Key takeaways, 2026
- Green tariff = standard tariff price: 100% REGO-backed contracts now match or undercut grey tariffs, with zero "green premium".
- Solar payback 4-7 years: modules are 18% cheaper than 2023 and Smart Export Guarantee pays 4-15p per exported kWh.
- CCL exemption: a matched-REGO tariff removes £80-£400/year of Climate Change Levy on electricity.
- PPAs scale: zero capital, 15-25 year contract, 10-30% discount versus retail. Standard above 100 kWp.
42%
UK grid renewables
Share of generation, 2025.
4-7 yrs
Solar payback
30-50 kWp commercial.
-18%
Solar cost
Versus 2023 baseline.
4-15p
SEG export rate
Per exported kWh.
Buying clean vs. generating clean
Every business has the same two paths to a lower-carbon footprint. The first is to buy 100% renewable electricity from the grid via a REGO-backed supplier tariff. The second is to generate some or all of your own electricity on-site, typically through solar PV but increasingly via small wind, biomass and combined heat and power.
In 2026 the gap between the two has narrowed materially. Buying clean costs the same as buying grey and removes the Climate Change Levy, so it is the no-effort baseline that every business should already be doing. Generating clean only makes sense above that baseline if you have the roof space, capital and management bandwidth to run an asset for 20+ years. The table below compares both routes on the only metric that matters: years to financial payback.
Seven sources, 2026 payback comparison
| Technology | Upfront (typical SME) | Payback period | Best fit |
|---|---|---|---|
| Solar PV (rooftop) | £18,000 - £60,000 | 4 - 7 years | Most SMEs with daytime load |
| Air-source heat pump | £8,000 - £25,000 | 5 - 9 years | Sites still on gas / oil heat |
| Ground-source heat pump | £18,000 - £45,000 | 8 - 14 years | Larger sites with land |
| Battery storage | £6,000 - £40,000 | 6 - 10 years | Paired with solar or TOU tariff |
| Small wind (10-50 kW) | £25,000 - £180,000 | 8 - 12 years | Rural sites, wind speed > 6 m/s |
| Biomass boiler | £15,000 - £200,000 | 5 - 12 years | Sites with biomass supply chain |
| Combined Heat & Power | £30,000 - £250,000 | 7 - 11 years | High heat + electricity demand |
2026 indicative figures, MCS-certified installers, after available grants and full expensing. Actual quotes vary by site.
Grants and incentives still open in 2026
The grant landscape has consolidated since 2022. Four schemes remain genuinely useful for UK businesses, listed below in order of accessibility.
Full expensing
100% first-year deduction against corporation tax on solar, heat pumps, battery storage and EV chargers. Made permanent in the 2024 Budget. The fastest, simplest tax saving on any renewable asset.
Smart Export Guarantee
Mandatory for every supplier with 150,000+ customers. 4 to 15 p/kWh for exported electricity, with time-of-use variants that pay best in peak demand windows. The natural replacement for the closed Feed-in Tariff.
Salix Finance
Interest-free loans of £5,000-£500,000 for public-sector bodies and SMEs investing in lighting upgrades, BMS controls, heat pumps and insulation. Repaid through energy savings over 5-8 years.
IETF
Industrial Energy Transformation Fund: competitive grants of £100,000+ for energy-intensive sectors (foundries, ceramics, chemicals, food processing). Phase 3 running through 2027. High effort, high return.
REGO certificates and the end of greenwashing
Until 2024, any UK supplier could sell a "100% renewable" tariff backed by REGO certificates bought wholesale on the secondary market, often without any obligation to actually procure renewable generation matching the customer load. The result was a market in which more retail "green" electricity was sold than was actually generated, the textbook definition of greenwashing.
Ofgem's 2024 Green Tariff Reform closed that loophole. To be sold as 100% renewable in 2026, a tariff now requires:
- REGO certificates matched on a half-hourly basis to the consumption it covers ;
- A clear breakdown on the bill of the underlying generation mix (wind, solar, hydro, biomass) ;
- Annual third-party audit, with results published.
