How do I Calculate the Energy Savings from Commercial Solar Panels?

Calculating the energy savings from a commercial solar installation comes down to four variables: how much electricity the system generates, how much of that generation is consumed on-site, what commercial electricity costs per unit, and what surplus export earns. This guide walks through the complete calculation, with worked examples, current rate data, and the variables that matter most for businesses in logistics, food production, manufacturing, and cold storage. 

Before a business commits to a commercial solar investment, whether through outright purchase or a Power Purchase Agreement, one question matters more than any other: what will this actually save us? 

It is a financial question, not a technical one. And it deserves a clear, honest, numerical answer. The problem is that commercial solar savings calculations are frequently presented in ways that obscure the variables, assume unrealistic inputs, or omit important adjustments that affect real-world returns. 

This guide sets out the correct methodology for calculating commercial solar energy savings, with current UK rate data, worked examples across different system sizes, and a clear explanation of the variables that have the greatest impact on the final figure. By the end, any Finance Director, Operations Manager, or Sustainability Lead should be able to verify a solar savings projection or build their own. 

The Two Sources of Financial Saving from Commercial Solar 

"As an indicative reference, Eden Sustainable's PPA rates for qualifying commercial sites are currently in the region of 13p to 14p/kWh — representing a saving of 12p to 14p per unit against a typical large commercial grid tariff of 26.5p/kWh. Actual PPA rates are site-specific and confirmed at the point of proposal." 

Before any calculation, it is important to establish that commercial solar savings come from two distinct and very different financial streams and that understanding the difference between them is the single most important conceptual step in calculating solar returns accurately. 

Source 1: Self-Consumption Saving 

Every unit of solar electricity consumed directly on-site displaces a unit of grid electricity that would otherwise have been purchased at the commercial tariff rate. This is the primary financial driver of commercial solar returns and at current commercial electricity rates of 25p to 28p per kWh for most large businesses, it is where the overwhelming majority of the financial benefit is generated. 

Self-consumption saving is worth the full commercial electricity rate per unit displaced, typically 25p to 28p/kWh for large commercial and industrial consumers in 2026. It is the most valuable financial output of a commercial solar system and maximising it through appropriate system sizing and battery storage is the most important design objective. 

Source 2: Export Income 

Solar electricity that is generated but not consumed on-site is exported to the grid under the Smart Export Guarantee (SEG). Commercial SEG rates in 2026 range from 3p to 8p per kWh on standard tariffs, rising to 12p to 15p per kWh on premium time-of-use tariffs from suppliers including British Gas and Octopus Energy. Commercial export income is real and should be included in savings calculations, but it is worth two to three times less per unit than self-consumption saving at equivalent commercial electricity rates. 

The financial implication is critical: maximising self-consumption is always more valuable than maximising generation. A system generating 200,000kWh per year with 85% self-consumption saves more than a system generating 250,000kWh per year with 50% self-consumption, at any realistic combination of current commercial tariff and SEG rates. This is why system sizing, operational profile, and battery storage integration all matter so much in calculating and maximising, commercial solar savings. 

The Core Calculation: Step by Step 

The complete commercial solar savings calculation has five steps. Each is straightforward once the input variables are established. 

Step 1: Calculate Annual Generation 

Annual generation is the total electricity a system will produce in a year, measured in kilowatt-hours (kWh). It is calculated using the system size in kilowatt-peak (kWp) and the UK solar yield factor for the site's location and orientation. 

Annual Generation (kWh) = System Size (kWp) × UK Yield Factor (kWh/kWp) 

The UK yield factor varies by location and orientation: 

• South England (south-facing): 950-1,100 kWh/kWp per year 

• Midlands and Wales (south-facing): 850-950 kWh/kWp per year 

• North England (south-facing): 800-850 kWh/kWp per year 

• Scotland (south-facing): 750-800 kWh/kWp per year 

• East/west orientation: Reduce yield by approximately 15% 

These figures are based on MCS (Microgeneration Certification Scheme) irradiance data and represent the industry standard for UK solar yield modelling. 

Worked example: A 250kWp system on a south-facing flat roof in the Midlands: 250 × 900 = 225,000 kWh per year. 

Step 2: Split Generation into Self-Consumption and Export 

Not all generated electricity is consumed on-site. The self-consumption rate — the proportion of generation used directly within the building — is the most important variable in any commercial solar savings calculation. 

