Are There Incentives for Installing Commercial Solar Panels in the UK?
- Rob Whitney
- Jan 8
- 4 min read
Most UK businesses face the challenge of rising energy costs & the uncertainty of price volatility. And, increasingly, organisations are responding to stakeholder demands for more sustainable business practices.
Installing solar panels is a great way to solve this ‘energy trilemma’ and commercial solar can create excellent returns on investment (ROI), as well as increase the value of commercial buildings for landlords.
There are numerous incentives available, both sticks and carrots, which make installing commercial solar panels highly attractive in the UK. Most commonly, organisations can access energy sector funding, notably Power Purchase Agreements (PPAs) - an area where Eden Sustainable is an established market leader. In addition, government regulatory drivers include tax and energy market incentives, regional or sector or sector specific capital grants and energy efficiency obligations.
In this short blog we consider the 5 key incentives that can really help make the case for the transition to clean energy a smart commercial decision. Here goes:
1.Smart Export Guarantee (SEG)
This is a government-backed scheme that allows businesses to sell surplus electricity generated by their solar panels back to the National Grid and obliges utilities to buy the power.
How It Works:
Businesses with solar panels (up to 5MW capacity) can sign up for SEG with an eligible energy supplier.
Energy suppliers pay the exporter for each unit (kWh) of excess electricity exported.
Tariffs vary between providers, so it’s important to compare rates.
Unlike the previous Feed-in Tariff (FiT) (since withdrawn), the SEG does not offer fixed payments but, instead, allows businesses to negotiate better deals based on market rates, and the rates vary over time with energy market forces. It is worth customers looking at the various options in the market for this exported solar power and prices can vary greatly.
Example Tariff Rates (from 2024):
Energy Supplier
EDF Energy
British Gas
SEG (p/kWh)
5.6p
6.4p
The main benefit of the SEG is that businesses can be sure to benefit from an export income for their solar project irrespective of whether they are consuming the power on site.
2. Full Expensing & Tax Benefits for Solar Panel Installations
As of February 2025, UK businesses installing commercial solar panels can benefit from several tax incentives:
Annual Investment Allowance (AIA):
Deduction: Businesses can deduct 100% of the cost of qualifying plant and machinery, including solar panels, from their taxable profits in the year of purchase.
Limit: The AIA allows for up to £1 million in qualifying expenditures annually.
50% First-Year Allowance (FYA):
Deduction: Under this scheme, companies can deduct 50% of the value of new solar panel installations from their profits in the first year, reducing their Corporation Tax bill.
Depreciation: The remaining 50% is written down at 6% in subsequent years If you’d like to read more about tax benefits, check out another Eden blog here.
3. Local Authority and Education Sector Grants
Some businesses and organisations may qualify for specific grants and financial support to assist with solar panel installation costs. These are typically available through:
Local Authority Grants
While there are no UK-wide grants for commercial solar panel installations, some local authorities offer financial support to businesses investing in renewable energy. The availability and amount of these grants vary by region, so it's advisable to consult your local council for specific opportunities. Grants usually cover a percentage of installation costs (e.g., 30%-50%).
Education Sector Grants
In 2024, the National Grid awarded a £2.7 million grant to the Solar In Schools initiative. This funding is intended to enable approximately £10 million worth of solar projects in schools that might otherwise lack the resources to adopt solar energy solutions.
4.Non-Domestic Rates Relief (Scotland), Green Business Loan Scheme (Wales)
Non-Domestic Rates Relief (Scotland)
In Scotland, businesses installing renewable energy systems, such as solar panels, may qualify for non-domestic rates relief. This incentive exempts new solar installations from business rates until 2035, providing significant financial savings for Scottish enterprises.
Green Business Loan Scheme (Wales)
Welsh businesses can access the Green Business Loan Scheme, offering loans ranging from £1,500 to £1.5 million to fund renewable energy projects, including solar panel installations. This
scheme facilitates the adoption of sustainable energy solutions by providing accessible financing options.
By leveraging these incentives, UK businesses can reduce the initial costs associated with installing commercial solar panels, leading to long-term energy savings and a smaller carbon footprint.
5. Minimum Energy Efficiency Standards (MEES)
This is more ‘stick’ than ‘carrot’ but nonetheless is an important consideration for any property owner or landlord. The UK's Minimum Energy Efficiency Standards (MEES) are designed to enhance the energy performance of commercial properties, thereby encouraging businesses to adopt energy-efficient solutions, such as installing solar panels.
Key MEES Requirements:
Current Standard (as of April 2023): All commercial properties must have a minimum Energy Performance Certificate (EPC) rating of 'E' to be legally let.
Upcoming Standards:
      - April 2027: Minimum EPC rating requirement increases to 'C'
      - April 2030: Minimum EPC rating requirement further rises to 'B'.
To comply with these escalating standards, businesses are incentivised to implement energy-efficient measures. Installing solar panels can significantly improve a property's EPC rating by reducing reliance on non-renewable energy sources and lowering overall energy consumption.
Talk to us
Investing in commercial solar panels can be a wise financial move for many businesses. The reduction in annual electricity costs provides a clear financial benefit, which may be further enhanced by incentives as well as a range of further commercial benefits.
At Eden, all of our system designs look at these factors and we ensure that we capture these in any proposal we make to you. If you’re thinking about making the switch to a more sustainable energy future, then contact us via our website and we’d love to help you unlock the benefits.
Author’s note: This blog should not be considered tax advice and organisations are encouraged to take their own specialist advice or speak to Eden Sustainable directly.