How Much Do Solar Panels Cost For Businesses

Many businesses are already making the move toward renewable energy, and solar power is one of the cleanest and most renewable energies of all. The sun is not going to stop shining, and the energy that this produces can be harnessed to cater for our energy needs. Solar panels aren’t only the right thing to do if you’re looking to decarbonise your energy use. You can save substantially on your energy bills, meaning that you over time see a return on investment, and you can even use them to promote your green credentials to potential new customers. 

Furthermore, the market is growing. The UK Solar Power Market size in terms of installed base is expected to grow from 18.53 gigawatts in 2024 to 53.12 gigawatts by 2029, at an annual growth rate of 23.53% during the five-year forecast period from 2024 to 2029, and this expansion coupled with the maturing market place means that solar panels are within the financial reach of more businesses than ever. The costs of solar installations for businesses have already dropped by more than 70% in the last ten years. What are the installation costs, and how much do they cost to maintain? 

Commercial Solar Panel Cost Breakdown

The actual cost of commercial solar panels can vary considerably according to several different factors, not least how much energy you plan to use and the specifics of your installation, but there are rough guides for pricing that can be used. 

Most small to medium businesses use somewhere between 25 and 50 kilowatt hours (kWh); you can check your business usage on your current bill. The costing is priced by the same metric, with all prices listed below being exclusive of VAT. Their total cost can be broken down into four core components: 

Installation

A decent rule of thumb is to work out the installation cost at around £200 per kWh installed, though the cost of installation will be influenced by the complexity of your specific circumstances. 

Solar panel systems

As with installation, the cost of the panels themselves can vary according to the size and your business location. But again, a reasonable rule of thumb for a rough estimate of price is around £1,000 per kWh. This means that a complete set of panels for a 30kWh installation would cost around £30,000 plus VAT. Integrating a solar battery into your system allows for energy storage and usage during periods of low sunlight or overnight. The cost of a solar battery starts from £2,500, while the average cost is around £4,500. 

Maintenance

The good news here is that solar panels are designed to be low maintenance. That’s one of their major selling points. But the bad news is that how much the maintenance costs can vary a lot from installation to installation. Maintenance costs will be unlikely to run to much more than a few hundred pounds a year, depending on your specific circumstances.

Cleaning

To optimise the performance of your solar panels, you’ll need to keep them clean. This isn’t always a job that you can do yourself. Doing so may void your warranty, and some jobs are best left to professionals. The cost of a professional cleaning should be between £150 and £300, depending on the number of panels you have.

Commercial Solar Panel Installation Cost

There are certain factors which will affect the cost of your installation, and the brief way of explaining this is to say that the more complex an installation is, the more expensive it will be. 

Roof type and condition

If you’re getting them installed on the roof of your premises, then the specifics of that roof matter. Roof conditions and characteristics, including the roof’s size, shape, and angle, can affect the cost of installing solar panels. A larger or more complex roof may require additional mounting hardware or customised solutions, increasing the installation expenses.

System size and capacity

Every solar panel installation is different. You may be putting them on the roof of your premises, or you could be installing them on land adjacent to them. Larger commercial systems are more complex, and with greater complexity comes higher costs, whether through the longer amount of time it takes to complete or requiring more workers to complete the job.

Location-specific factors

There are several location-specific factors which can affect the cost of your installation. Labour costs for installation can vary across the country, and premises that are more difficult to access may also prove more expensive. Even the precise angle of your building can make a difference. The direction that your roof faces will influence how efficiently your panels can generate electricity. Roofs facing south, south-west and south-east are considered highly efficient because they see more sunlight throughout daylight hours, while roofs that face north may be less so.

For a company that is looking to produce 30kWh, a rough estimate of the total cost might look something like £6,000 for installation. 

Commercial Solar Panel Maintenance and Cleaning Costs

Solar panel systems are designed to be low-maintenance, but cleaning your solar panels is an important job. A failure to do so may lead to a build-up of dust, bird droppings, leaves and soot, which can then cause issues with the performance of your solar panels. The dirtier your solar panels get, the less energy they will absorb, and the less effectively they will work. Good maintenance isn’t so much a cost as an investment. You’ll benefit from it in the long run. It is estimated that a medium-sized commercial solar system reaching 30 kWp (kilowatts peak, the peak potential kilowatt output of a solar panel under perfect conditions) will cut your electricity bills by £5,200 per year.

It is highly advised to keep on top of a strict cleaning regime to avoid any issues, and this is especially the case if you live next to a busy road or farm, as there will be a far greater amount of pollution and dirt in the air than in most other areas. The cost of a professional cleaning should be between £150 and £300, depending on the number of panels.

Factors Influencing Business Solar Panel Costs

Depending on the specifics of your installation, you could benefit from a range of government solar incentives. If you’re installing new equipment, and you intend to fully own the asset, you could apply for a capital allowance. 

Capital allowances mean that you can deduct the full cost of your solar plant from your profits before tax, through an annual investment allowance (AIA). With AIA, you could claim up to £1 million for plants and machinery. This can help you to keep your budget stable when investing in large-scale commercial solar power.

The Smart Export Guarantee (SEG) took effect in January 2020, and businesses can potentially experience financial gain from exporting excess energy back to the national grid. To be eligible, you must have a smart meter to measure the power exported. 

The Government’s post-Covid stimulation package, “The 130% Super-Deduction and the 50% First Year Allowance” operated from 1st April 2021 to 31st March 2023. Only the latter part of the package applies to solar panel installations, as solar panels are classed as “Special Rate Assets”.

Under the 50% First Year Allowance scheme, companies can deduct half the value of new solar panel installations from their profits in the first year of installation, thus reducing their Corporation Tax bill. The remaining 50% will be written down at 6% in subsequent years. Previously, solar panels only qualified for the 6% special rate writing down allowance. Although the 50% First Year Allowance was due to end on 31st March 2023, the 2023 Spring Budget extended the allowance for a further three years until 31st March 2026.

Sole traders who haven’t incorporated may wish to note that since April 2022, VAT has been reduced to 0% for certain energy-saving products, which includes solar panels and their installation.

Are There Financing Options Available for Businesses to Cover the Upfront Costs?

The United Kingdom does not offer government grants for solar panels on commercial buildings, but, new funding opportunities may arise as the UK works toward lowering emissions and reducing fossil fuel reliance.

But this doesn’t mean Commercial solar PPAs (power purchase agreements) allow businesses to purchase solar energy from a third-party provider at a fixed price, typically 30-50% lower than traditional utility rates. With no upfront costs and long-term price stability, commercial solar PPAs offer a hassle-free and cost-effective solution to power your business sustainably. More traditional hire purchase finance solutions. 

There are also some additional solar panel funding opportunities if you are in the public sector. Salix Funding provides interest-free capital for energy-efficient technologies. Salix is owned by Governments: it’s funded by the Department of Business, Energy and Industrial Strategy (BEIS), the Scottish government, the Welsh government, and the Department for Education. 

The cost of fossil fuels is only going to increase over time, of that much we can be reasonably certain. And decarbonising your energy usage is a great way of both improving your bottom line over time and doing the right thing concerning the environment. There are upfront costs, but with competitive financing options available, tax benefits and lowered energy bills, the return on investment can be significant. Get a quote today, and take that first step toward a greener future for your business!