Is commercial solar worth it? Payback, ROI and what changes them

Whether solar is “worth it” depends on one question more than any other: how much of the power you generate would you otherwise have bought from the grid? This guide explains self-consumption, works through three example businesses with their assumptions in plain view, and says when solar isn’t worth it. For prices to plug in, see our commercial solar cost guide.

What is self-consumption and why does it matter?

Self-consumption is the share of your solar output that you use on site rather than send to the grid. Every kilowatt-hour (kWh) you use yourself saves the full price you’d pay your retailer. Every kWh you export earns only the feed-in rate, which for many business plans is low.

The gap is large. Under a business tariff of around 25 cents per kWh excluding GST, a self-used kWh saves 25 cents; an exported kWh at 3 cents earns 3. So a system that exports half its output earns a fraction of what the same system would earn if the business used it all. For context, the Essential Services Commission lists Victorian Default Offer small business flat usage rates for 2026-27 of 24.77 to 34.23 cents per kWh including GST, and other states and larger users pay different rates, so use the rate on your own bill. Our guide to reading an electricity bill explains where to find it, and the Energy Made Easy explainer on what’s on your energy bill covers the charges.

How do the numbers work out for different businesses?

The table shows three imaginary businesses on the same 50 kW system. The system, price and tariff are identical; only the pattern of use changes. The assumptions are the same defaults our commercial solar calculator uses, and you can change any of them there.

• System: 50 kW in a zone 3 location, installed on or after 1 October 2026, producing about 69,100 kWh in year 1.
• Price: $1,050 per kW before certificates, so $52,500, from a placeholder derived from Solar Choice’s September 2026 commercial prices (see the cost guide).
• Certificates: 345 STCs (50 kW × 1.382 × 5 deeming years), worth $12,075 at an assumed $35 each, leaving a net cost of $40,425. That $35 sits inside the $33 to $38 the Clean Energy Regulator says agents usually pay.
• Electricity: 25 cents per kWh excluding GST for imports, 3 cents for exports, rising 2.5% a year; 0.5% a year panel degradation; $12 per kW a year maintenance; 25 years; 7% discount rate.
• Self-consumption is modelled from the hours the business operates, with 20% of its yearly use assumed to run around the clock. The model treats every day alike, so it tends to give a higher result than real life.

Read the table as a ranking, not a promise. The weekday and seven-day businesses both use most of the solar they make. The seven-day business does better because it uses more power across more of the week, including weekends when the weekday business is mostly idle. The night business exports almost everything at 3 cents, so the system struggles to repay even its net cost.

What improves or worsens payback?

Things that shorten it

• Using power during daylight hours, including on weekends.
• A high energy rate. Every cent per kWh you pay above our 25 cents shortens payback.
• A lower net price: compare quotes, and claim every certificate you’re entitled to. See commercial solar costs.
• A system sized to your daytime load, not your roof. Output you can’t use earns the export rate.
• Cutting a demand charge, if your tariff has one. See demand charges explained.

Things that lengthen it

• Low daytime use, or most of your use at night.
• A low or zero export price, or a network cap on how much you can send to the grid.
• Extras the headline price leaves out, such as switchboard upgrades or grid connection studies.
• A lower certificate price than assumed. The Regulator notes that open-market certificate prices vary daily.
• Falling energy prices or a move to a cheaper plan after you install.

What do NPV and IRR mean in plain English?

Payback tells you how long it takes to get your money back. It ignores what happens afterwards and treats a dollar in year 10 the same as a dollar today. Two measures fix that.

• Net present value (NPV): add up every future saving, convert each into today’s dollars using a discount rate (the return you’d expect from your next-best use of money), then subtract the cost. A positive NPV means solar beats that alternative. In the table, the weekday business’s NPV of about $119,000 means the savings are worth that much more than the money invested, measured at 7%.
• Internal rate of return (IRR): the yearly return the project earns, similar to an interest rate. If it is higher than your cost of borrowing or the return on your other uses of cash, solar looks attractive. The night business’s 5% IRR is below our 7% hurdle, which is why its NPV is negative.

Your own discount rate might be your loan rate or the return you expect on other investments. Ask your accountant which to use, and see business solar tax and depreciation and paying for business solar for how tax and finance change the picture.

When is commercial solar not worth it?

Solar isn’t always the right move, or not yet. Check these before you ask for quotes:

• Short lease: if you may leave before the system has paid back, you may not recoup the cost. Ask your landlord about who owns the panels and whether they will contribute.
• Mostly-night loads: if you operate mainly after dark, solar saves little. A battery may help, but it often pays back more slowly. See batteries for business.
• Roof replacement due: panels have to come off and go back on when a roof is replaced, which adds cost. Fix the roof first.
• A planned move or sale: you may not get the value back in the sale price.
• Tight export limits: if the network limits how much you can export, oversized systems are throttled. Size to your daytime use instead.
• Landlord or strata approval you haven’t got: you may need written consent before anything is installed.

How do I check my own numbers?

1. Download 12 months of half-hourly interval data from your retailer or network, and note your daytime use on weekdays and weekends.
2. Note your energy rate in cents per kWh, any demand charge, and what your plan pays for exports.
3. Collect two or three quotes, each showing the price before certificates, the number of certificates and the price per certificate.
4. Check your lease, roof age and any plans to move or expand.

Then run them through the commercial solar calculator, and when you’re ready, compare quotes from installers. A bigger system isn’t automatically a better one. Demand charges, covered in our demand charges guide, can change the picture for businesses with spiky loads.

This guide is general information, not financial or legal advice. Rules, rebates and prices change, so check the linked sources before you decide. Facts checked 31 October 2026.