Units Self-Consumed (kWh) = Annual Generation × Self-Consumption Rate 

Units Exported (kWh) = Annual Generation × (1 − Self-Consumption Rate) 

Self-consumption rates vary significantly by business type and operational profile. The table below sets out typical rates by sector for Q2 2026: 

Business Type	Typical Self-Consumption	With Battery Storage	Why
Food production (day shift, continuous process)	80%-95%	90%-98%	High continuous process loads align precisely with solar generation hours - very little surplus to export
Logistics & distribution (day shift)	70%-85%	85%-92%	Large daytime loads from lighting, handling equipment, and dock operations. Battery extends into early evening shifts.
Manufacturing (day shift, energy-intensive)	75%-90%	88%-95%	Process loads run during production hours - strong daytime consumption alignment
Cold storage (24/7 refrigeration)	60%-75%	80%-90%	Refrigeration runs continuously - solar covers daytime, battery extends into evening. Strong overall case.
Warehousing (standard hours, moderate load)	55%-70%	75%-85%	Moderate daytime loads - lighting, forklift charging, office. Battery adds meaningful uplift.
Office / commercial property (Mon–Fri)	45%-65%	65%-80%	Strong Mon-Fri daytime consumption but weekend generation mostly exported. Battery helps.

Self-consumption rates are indicative for typical operational profiles in each sector. Actual rates depend on half-hourly consumption data specific to each site. A site-specific feasibility assessment using AMR meter data will produce more accurate self-consumption projections than sector averages. 

Worked example: A 250kWp Midlands warehouse generating 225,000 kWh/year with 75% self-consumption: 225,000 × 75% = 168,750 kWh consumed on-site; 225,000 × 25% = 56,250 kWh exported. 

Step 3: Calculate Self-Consumption Saving 

The self-consumption saving is the financial value of the grid electricity displaced by solar generation — the units consumed on-site multiplied by the commercial electricity rate. 

Self-Consumption Saving (£) = Units Self-Consumed (kWh) × Commercial Electricity Rate (£/kWh) 

The correct rate to use is the actual commercial tariff the business pays — not a residential rate, not a generic average, and not the Ofgem household price cap (which does not apply to commercial customers). Current commercial electricity rates by business size in Q2 2026: 

Rate Type	Q2 2026 Figure	Notes
Small business electricity rate (10,000 kWh/yr)	27.8p/kWh	Average across contract lengths, February 2026 data
Medium business electricity rate (25,000–50,000 kWh/yr)	26.3p-26.5p/kWh	Average commercial rate, Q2 2026
Large business electricity rate (55,000 kWh/yr+)	25p-26p/kWh	Lower rate at higher volume - large commercial tariff
Energy-intensive industrial rate	22p-28p/kWh	Wide range - I&C rates vary significantly by contract, volume, and half-hourly profile
Commercial SEG export rate (standard)	3p-8p/kWh	Range across major suppliers - standard commercial export tariffs
Commercial SEG export rate (premium / ToU)	12p-15p/kWh	Available via British Gas, Octopus - time-of-use export, requires half-hourly metering
UK average solar yield (commercial)	850-950 kWh/kWp/year	MCS irradiance data: 900 kWh/kWp for Midlands; 950-1,100 for South England; 800-850 for North and Scotland

Commercial electricity rates are based on published industry data as of Q2 2026. Actual rates vary significantly by contract, consumption volume, location, and market conditions. Always use the business's actual contracted rate when calculating savings projections. 

Worked example: 168,750 kWh × £0.265/kWh = £44,719 per year in self-consumption saving. 

Step 4: Calculate Export Income 

Export income is the revenue from surplus solar generation sold back to the grid under the Smart Export Guarantee. 

Export Income (£) = Units Exported (kWh) × SEG Export Rate (£/kWh) 

For commercial solar installations: 

• Standard commercial SEG rates: 3p to 8p/kWh - available from most major suppliers 

• Premium time-of-use commercial SEG: 12p to 15p/kWh - available from British Gas (Export and Earn Plus), Octopus Energy, and EDF Energy; requires half-hourly export metering 

• MCS certification required: Commercial installations up to 5MW must be MCS certified to qualify for SEG payments 

Worked example: 56,250 kWh × £0.07/kWh (conservative standard commercial SEG) = £3,938 per year in export income. 

Step 5: Calculate Total Annual Saving 

The total annual saving is the sum of self-consumption saving and export income. 

Total Annual Saving (£) = Self-Consumption Saving (£) + Export Income (£) 

Worked example: £44,719 + £3,938 = £48,657 per year total saving. 

This is the figure that drives payback period and return on investment calculations. It is a first-year figure - and it will grow in real terms over the system's life as commercial electricity rates rise, which they are structurally expected to do given rising non-commodity costs and ongoing grid infrastructure investment. 

