What On-Site Solar Cuts on a Business Electricity Bill
Updated 23 October 2026 · SEO Dons Editorial
What lines does a business electricity bill contain?
Ofgem describes a tariff as two things: "how much you will pay for each unit of energy you use, also called the unit rate, and the standing charge", which is "a fee you pay each day, even if you do not use any energy on that day". Behind both sit wholesale costs, network costs "to build, fix and repair pipes and wires to move energy", policy costs "such as government social and environmental schemes", and the supplier's own running costs and margin. Half-hourly sites also meet a capacity charge, set by an agreed number of kVA.
| Bill line | Charged per | Does on-site solar cut it? |
|---|---|---|
| Unit rate (energy, plus whatever share of network, policy and other costs the contract puts into it) | kWh imported | Yes, for each unit you stop importing |
| Standing charge | Day | No |
| Capacity (kVA) charge, half-hourly sites | kVA of agreed Maximum Import Capacity (MIC) | Not unless the agreed capacity is lowered |
| Climate Change Levy | kWh | Yes, on units not imported |
| VAT | Percentage of the bill | It moves with the bill, but a VAT-registered business normally reclaims it, so the saving is the ex-VAT figure |
The Climate Change Levy gets one line here: HMRC says its rate for electricity is set per kilowatt hour and publishes the figure each year.
Which charges fall with every unit of solar a site uses?
The ones that follow imported volume. A unit generated and used on site never passes through the import meter, so every per-kWh line shrinks with it. That includes policy costs that suppliers carry per unit supplied. Under the Renewables Obligation, Ofgem says suppliers "must present a specified number of Renewables Obligation Certificates (ROCs) per megawatt hour (MWh) of electricity supplied". The Feed-in Tariff scheme's costs are spread across suppliers "based on their share of the electricity supply market". How a bill presents these, as separate lines or folded into one unit rate, can vary with the contract. Ofgem's page on business contracts says fixed-rate contracts fix "the price of unit rates and standing charges", while a variable-rate price "can increase or decrease during the contract period" and flexible contracts let large users buy energy in portions when market conditions suit.
The saving per unit therefore equals the per-kWh part of the bill, not the whole bill divided by the units. Take a fixed-rate site: a self-used unit saves its contract unit rate. Take a variable one: it saves whatever the unit rate is that month.
Why do standing and kVA charges stay put?
Because they are not tied to units. The standing charge is payable every day. The capacity charge turns on the Maximum Import Capacity: Electricity North West says all half-hourly metered customers are allocated one, "many of these are legacy values from when the site was first connected", unchanged "unless requested to be increased or decreased by the customer". Maximum demand is "the maximum amount of power drawn from the network at any one time during a billing period", and if it exceeds the MIC, "excess capacity charges are applied", at a higher rate than the standard one. The charges pass from the network operator to your supplier and show up in the monthly bill.
Solar rarely lowers maximum demand because that measure is one moment. If the highest draw of the month falls at dusk, on a dull morning or overnight, an array that produces nothing then changes nothing. Electricity North West says there is "no charge associated with reducing your MIC", recommends setting it 10% above the peak of the last 12 months, and allows a change only once in each 12-month period, so a reduction after installation is a decision to take on the metered peak, not on the array's rating.
Time of day matters for the unit part of network charges. Distribution charges are set under national methodologies, which Northern Powergrid says are "governed under the Distribution Connection and Use of System Agreement (DCUSA)". The DUoS red band times by DNO page sets out the time bands network area by network area, and where a band is dearer, a unit generated inside it avoids more than one generated outside it.
A worked example with two load profiles
These are hypothetical sites, with assumptions chosen for the arithmetic. Before solar, both import 1,000,000 kWh a year, and each has a 200,000 kWh annual solar output. Site A is a 24-hour cold store that uses 90% of the output on site. Site B is a weekday office that uses 50%.
| Measure | Site A | Site B |
|---|---|---|
| Solar output used on site | 180,000 kWh | 100,000 kWh |
| Solar output exported | 20,000 kWh | 100,000 kWh |
| Imported kWh after solar | 820,000 | 900,000 |
| Fall in imported kWh | 18% | 10% |
| Upper bound at 24.3p per kWh | £43,740 | £24,300 |
| Standing and kVA charges | Unchanged | Unchanged |
The 24.3p is the Department for Energy Security and Net Zero's provisional 2025 average price for non-domestic electricity across all size bands, including Climate Change Levy. It is a ceiling, not a forecast. An all-size average blends every bill line and every site, so a site whose bill carries large fixed charges saves less per unit. DESNZ publishes quarterly and annual prices "split into consumption size bands", so use the band closest to your annual kWh and your own itemised bill to refine it. The exported kWh earn a separate payment under the Smart Export Guarantee, which British Gas describes as "separate to your import tariff"; the Smart Export Guarantee guide explains the metering.
The same array saves Site A about 80% more imported volume than Site B, which is why self-consumption matters more than panel count. The savings calculator lets you put in your own load share, and payback, ROI and IRR shows how those savings turn into the figures a finance director reads.
Sources and last checked
- Ofgem: SEG overview; How your electricity or gas bill is calculated; Get a business energy contract; Renewables Obligation buy-out price 2026-27, 31 March 2026; Feed-in Tariffs (FIT), checked 22 October 2026.
- HM Revenue and Customs: Climate Change Levy rates, updated 27 November 2025; VAT guide (VAT Notice 700), updated 25 June 2026, checked 22 October 2026.
- Department for Energy Security and Net Zero: Gas and electricity prices in the non-domestic sector, updated 29 September 2026; Annual report 2025 to 2026: performance report, updated 19 August 2026, checked 22 October 2026.
- Network operators: Electricity North West: upgrade or reduce your supply; Northern Powergrid: use of system charges, checked 22 October 2026.
- British Gas business: Smart Export Guarantee (SEG) tariffs for businesses (a supplier page, used only for facts about that supplier), checked 22 October 2026.
Common questions
Will solar remove my standing charge?
No. Ofgem describes the standing charge as a fee paid each day even if no energy is used that day, so it is independent of how many units you import. Solar changes the units, not the daily fee.
Does solar lower my kVA capacity charge?
Only if the site's agreed Maximum Import Capacity is reduced, and solar does not do that by itself. Electricity North West says reducing it costs nothing but can be done once in 12 months, and recommends a figure 10% above the last 12 months' peak.
Is the saving per kWh the same as the price I see on the bill?
Not usually. The saving equals the per-kWh part of the bill, and a blended price includes standing and capacity charges that do not fall. An itemised bill shows which lines scale with units.
Does exporting earn a credit on my electricity bill?
Export is paid separately, under a Smart Export Guarantee tariff that British Gas describes as separate to the import tariff. Ofgem says those payments are calculated from export meter readings.