Energy & ROI Modelling
We build the financial model for a commercial solar project. It covers cost, savings, tax relief, running costs and the downside. You get the model and its assumptions, not one headline payback.
A headline payback of five years tells a finance team very little. The useful questions sit behind it. How much of the output does the site use itself? What does each of those units cost today? What happens if the tariff falls, or if an inverter fails in year twelve?
Self-use is the biggest lever. Electricity used on site replaces a delivered price. Electricity sent to the grid earns a Smart Export Guarantee rate instead. Each licensed supplier sets its own rate, and Ofgem's scheme requires it to be above zero. The delivered price also changes with the size of the user. DESNZ's price tables show that in 2025 a business using 20 to 499 MWh a year paid an average 28.4p per kWh, excluding VAT and the Climate Change Levy. A business using 20,000 to 69,999 MWh paid 23.9p. The larger the user, the less each unit of solar saves.
Tax relief changes the real cost. The Annual Investment Allowance gives 100% relief on up to £1 million of qualifying spending a year. By statute, solar panels are special-rate expenditure, so they miss the 100% full expensing that main-rate machinery gets. Above the AIA, a company can claim a 50% first-year allowance on special-rate spending and write the rest down at 6% a year. The 2026 changes to the main pool, a new 40% first-year allowance and a cut in the main writing-down rate from 18% to 14%, leave that 6% untouched.
For a company paying the 25% main rate of corporation tax, £100,000 of spending covered by the AIA cuts the tax bill by £25,000. Companies on lower rates, partnerships and sole traders see different figures, which is why the model uses your own tax position.
One saving is easy to miss. In England, kit used for on-site renewable power is exempt from business rates from 1 April 2022 to 31 March 2035. Panels on your roof should not raise your rateable value. The Valuation Office Agency applies the exemption, and the model simply keeps the rates line flat.
Worked example: 250 kWp on an East Midlands warehouse
An illustration with stated assumptions. It is not a quote and not a prediction for your site.
- System size
- 250 kWp
- Yearly output
- About 245,000 kWh (PVGIS, Leicester: 981 kWh per kWp)
- Installed cost, planning range
- £162,500 to £237,500 (£650 to £950 per kWp, excluding VAT)
- Weak case
- 60% used on site at 19.9p a kWh saves about £29,200 a year
- Strong case
- 80% used on site at 25.6p a kWh saves about £50,100 a year
- Simple payback
- About 3 years (low cost, strong case) to 8 years (high cost, weak case)
The prices are 70% and 90% of the DESNZ 2025 average of 28.4p for a user of 20 to 499 MWh a year, because part of a delivered price is fixed charges that solar does not remove. Simple payback leaves out running costs, inverter replacement, panel degradation, export income, finance cost and tax relief. Your bills and half-hourly data replace every figure here.
What it delivers
- Half-hourly load analysis from your own metered data
- Self-use against export under today's tariff and a lower one
- Running costs, inverter replacement and panel degradation built in
- Capital allowances applied as the rules say, not as sales material claims
- IRR, NPV and payback in a base, a strong and a weak case
Outcomes
- A model you own and can stress-test
- Tax relief counted where it applies and nowhere else
- Enough evidence to approve the project or turn it down
Sources & further reading
- DESNZ — Prices of fuels purchased by non-domestic consumers (tables 3.4.1 and 3.4.2)
- GOV.UK — Annual Investment Allowance
- GOV.UK — Full expensing and 50% first-year allowance
- HMRC Capital Allowances Manual — CA22335: Solar panels
- GOV.UK — New first-year allowance and reducing main-rate writing-down allowances
- GOV.UK — Corporation Tax rates
- legislation.gov.uk — Valuation for Rating (Plant and Machinery) (England) Regulations 2022
- Ofgem — Smart Export Guarantee
Frequently asked questions
Do you use our own energy data or industry averages?
Your own half-hourly data wherever it exists, because averages hide the daytime load that decides how much of the output you use.
Does the model include capital allowances?
Yes, as the rules apply to solar. The Annual Investment Allowance comes first. Above it, a company can claim a 50% first-year allowance. Full expensing is not open to solar panels.
Insights on energy & roi modelling
Does commercial solar work in a power cut?
Standard grid-tied solar shuts off when the grid fails, because of a safety rule. What a battery, inverter and backup circuit add if you need cover.
Read more →What is the Smart Export Guarantee? A 2026 guide for businesses
The Smart Export Guarantee makes suppliers pay for power you export, although each sets its own rate. Who can join, what meter and certification you need, and how to compare.
Read more →Solar land lease rent: property income, not farming profit
Rent from a solar lease is taxed as property income, not farming profit. That matters because it affects averaging, National Insurance, VAT and inheritance tax relief.
Read more →Want to see your own numbers?
Tell us the site, the tariff you pay and who signs off the spend. We will say what data the model needs.