How much do commercial solar panels cost in the UK?

How grants and tax allowances change the maths

The headline grant percentages — 30% IETF, 100% PSDS, 40% REPF — are real but they apply to eligible capex, not total capex. Eligible capex usually excludes contingency, certain fees and any element of "betterment" (e.g. roof replacement). The effective grant rate, on average, is 18–24% of total project capex on IETF, 75–85% on PSDS once ineligible items are stripped, and 25–32% on REPF.

The capital allowance is the simplest part of the stack — but it has to be the right allowance. Solar panels are special rate expenditure for capital allowances: HMRC has designated all capital expenditure on the provision of solar panels as special rate since April 2012 (Capital Allowances Manual CA22335). That matters because Full Expensing does not apply to solar PV — the 100% first-year allowance is for main-rate plant only. The 100% year-one route for solar is the Annual Investment Allowance (AIA), which is available against special-rate expenditure and covers the first £1,000,000 of qualifying spend a year; most commercial solar projects sit under that cap, so relief is full in year one. For any UK incorporated company paying the main rate of corporation tax (25%), £1 of solar capex relieved under AIA saves you 25p of tax in the period the spend is incurred. So a £400,000 system effectively costs you £300,000 net. Spend above the £1m AIA cap attracts the 50% special-rate first-year allowance in year one instead, with the balance going into the special rate pool at a 6% writing-down allowance. Stacked on a grant, the allowance applies to the after-grant capex — so an IETF grant covering 30% leaves £280,000 net of grant, which AIA then reduces to £210,000 effective net cost. Full mechanics here.

The cost lines installers usually under-quote

DNO connection costs. For systems over 16A per phase (4kW single-phase, 12kW three-phase), connection requires a G99 application to the DNO (UK Power Networks, National Grid Electricity Distribution, SP Energy Networks, etc.). Anything above 100kW often triggers non-contestable works — switchgear upgrades, transformer changes, network reinforcement — that the DNO charges directly. We have seen these come in anywhere from £8,000 to £180,000. They should always be quoted before contracts.

Structural reinforcement. Buildings constructed pre-2000 — especially clad steel-portal warehouses — often need additional purlins or bracing to take a 12–15kg/m² PV load. A structural engineer's report (£600–£1,200) up-front saves the surprise cost later.

Roof remediation. Solar PV is a 30-year asset; the roof should match. Expect to budget for re-coating or panel replacement on roofs more than 15 years old. PSDS allows a portion of remediation cost to be claimed; private sector grants usually do not.

Battery sizing changes the model. Adding a 100kWh battery to a 250kWp PV system typically lifts capex by £40,000–£55,000 but raises self-consumption from 75% to 92%, which materially shortens payback on most commercial sites with non-24h operation.

How to validate a quote

The three checks that catch 90% of overpriced quotes: (1) panel + inverter cost together should be no more than 50–55% of total quote — anything higher is over-marked-up; (2) DNO costs should be a separate line, not buried in "civils" — if it isn't, ask for the G99 confirmation letter; (3) IWA insurance-backed warranty should be itemised — its presence is the cheapest signal that the installer is in an MCS-aligned scheme.

If you want a second opinion on a quote, we benchmark commercial solar quotes for free — no commitment, no upsell. The funding review form includes a quote review option.