Business Electricity Rates UK 2026: What Solar Can Avoid

Quick answer: UK businesses paid an average of 24.51p per kWh for electricity, including the Climate Change Levy, in the second quarter of 2026, according to the government’s Quarterly Energy Prices release. That figure is the starting point for a solar business case and the wrong number to multiply by your generation. Solar avoids the per-unit part of your bill on the electricity you use on site, and earns a much lower export rate on the rest.

The headline number, and what it is made of

The Department for Energy Security and Net Zero publishes Quarterly Energy Prices each quarter. The 29 September 2026 release covers April to June and reports:

• Non-domestic electricity, including the Climate Change Levy (CCL): 24.51p per kWh, 2.0% higher than the second quarter of 2025 and 1.5% higher than the first quarter of 2026. The release adds that this varies by size band.
• Manufacturing electricity, excluding CCL: 17.4p per kWh, 4.0% (0.67p) higher than a year earlier.
• Non-domestic gas, including CCL: 5.28p per kWh, 0.6% lower than a year earlier.

The release also makes a point that matters for any business reading its own bill against these figures: many non-domestic customers are on fixed-price contracts negotiated and renewed at different times, so wholesale movements reach them unevenly. Your rate today may be a price agreed a year or two ago, and your rate at renewal may not resemble it.

An average hides the structure of a bill. A business electricity bill is built from a few distinct parts, and solar acts on some of them and not others.

Which parts of the bill solar can reduce

The energy charge. The price per kWh for the electricity itself. Every unit you generate and use on site is a unit you do not buy, so this part falls in full.

Variable network and policy charges. Charges billed per unit consumed fall with your imports. Ask the supplier which of these are on a per-kWh basis on your contract, because pass-through and fixed structures differ.

The Climate Change Levy. The levy is £0.00801 per kWh on electricity from 1 April 2026, per HMRC’s published rates. HMRC’s guidance, Excise Notice CCL1/3, says an auto-generator or exempt unlicensed supplier does not have to account for CCL on self or direct supplies of renewable-source electricity. Your own generation used on your own site therefore carries no supplier levy.

Fixed daily and capacity charges. Since 1 April 2023 the demand-residual element of the transmission charge has been a fixed daily charge per site, set by consumption or capacity band, rather than a charge per unit (NESO guidance). Generating more of your own power does not reduce it. Standing charges behave the same way.

VAT. For a VAT-registered business the VAT on electricity is recoverable, so it is not a saving. That is also why VAT on the commercial solar installation is treated separately from the energy bill.

The consequence is simple. The 24.51p average is a whole-bill figure. The number to use is your avoided unit price: the sum of the components in your bill that change with each kWh you stop importing. It will be lower than the headline average if a large share of your bill is fixed charges, and the only way to know is to read the breakdown.

A worked example: three avoided unit prices

Take the illustrative 165 kW rooftop system used across this site, at £160,000 installed, generating about 148,500 kWh in year one (see how the cost per kWh is calculated for the yield workings). Assume 70% of the output is used on site and 30% is exported at an assumed 4p per kWh. Those two assumptions are inputs for illustration. A site that runs overnight exports more; a daytime factory exports less.

Avoided unit price (assumed)	On-site saving (103,950 kWh)	Export income (44,550 kWh at 4p)	Year-one benefit	Simple payback on £160,000
12p	£12,474	£1,782	£14,256	about 11.2 years
16p	£16,632	£1,782	£18,414	about 8.7 years
20p	£20,790	£1,782	£22,572	about 7.1 years

The table holds output flat, ignores running costs and ignores tax relief, all of which a full model would include. What it shows is the sensitivity. Moving the avoided unit price from 12p to 20p, an 8p difference that sits comfortably inside the range between a heavily fixed-charge bill and a unit-rate-heavy one, cuts the payback by about four years. The installed cost and the yield did not change.

That is why a quote that states a saving “at your current rate” deserves a follow-up question: which components, and what happens at renewal? If you would rather see the repayments against a saving than a payback, the solar finance calculator takes the cost, term, indicative rate and annual energy value and returns the monthly figure and the year-one tax relief.

Three ways the number goes wrong

Using the average instead of the bill. A business on a high fixed-charge structure will overstate its saving if it multiplies generation by 24.51p. A business on a rate well above the average will understate it. Take the unit rate from your own contract.

Treating all output as self-consumed. Units exported earn the Smart Export Guarantee rate set by the supplier, which is far below the import price. The Smart Export Guarantee for business solar explains who keeps the export income and why ownership matters. The right self-consumption share comes from your half-hourly consumption data, not from a rule of thumb.

Pricing the next 25 years at today’s contract. A fixed-price contract is a snapshot. The case should be run at a lower and a higher future unit price, and the PPA alternative compared on the same basis. Our asset finance versus PPA page sets out why a funder’s escalating unit rate and an owned system’s fixed cost behave differently over time, and the capital allowances page covers the tax relief the table above leaves out.

What to ask for before you decide

1. Your last twelve months of half-hourly or monthly consumption, so the self-consumption share is measured rather than assumed.
2. The unit-rate breakdown on your contract: which charges are per kWh, which are daily, which are pass-through.
3. Your renewal date and the indicative renewal price.
4. The installer’s yield forecast for your roof, not a national average.

With those four items the avoided unit price stops being an assumption, and the payback in the table above becomes a number about your site rather than an illustration.