Full Worked Example: 250kWp Midlands Warehouse 

The table below brings the complete calculation together for a representative large commercial installation - a 250kWp south-facing flat roof system on a logistics warehouse in the Midlands, with a standard day-shift operation and no battery storage. 

Variable	Figure	Notes
System size	250kWp	Typical large warehouse installation
UK annual yield factor	900 kWh/kWp	Midlands location, south-facing flat roof
Annual generation	225,000 kWh	250 × 900 = 225,000 kWh
Self-consumption rate	75%	Day-shift operation, no battery storage
Units consumed on-site	168,750 kWh	225,000 × 75% = 168,750 kWh
Units exported to grid	56,250 kWh	225,000 × 25% = 56,250 kWh
Commercial grid rate	26.5p/kWh	Typical large business rate, Q2 2026
Self-consumption saving	£44,719/year	168,750 × £0.265 = £44,719
Commercial SEG export rate	7p/kWh	Conservative commercial SEG rate
Export income	£3,938/year	56,250 × £0.07 = £3,938
TOTAL ANNUAL SAVING	£48,657/year	Self-consumption saving + export income
25-year cumulative saving (no inflation for purpose of this exercise but will increase with inflation)	£1,216,425	£48,657 × 25 years (undiscounted)
Estimated system cost	£162,500-£200,000	£650-£800/kWp installed
Simple payback period	3.3-4.1 years	System cost ÷ annual saving

All figures are based on Q2 2026 commercial electricity and SEG rate data. System cost range reflects standard installed cost for 250kWp at £650–£800/kWp. Savings do not account for annual panel degradation (approximately 0.4% per year for Tier 1 N-type TOPCon panels), which would reduce year-25 generation by approximately 8–9% relative to year one. Payback period does not account for corporation tax relief via Annual Investment Allowance, which can reduce effective net cost by up to 25% in year one. 

What Happens to Savings Over 25 Years 

The worked example above shows year-one savings. But commercial solar is a 25-year investment, and understanding what the savings trajectory looks like over that period is important for accurate lifetime return calculation. 

Panel Degradation 

Tier 1 N-type TOPCon panels degrade at approximately 0.3% to 0.4% per year. At 0.4% annual degradation, a system generating 225,000 kWh in year one generates approximately 207,000 kWh in year 25 - a reduction of around 8%. When calculating 25-year cumulative savings, applying a degradation adjustment to each year's generation figure produces a more accurate total than simply multiplying year-one savings by 25. 

The correct approach is a year-by-year generation table, with each year's generation reduced by the annual degradation factor. For most commercial financial modelling purposes, a simplified adjustment - reducing year-one generation by 4% to 5% to calculate an average annual generation figure, then multiplying by 25 - produces an acceptably accurate 25-year total without requiring a full year-by-year model. 

Electricity Price Inflation 

Commercial solar savings grow in real terms as grid electricity prices rise. UK commercial electricity prices have risen by approximately 150% over the past decade in nominal terms. Forecasting future electricity prices with precision is not possible - and any savings projection that assumes a specific electricity price inflation rate should be treated with appropriate scepticism. The conservative and defensible approach is to model savings at current electricity rates, without assuming price inflation. Any real-terms increase in grid electricity prices will improve the actual financial return above the projected figure - which means the modelled projection represents a floor rather than a ceiling. 

Tax Relief - Reducing the Effective Cost Base 

For businesses purchasing a commercial solar system outright, the Annual Investment Allowance significantly improves the effective return. At 25% corporation tax, a £200,000 system generates up to £50,000 in tax relief in year one - reducing the effective net cost to £150,000 and improving the simple payback period from approximately 4.1 years to approximately 3.1 years. This relief should be discussed with your accountant or tax adviser. 

How Battery Storage Changes the Calculation 

The addition of battery storage to a commercial solar system improves savings calculations by increasing self-consumption - shifting generated electricity from low-value export to high-value on-site consumption. The financial impact is material. 

Using the 250kWp warehouse example: without battery storage, self-consumption is 75% and total annual saving is £48,657. With a 250kWh battery bank (approximately £50,000 to £112,500 installed), self-consumption rises to approximately 88%. The same calculation at 88% self-consumption produces: 

• Units self-consumed: 225,000 × 88% = 198,000 kWh 

• Units exported: 225,000 × 12% = 27,000 kWh 

• Self-consumption saving: 198,000 × £0.265 = £52,470 

• Export income: 27,000 × £0.07 = £1,890 

• Total annual saving with battery: £54,360 — an increase of £5,703 per year over the no-battery figure 

At an additional £5,703 per year, a £75,000 battery installation achieves a standalone payback of approximately 13 years - long relative to the solar system's 5-year payback, but within the battery's 15 to 20-year operational lifespan. The correct evaluation is whether the combined system - solar plus battery - produces a better overall return than solar alone, accounting for the additional capital cost. For many commercial sites, particularly those with significant evening or overnight consumption, it does. 

