Commercial Solar PV UK: Roof Capacity, Payback and SEG Export Tariffs

Commercial Solar PV: Scale and Economics

Commercial rooftop solar PV installations typically range from 50 kW to 500 kW of installed capacity for SME and mid-market premises. Larger industrial and distribution facilities may install above 500 kW, at which point grid connection negotiations, planning requirements, and Distribution Network Operator (DNO) applications become more complex.

The financial case for commercial solar rests primarily on self-consumption: the proportion of solar generation that displaces grid electricity purchased at the prevailing unit rate. For a business consuming electricity during daylight hours on weekdays, the self-consumption rate may be 70 to 90% of annual generation. For a business with low weekday daytime consumption, self-consumption may be below 40%, with the majority of generation exported to the grid at the significantly lower Smart Export Guarantee rate.

At current commercial electricity unit rates, a self-consumption rate of 70% or above typically produces payback periods in the range of 6 to 10 years for a well-specified installation. At lower self-consumption rates, payback extends and the financial case weakens. Battery storage can improve self-consumption by storing surplus daytime generation for evening use, but adds capital cost and extends the combined payback period.

The Smart Export Guarantee

The Smart Export Guarantee (SEG) was established under the Energy Act 2008 and came into force from January 2020. It replaced the export element of the previous Feed-in Tariff scheme for new installations. Ofgem administers SEG accreditation and publishes details of licensed SEG suppliers and their export tariff rates.

Under the SEG, licensed electricity suppliers with more than 150,000 domestic customers are required to offer an export tariff to eligible small-scale generators. The tariff must be greater than zero but the rate is set competitively by each supplier. Rates vary and change over time; Ofgem publishes a list of SEG licensees and their current tariff offers on the Ofgem website.

Eligibility for SEG requires the installation to hold a Microgeneration Certification Scheme (MCS) certificate or equivalent approved certification, and the premises to have an export meter that records exported electricity in half-hourly intervals. For commercial installations, this typically means a smart meter or a separately installed export meter is required before SEG payments begin.

SEG export rates are substantially below grid import rates. Export-only economics are rarely financially compelling on their own. The SEG functions as a revenue supplement to self-consumption savings rather than a primary return driver for commercial installations.

Half-Hourly Metering Implications for Solar Export

Commercial electricity supply points with a Maximum Import Capacity above 100 kW are subject to mandatory half-hourly (HH) settlement. For solar PV installations, the presence of export metering and the interaction with HH settlement affects how exported electricity is measured and how SEG payments are calculated.

A commercial installation exporting to the grid must have export metering capable of recording export in half-hourly intervals for accurate SEG billing. If the existing supply meter does not record export, a separate export meter is required. The cost of export metering installation should be included in the capital cost assessment.

For sites near the 100 kW MIC threshold, installing solar PV can in some circumstances affect the apparent demand profile in ways that interact with DNO notifications and half-hourly settlement obligations. Installers and DNOs should both be consulted on metering and settlement implications before installation proceeds.

Planning Permission for Commercial Solar PV

In England, permitted development rights under the Town and Country Planning (General Permitted Development) Order 2015 allow solar panels to be installed on commercial buildings without full planning permission in many circumstances, subject to conditions. The conditions include limits on how far panels protrude above the roof plane, restrictions on installations on listed buildings or in conservation areas, and requirements that panels be removed when no longer needed.

For ground-mounted systems and larger roof installations that exceed permitted development limits, a full planning application to the local planning authority is required. Planning outcomes vary by location, roof visibility, and the local authority's policies on renewable energy installations.

In Scotland, Wales, and Northern Ireland, permitted development rules differ. Installers with commercial PV experience in the specific jurisdiction should be consulted to confirm the applicable planning requirements before proceeding.

Business Rates Implications

Solar PV installations on commercial premises can affect the rateable value of the property and therefore the business rates liability of the occupier. The Valuation Office Agency (VOA) in England and Wales has the authority to reassess rateable values following significant changes to a property, including significant energy generation installations.

The government introduced business rates exemptions for eligible plant and machinery used for generating electricity from renewable sources in certain categories. The specific exemptions and their scope have changed over successive Finance Acts. Businesses planning commercial solar installations should confirm the current business rates position with the VOA or a qualified rating surveyor before installation, particularly for installations above 50 kW where the rateable value impact is more material.

