If you run a business in Britain, you have probably noticed two things in the last few years. Energy prices have been volatile and solar has been popping up on more rooftops across business parks and high streets. The big question many finance teams are asking this year is simple. Are solar panel costs actually falling for commercial projects in the UK, and if so, what does that mean for payback and return on investment
The short answer is yes, the price of the solar modules themselves has been falling. Global oversupply and intense competition among manufacturers drove a sharp drop in the price of panels through 2023 and 2024. Industry analysts reported record global deployment on the back of these low module prices, which stimulated demand in many markets. That trend has continued into 2025, although there are signs that prices are finding a more sustainable floor as manufacturers try to protect margins. For a UK business, that translates into better kit prices than we saw during the energy crisis peak, even if not every cost line is falling at the same rate.
It is useful to separate the total installed cost into two parts. First, the modules, which have indeed become cheaper. Second, everything else that makes a system work, often called balance of system. That includes mounting, cabling, inverters, design, labour, permitting and grid connection. Panel prices respond to global supply and demand and have been trending downward. By contrast, labour, grid fees and some materials have faced the same inflation and supply chain pressures seen across the wider economy. This mix means the total installed cost has not dropped as quickly as the headline module price, but the overall direction of travel is favourable for most commercial rooftops.
Falling kit costs are only half the story. Your savings come from the electricity you do not buy from the grid. Business energy rates spiked after 2021 and although they have eased from the peak, they remain above the levels many firms were paying before the crisis. Ofgem reports that business electricity and gas prices have started to decline but are still higher than pre 2021 levels. That means every kilowatt hour you generate and use on site is still displacing comparatively costly grid power, which keeps the business case strong even when wholesale markets wobble.
The wider policy environment also matters. The Smart Export Guarantee allows small scale generators, including businesses, to receive payments for surplus electricity exported to the grid. The scheme covers systems up to five megawatts, so it comfortably includes most commercial rooftops and light industrial arrays. Export rates are set by suppliers rather than a fixed government tariff, so they vary and you should shop around. For many sites the export income is a helpful top up rather than the main driver, since the best returns usually come from using the power on site to offset grid imports.
So where does this leave payback for a typical commercial rooftop system Most sites do not have the same profile, so any example needs to be treated as a guide rather than a promise. As a rule, higher day time consumption and regular five or six day operations improve the case, because more generation is consumed on site. A distribution centre with refrigeration or a manufacturer with steady production will often see a shorter payback than an office that empties at five in the afternoon. In practice we see many businesses targeting simple paybacks of four to seven years, depending on site consumption, system size, finance route and export arrangements. The recent softening in kit prices and the still elevated business energy rates are nudging projects toward the lower end of that range compared with the crisis years. Independent forecasts for business energy suggest prices may remain structurally above pre crisis levels through the decade, which further supports the long term rationale for self generation.
On the down side, global manufacturing capacity for modules has expanded rapidly, especially in Asia. That has created a buyer friendly market for panels in Europe, where wholesalers and installers have been able to secure better pricing and pass through savings to projects. On the up side, grid connection studies and approvals can add both time and cost, particularly for larger systems or sites in constrained areas. Construction inflation has also affected scaffolding, mounting hardware and labour rates. Finally, if a roof needs structural work or a replacement in the next few years, it may make sense to co ordinate that work with the solar project, which can change the cost profile but gives a better long term outcome.
What about quality and technology choice The fall in panel prices has not meant a race to the bottom on quality for reputable brands. Tier one manufacturers continue to deliver high efficiency modules with long product and performance warranties. The sweet spot for many commercial rooftops today is a moderate to high efficiency monocrystalline module in the four hundred to six hundred watt range, paired with a string inverter or a set of smaller inverters to give design flexibility.
Bifacial modules are worth considering on certain roof types and orientations, although their extra yield benefits are site specific. Inverters remain the brains of the system, so we always recommend strong brands with robust UK support. To maximise output across an irregular roof with different pitches or shading, module level optimisation can be considered, though it adds cost and should be evaluated case by case.
You might also be wondering if you should wait for prices to fall further. There is always a point where waiting can cost more than acting, especially when you are paying today’s power prices for every unit you import. Analysts have suggested that the steepest module price falls are behind us and that producers cannot sustainably sell below cost for long. While no one can perfectly time the market, most businesses gain more by securing a good price today, locking in a trusted installer and starting to reduce grid imports, rather than chasing the last few points of kit savings.
To get the best value from a commercial solar project in 2025, focus on four simple steps. First, map your consumption profile with hourly data if possible, so system sizing fits your demand rather than just your roof. Second, compare module and inverter options on lifetime yield and warranty strength rather than price alone.
Third, check grid export constraints and decide early whether to cap export, apply for a higher limit or pair with storage. Fourth, run a financial model that includes realistic energy price scenarios, export income under the Smart Export Guarantee and the correct tax treatment under capital allowances. These steps will give your board a confident, transparent case for investment.
In summary, yes, the cost of panels has been falling and that trend has improved the economics of commercial installations across the UK. Total installed costs have eased, although some site specific and grid related items can still add pressure.
Pair those lower kit prices with continued above trend business energy costs and the result is a stronger business case than many expected even a year ago. With sensible sizing, a good installer and a clear understanding of tax and export rules, most firms can expect compelling savings and a solid return on investment from a rooftop array commissioned this year.
Can my business get paid for surplus electricity
Yes. Under the Smart Export Guarantee, many suppliers will pay you for each unit you export. Rates vary by supplier and tariff, so it is worth comparing offers.
Do capital allowances apply to solar
Yes, but solar is a special rate asset, so full expensing does not apply. Instead there is a fifty per cent first year allowance with the balance written down at the special rate. Your tax adviser can confirm the best route for your company.
Are energy prices going back to pre crisis levels
Prices have eased from the peak. However Ofgem and market updates show they remain higher than before 2021. This continues to support the case for on site generation.
If you would like a tailored assessment for your site, Save Energy UK can model consumption, design the right system for your roof and present a clear business case with payback, incentives and finance options. Get in touch for a free consultation and a no obligation quote.
