adds 4–12 weeks to the project timeline.

Export arrangements: The domestic Smart Export Guarantee (SEG), which pays homeowners for electricity exported to the grid, does not apply to businesses. Commercial sites instead negotiate directly with suppliers via Power Purchase Agreements (PPAs) or commercial export contracts. These can offer better rates than SEG if your export volumes are substantial.

MCS certification: The Microgeneration Certification Scheme (MCS) still applies to commercial installs. Your installer and the equipment must be MCS-certified for you to access certain incentives and grid connection routes.

The Financial Case for Commercial Solar

The business case for solar is often stronger than the domestic equivalent — and for a straightforward reason: commercial premises typically consume more electricity during the day (when panels generate) and have larger roof areas that allow bigger, more cost-effective systems.

Cost at Commercial Scale

At commercial scale, the installed cost per kWp falls. Where domestic systems run at roughly £1,100–1,500/kWp installed, commercial installations typically come in at £800–1,200/kWp depending on system size, roof type, and mounting method. A 50 kWp system at £900/kWp costs £45,000 — before tax relief.

Capital Allowances: The Tax Advantage

This is where commercial solar becomes considerably more attractive than domestic. Businesses can use two complementary mechanisms:

Annual Investment Allowance (AIA): Businesses can deduct the full cost of qualifying plant and machinery against taxable profits in the year of purchase. The AIA limit is £1 million per year — meaning most commercial solar installations qualify for 100% first-year tax relief. A £45,000 solar installation could reduce your corporation tax bill by £9,450 (at the 21% small profits rate) to £11,250 (at the 25% main rate) in year one.

Enhanced Capital Allowances (ECA): For energy-efficient plant, ECA historically provided 100% first-year deductions even outside AIA limits. Check with your accountant — the landscape has evolved as AIA limits increased, but ECA remains relevant for specific equipment categories.

The effect of AIA is significant: a £45,000 system effectively costs £33,750–35,550 after corporation tax relief, depending on your tax rate. That meaningfully shortens payback periods.

Business Rates Exemption

In England and Wales, solar installations up to 50 kW are exempt from business rates. This exemption means you don't pay additional property tax on the value the solar system adds to the premises. Systems above 50 kW are assessed for business rates separately — worth factoring in for larger installations.

Scotland and Northern Ireland have their own rating systems; check with the relevant valuation authority.

Return on Investment

Combining lower per-kWp costs, higher daytime consumption, and significant tax relief, commercial solar typically achieves payback periods of 4–7 years — meaningfully faster than the 8–12 year range common for domestic systems.

An example for a light industrial unit with a 30 kWp system:

Actual figures vary considerably based on your consumption profile, roof orientation, shading, and the export rate you negotiate. The above is illustrative — use it as a framework, not a guarantee.

Planning Permission

Most commercial rooftop solar falls under Permitted Development Rights (PDR) and does not require a formal planning application. The relevant Class is Class J (non-domestic rooftop solar) under the Town and Country Planning (General Permitted Development) Order.

Key Class J limits:

• Panels must not protrude more than 200mm beyond the roof plane
• Aggregate capacity must not exceed the electricity demand of the building
• Listed buildings and World Heritage Sites are excluded — full planning required
• Conservation area installations may have additional restrictions

Car park canopy solar falls under Class OA, which allows solar canopies over car parks with permitted development rights, subject to height and setback conditions. This is increasingly attractive for large commercial car parks.

Always check with your local planning authority before proceeding — PDR boundaries can be ambiguous, and prior approval may be required in some cases even under Class J.

Grid Connection: G99 Explained

G99 is the engineering standard that governs how generating installations above certain thresholds connect to the distribution network. For commercial solar, you'll be in G99 territory if:

• Your system exceeds 3.68 kW on a single-phase supply, or
• Your system exceeds 11.04 kW on a three-phase supply (3.68 kW per phase)

In practice, almost all commercial installations trigger G99.

The G99 process involves:

1. Completing a DNO application (each network operator has its own portal)
2. The DNO assessing whether the local network can accept the export
3. Possible requirement for export limitation (limiting export to a set level to protect the network)
4. Formal approval before the installation proceeds
5. A final G99 commissioning notification after installation

Budget 4–12 weeks for DNO approval, though some DNOs are faster. Your installer should handle the application, but it's worth tracking progress yourself.

Choosing the Right Installer

For commercial projects, MCS certification remains the baseline. Beyond that, look for:

• Experience with commercial-scale systems — not all domestic installers are equipped for 30–100 kWp projects
• G99 application track record — the DNO process has nuances; experienced installers know what DNOs look for
• Monitoring and O&M support — commercial systems justify ongoing monitoring and a maintenance contract
• Structural survey capability — flat roofs common on commercial buildings need a loading assessment before installation

Obtain at least three quotes. The gap between the cheapest and best-value installer on a £50,000 project can be significant.

Power Purchase Agreements

If capital investment isn't viable — perhaps due to lease restrictions on the building, or capital tied up elsewhere — a Power Purchase Agreement (PPA) is worth exploring. Under a PPA:

• A third party funds and owns the solar installation
• You purchase the electricity generated at an agreed rate (typically below grid price)
• You benefit from lower energy costs without upfront capital outlay
• The third party benefits from export income and capital allowances

PPAs typically run 10–25 years, so read the terms carefully and consider what happens if you move premises or change business use. The terms of building leases also matter — check with your landlord and solicitor before committing.

Summary

Commercial solar combines faster payback, meaningful tax relief, and larger economies of scale than domestic installations. The additional complexity — G99, three-phase inverters, planning checks, VAT treatment — is manageable with the right installer and professional advisers. For most businesses with suitable roof space and reasonable daytime consumption, solar is worth a serious look.

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