Commercial Solar ROI Calculator
Model the return on a commercial solar system over 25 years: payback, internal rate of return, net present value and total cash, with optional tax relief. Every assumption is editable, nothing is gated, and the maths runs in your browser.
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- 25-year cash flow
- Pre-tax or after tax
- CSV export
Your system, your costs, your tax position
Start with the 100 kWp example, change anything, and read the result on the right. Nothing is sent anywhere until you choose to send an enquiry.
Cumulative cash flow
Year-by-year table
How the commercial solar ROI calculation works
Return on investment for a solar system is the cash it gives back against the cash you put in, spread over a long life. This commercial solar ROI calculator builds a year-by-year cash flow for 25 years and reads four measures off it. The first year is the same calculation as the business solar calculator, so the two pages agree on the same inputs.
- Year-1 benefit. Generation is system size × yield. The share used on-site avoids electricity you would otherwise import at your import rate; the rest is exported at your Smart Export Guarantee rate. On-site use cannot exceed your annual consumption.
- Later years. Output falls by the degradation rate each year (0.5% by default). The import rate moves by the real price change you enter (0% by default, meaning flat prices in today’s money). Running costs come off every year and the inverter replacement lands in the year you choose. The on-site share is recalculated each year, so in later years the result can differ slightly from the main calculator’s straight-line 25-year figure when consumption limits on-site use.
- Payback. Simple payback is capex ÷ year-1 benefit, the same definition the main calculator uses. Cash payback is the point where cumulative cash turns positive after running costs, the inverter and any tax. It is longer, and the more honest of the two. The commercial solar payback calculator adds discounted and after-tax payback to the same two measures.
- IRR and NPV. IRR is the single annual return that makes the 25 years of cash flow exactly repay the capex; compare it with your cost of capital. NPV discounts each year at the rate you set and subtracts the capex. Because every figure is in today’s money, the discount rate is a real rate, not a nominal one.
The planning assumptions behind the defaults are the same ones published under the main calculator: regional yields, a £750–£900 per kWp cost band for 50–250 kWp, a 26p import rate, a 12p export rate and 65% on-site use. Operations and maintenance (£10 per kWp a year), the inverter replacement (£80 per kWp in year 12) and the 6% discount rate are our own planning assumptions, not sourced data; every one is an input, so replace them with the numbers in your quotes.
Worked example: 100 kWp in the Midlands
With the default inputs (100 kWp at 950 kWh per kWp, 115,000 kWh a year of consumption, 65% used on-site, 26p import, 12p export, £825 per kWp, running costs of £10 per kWp a year, an £80 per kWp inverter in year 12, 0.5% degradation, flat real prices and a 6% real discount rate) the system generates 95,000 kWh in year 1. 61,750 kWh is used on-site and 33,250 kWh is exported. The year-1 benefit is £20,045 and the installed cost is £82,500.
Simple payback is 4.1 years. After running costs and the year-12 inverter, cash payback is 4.4 years, the IRR is 22.2% and the NPV at 6% is £145,735. Over 25 years the system returns £356,679 net of the capex, which is 432% of what was spent. These are outputs of a model under stated planning assumptions, not a forecast for any particular site.
What moves the return most
Run the same 100 kWp system with different on-site use and import rates and the cash payback ranges from 3.2 years to 5.9 years. The table shows cash payback and IRR for nine combinations, with every other input left at its default.
| On-site use | 20p import | 26p import | 32p import |
|---|---|---|---|
| 50% used on-site | 5.9 yrs (16.0%) | 4.9 yrs (19.7%) | 4.2 yrs (23.3%) |
| 65% used on-site | 5.4 yrs (17.5%) | 4.4 yrs (22.2%) | 3.7 yrs (26.8%) |
| 80% used on-site | 5.1 yrs (19.0%) | 4.0 yrs (24.7%) | 3.2 yrs (30.3%) |
Cash payback in years, with IRR in brackets. Generated by this page’s own model, pre-tax, default costs.
Two inputs do most of the work. On-site use decides how much of each kWh is worth your import rate rather than the export rate, so a site that runs through the day beats one that is empty by 5pm. The import rate sets what that avoided kWh is worth: it is the number to take from your own bill, not from a table. Capex per kWp and system size matter too, but they are the numbers an installer will actually quote, so they are the ones to replace first. The yields by region page shows how far the yield alone can move the answer.
Tax: how capital allowances change the ROI
Solar panels are special-rate plant for capital allowances. The Annual Investment Allowance is £1 million (GOV.UK), which usually means 100% relief in year one for a business that stays under the limit. Companies can also claim a 50% first-year allowance on special-rate plant, with the rest written down at 6% a year on a reducing balance (HMRC helpsheet HS252). Full expensing does not cover solar.