Structural and Insurance Considerations

Commercial rooftop solar requires the supporting roof structure to carry the additional dead load of the panel array and mounting system, typically 15 to 25 kg per square metre. Older industrial and commercial roofs may require structural assessment and potential remediation before installation can proceed safely. A structural survey by a qualified structural engineer should be obtained before finalising installation plans for any roof whose condition or load capacity is uncertain.

Building insurance policies must be notified of the solar PV installation. Failure to notify the insurer may invalidate the policy in the event of a claim. Some insurers require a policy endorsement for commercial solar installations; others cover them under existing commercial property terms subject to notification. The installation itself, including panels and inverters, should be covered for damage, theft, and business interruption arising from system failure.

Fire risk assessment implications have received attention following incidents involving PV installations in other markets. DC isolators, cable routing, and inverter placement should comply with current IET Wiring Regulations (BS 7671) and installer MCS requirements. Fire and rescue services guidance on commercial PV should be reviewed as part of the installation sign-off process.

How we verified this

This article draws on the Smart Export Guarantee framework as established under the Energy Act 2008 and documented on the Ofgem website, the Town and Country Planning (General Permitted Development) Order 2015 as published on legislation.gov.uk, and Valuation Office Agency guidance on business rates for plant and machinery. Half-hourly settlement requirements are based on Ofgem's published settlement framework documentation.

Frequently asked questions

Editorial disclaimer: The following questions address common points of uncertainty about commercial solar PV for UK businesses. They do not constitute financial, planning, or engineering advice. Businesses should obtain independent professional advice specific to their premises before proceeding with any installation.

How much does commercial solar PV cost and what is the payback period?

Commercial rooftop solar PV installation costs vary by system size, roof type, mounting system, and inverter specification. Indicative installed costs for commercial systems in the 50 to 250 kW range typically fall between £600 and £900 per kW of installed capacity, though costs change with supply chain conditions. Payback periods depend primarily on the self-consumption rate and the current electricity unit rate. High self-consumption installations at current commercial rates typically show payback periods of 6 to 10 years. Lower self-consumption profiles extend payback. Individual quotations from MCS-certified installers are necessary for site-specific financial assessment.

What is the Smart Export Guarantee and how much does it pay?

The Smart Export Guarantee, established under the Energy Act 2008 and administered by Ofgem, requires licensed electricity suppliers above a threshold size to offer a positive export tariff to eligible small-scale generators exporting surplus electricity to the grid. Export tariff rates are set competitively by individual suppliers and vary. Ofgem publishes a list of SEG licensees and their current rates. Export rates are substantially below import unit rates, so the SEG supplements self-consumption savings rather than driving the financial case independently.

Do I need planning permission to install solar panels on a commercial building?

In England, permitted development rights under the Town and Country Planning (General Permitted Development) Order 2015 allow solar panels on commercial buildings without a full planning application in many cases, subject to conditions including projection limits and restrictions in conservation areas or on listed buildings. Installations exceeding permitted development limits require a full planning application. Rules differ in Scotland, Wales, and Northern Ireland. A qualified installer or planning consultant should confirm the applicable requirements for the specific premises before proceeding.

Will installing solar PV affect my business rates?

Solar PV installations can affect the rateable value of a commercial property and therefore the business rates liability of the occupier. The Valuation Office Agency has the authority to reassess rateable values following significant changes to a property. Business rates exemptions for eligible renewable generation plant exist but their scope is subject to change under Finance Act provisions. Confirmation of the current business rates position from the VOA or a qualified rating surveyor before installation is advisable, particularly for larger installations.

What structural checks are needed before a commercial solar installation?

Solar panel arrays and mounting systems add a dead load of approximately 15 to 25 kg per square metre to the roof structure. Older commercial and industrial roofs may not have been designed to carry this load and may require structural assessment and potentially remediation before installation. A structural survey by a qualified structural engineer is recommended before finalising installation plans for any roof whose condition or load-bearing capacity has not been recently assessed.

Sources

• Ofgem - Smart Export Guarantee
• Energy Act 2008 - legislation.gov.uk
• Town and Country Planning (General Permitted Development) Order 2015 - legislation.gov.uk
• Valuation Office Agency - gov.uk

For related reading on energy metering requirements, see Half-Hourly Meters for Business UK and Business Energy Meter Types UK.