How PPA Savings Are Calculated Differently 

For businesses accessing commercial solar through a Power Purchase Agreement rather than outright purchase, the savings calculation works differently. Under a PPA, the business does not own the system - it pays a contracted rate for the electricity the system generates, which is below the commercial grid tariff. The saving is the difference between the PPA rate and the grid rate on each unit consumed on-site. 

PPA Annual Saving (£) = Units Self-Consumed (kWh) × (Grid Rate − PPA Rate) 

Example: A PPA rate of 14p/kWh versus a commercial grid rate of 26.5p/kWh produces a saving of 12.5p per unit. On 168,750 kWh of self-consumed generation, that is £21,094 per year in direct cost saving - without any capital outlay. 

The PPA saving is lower per unit than the outright purchase saving, because the PPA provider retains a share of the economic benefit in exchange for bearing the capital cost, maintenance responsibility, and performance risk. The comparison table below sets out the key differences in how savings are calculated and where the financial benefit flows: 

Metric	CAPEX Purchase	PPA Arrangement
Upfront cost	Full system cost (e.g. £162,500-£200,000 for 250kWp)	Zero - provider funds the system
Annual saving mechanism	Full value of avoided grid electricity + export income accrues to business	Difference between PPA rate and current grid rate - e.g. 14p/kWh PPA vs 26.5p grid = 12.5p/kWh saving on self-consumed units
Annual saving — self-consumption (250kWp example)	168,750 kWh × 26.5p = £44,719	168,750 kWh × 12.5p = £21,094 (on the rate differential)
Export income	56,250 kWh × 7p = £3,938 to business	Provider receives as asset owner
Tax relief	AIA up to 25% of system cost in year one - up to £50,000 on £200,000 system	No - provider claims AIA as asset owner
O&M responsibility	Business - or via separate O&M contract	Provider - included in PPA arrangement
End of term	Business already owns system	System transfers to business at end of term
Best for	Businesses with available capital, strong tax position, maximising long-term return	Businesses prioritising zero capital outlay, immediate savings, and balance sheet simplicity

PPA rate and saving figures are illustrative. Actual PPA rates depend on system size, site characteristics, PPA term, and market conditions at the time of agreement. Always obtain a site-specific PPA proposal and compare it against the outright purchase case on a like-for-like basis before making a financing decision. 

Common Errors in Commercial Solar Savings Calculations 

Financial projections for commercial solar vary significantly in quality. The following are the most common errors that lead to overstated or misleading savings figures - and what to look for when evaluating a proposal. 

• Using residential electricity rates instead of commercial tariff rates: Commercial electricity rates are not the same as the Ofgem household price cap. Large commercial consumers typically pay 25p to 27p/kWh - which is actually similar to or slightly above the current household cap - but rates vary significantly by business size and contract. Always use the actual contracted rate. 

• Assuming overly high self-consumption rates without half-hourly data: Self-consumption rates of 90% or above are achievable for some operational profiles but should not be assumed for businesses that are not operating primarily during daylight hours. A calculation using 90% self-consumption for a business with significant overnight operations will significantly overstate savings. 

• Ignoring panel degradation in 25-year projections: Year-one savings multiplied by 25 overstates cumulative savings by approximately 4% to 8% for a Tier 1 system. A small but meaningful error on large systems. 

• Assuming aggressive electricity price inflation: Some savings projections assume 10% annual electricity price increases to generate impressive 25-year totals. These assumptions are not defensible for financial planning purposes. Model at current rates and treat any real-terms price increase as upside. 

For businesses ready to move beyond the indicative stage, a full feasibility assessment - which is also free and without obligation - produces the site-specific generation model, savings projection, payback analysis, and PPA versus CAPEX comparison that Finance Directors need to take a solar investment decision to the board with confidence. 

For more detail on the financial case for commercial solar, read our related guides

Eden Sustainable Ltd is a certified B Corp and commercial solar and PPA specialist, part of AMPYR Distributed Energy. Rate figures in this article are based on published industry data as of Q2 2026 and are subject to change. Savings calculations are illustrative and based on the assumptions stated. Actual savings depend on site-specific conditions including consumption profile, grid tariff, system orientation, shading, and self-consumption rate. This article is for general informational purposes and does not constitute financial or investment advice. Always obtain a site-specific feasibility assessment and confirm tax position with a qualified accountant before making investment decisions.