The corporation tax main rate is 25% for profits over £250,000 and the small profits rate is 19% for profits under £50,000, with marginal relief between (GOV.UK). The after-tax settings here tax the annual saving at the rate you enter and give relief for the allowance in the same year, so they assume you have enough taxable profit to use it. At the default 25% rate:
| Setting | Cash payback | IRR | NPV at 6% | Net cash, 25 years |
|---|---|---|---|---|
| Pre-tax (default) | 4.4 years | 22.2% | £145,735 | £356,679 |
| After tax, Annual Investment Allowance | 4.4 years | 20.9% | £107,140 | £265,509 |
| After tax, 50% first-year allowance | 4.9 years | 19.0% | £102,312 | £263,314 |
Same 100 kWp example. The after-tax rows tax the annual saving as well as relieving the capex, which is why the pre-tax and after-tax figures cannot be compared line by line.
Capital allowances only help a business that pays tax. A loss-making company, a charity or a public body cannot use them directly, which is where a lease or power purchase agreement can win; the solar tax treatment page and the funding comparison cover both.
What this calculator leaves out
A screening model should be clear about its edges. This one does not price:
- Grid connection and export limits. Above the G98 threshold a G99 application and DNO approval come before connection, and the network can cap export or require reinforcement. Those costs and delays sit outside the cost per kWp you enter.
- The roof. Roof condition, re-roofing, structural checks and access are site-specific. Roofing work is charged at the standard VAT rate even when the solar element is not.
- VAT. The zero rate for energy-saving materials in VAT Notice 708/6 applies to residential accommodation and, from 1 February 2024, buildings used solely for a relevant charitable purpose, and it ends on 31 March 2027. A typical commercial installation is standard-rated, and a VAT-registered business normally reclaims that VAT. If yours cannot, tick the VAT box and the model adds 20% to the cost.
- Business rates. In England, onsite renewable generation plant is currently exempt from business-rates valuation until 31 March 2035 (S.I. 2022/405), so the panels should not add to a rates bill. Scotland (SSI 2023/32) and Wales (SI 2023/1229) also keep qualifying renewable plant out of valuations until 31 March 2035; in Northern Ireland, generating plant up to 50 kW is not rateable (Department of Finance valuation notes).
- Batteries and finance. Storage changes on-site use and export; interest changes the cash flow. Neither is in the model. The main calculator’s method page explains how on-site use is treated.
Where the inputs come from
In Great Britain, export rates are set by licensed suppliers under the Smart Export Guarantee (Northern Ireland has no SEG; suppliers there set their own export tariffs), so they vary and a business should ask its own supplier. The 12p default is a planning figure in line with the better fixed rates on comparison sites in early October 2026 (around 12–13p per kWh). Yields come from the regional yields page, which checks the five defaults against the European Commission’s PVGIS for twelve UK cities. The installed-cost band is a planning range; the government’s own small-scale solar PV cost data is the published benchmark to compare a quote against, and business electricity prices are published by DESNZ in Quarterly Energy Prices. Your own bill and your own quotes always beat both.
Tax and VAT references last checked on 20 October 2026.
Common questions about commercial solar ROI
How do you calculate ROI on a commercial solar system?
Add up what the system saves and earns each year, take off running costs, the inverter replacement and any tax, then compare the total with what you spent. This calculator shows that as cash payback, IRR, NPV and 25-year net cash. With the default inputs the 25-year net cash is £356,679 on £82,500 of capex, a return of 432% of the amount spent.
What is a good payback or ROI for commercial solar?
There is no fixed threshold. What matters is how the return compares with your cost of capital and with the next best use of the same cash. At the default inputs the IRR is 22.2% against a 6% real discount rate. Payback moves most with on-site use and your import rate: in the table above the same 100 kWp system ranges from 3.2 years to 5.9 years cash payback.
Does the ROI include tax relief?
Only if you switch it on. The default is pre-tax, which matches the main business solar calculator. The two after-tax settings tax the annual saving at your corporation tax rate and give relief for the Annual Investment Allowance or the 50% first-year allowance. They assume your business has enough taxable profit to use the relief. See solar tax treatment for how each allowance works.
What does the calculator leave out?
Grid connection and DNO costs, export limits, roof repairs or re-roofing, batteries, finance interest, insurance and the cost of any shutdown while the system is installed. It also ignores timing within a year and assumes a profitable business when tax relief is switched on. Treat it as a screening tool for a decision, then ask installers to price your site.
Is a PPA or lease a better return than buying?
They are different trades. A power purchase agreement or lease reduces or removes the upfront cost but also reduces how much of the benefit you keep. The funding comparison runs the same 100 kWp system through purchase, lease and PPA so you can compare like with like.
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