The practical upshot for a business: ask your supplier whether their tariff is "granular matched" or "annually matched". Granular matched is the gold standard ; annually matched is acceptable transitional. Anything else does not qualify for the Climate Change Levy exemption.
The seven sources, in detail
Solar PV
Photovoltaic panels on the roof generate electricity directly. The dominant technology for 2026 commercial installations because of low cost, fast install (typically 2 to 5 days) and minimal maintenance. Best ROI on south-facing roofs in the southern half of the UK, but worthwhile anywhere south of Edinburgh.
Heat pumps
Air-source and ground-source pumps move heat rather than generate it, delivering 3-4 kWh of heat per kWh of electricity used. Replace gas, oil and LPG boilers, with the biggest savings on sites switching off oil heating. The Boiler Upgrade Scheme provides grants of £7,500-£12,000 in 2026.
Battery storage
Lithium-ion battery packs paired with solar to capture daytime generation for evening use, or paired with a time-of-use tariff to charge cheaply overnight and discharge at peak. Costs have fallen 50% since 2022 ; 30-50 kWh packs are now standard for medium SMEs.
Small wind
Microturbines (under 10 kW) and small commercial turbines (10-50 kW) for rural sites with average wind speeds above 6 m/s. Planning is the bottleneck, not technology. Best fit for farms, distilleries and standalone industrial sites away from residential housing.
Biomass
Wood pellet or wood chip boilers that displace gas or oil heating. Eligible for the Boiler Upgrade Scheme for sites that meet sustainability criteria. Best fit for sites with an existing biomass supply chain (sawmills, joinery, agricultural).
Combined Heat & Power (CHP)
Co-generation of electricity and useful heat from a single fuel source, usually gas or biomass. Highest efficiency of any thermal technology (around 80%) but requires constant high heat demand to be worthwhile. Best fit for hospitals, hotels, leisure centres, food processing.
Power Purchase Agreements for businesses without capital
If the upfront cost of an on-site renewable asset is the blocker, a Power Purchase Agreement (PPA) is the alternative. A developer designs, finances, installs and maintains the equipment on your premises ; you pay only for the energy it generates, at a unit rate agreed in advance and typically 10% to 30% below grid retail.
PPAs are most common for solar arrays above 100 kWp and have become the default model for warehouses, supermarkets and large industrial roofs. Contract length is 15 to 25 years, with the option to buy the asset outright at the end. The trade-off is that you do not own the generation, so the depreciation tax benefit goes to the developer, not your balance sheet.
How to actually choose
Three questions narrow the field for any business:
- Do you own the building, or have a lease longer than the payback period? If no, switch to a renewable tariff and stop here. Capital investment on a short lease never pays back ;
- Is most of your load daytime weekday? If yes, solar PV is almost always the right first investment, with battery storage as the second phase ;
- Do you still burn gas or oil for heat? If yes, an air-source or ground-source heat pump replaces fossil heat with electricity that your solar can then offset, the highest-leverage combination available.
For energy-intensive sites in IETF-eligible sectors, add a fourth question: is your sector represented in the current IETF round? If yes, the grant economics often dwarf the standard ROI calculation and warrant a dedicated procurement exercise.
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Frequently asked questions
On the wholesale side, yes. UK levelised cost of electricity for new onshore wind and solar is now around £40-£50/MWh, materially below gas-fired generation at £85-£110/MWh. On the retail side, a 100% green business tariff costs roughly the same as a standard tariff in 2026, sometimes 1-2% less, because suppliers no longer charge a "green premium". The retail price parity is new in 2024-2025.
For a typical SME rooftop installation (30-50 kWp), payback is 4 to 7 years at 2026 electricity prices and panel costs. Solar costs have fallen another 18% since 2023 thanks to surplus Chinese module manufacturing, and the Smart Export Guarantee (SEG) pays around 4-15p per exported kWh depending on supplier. Sites that consume their own generation directly (rather than exporting) get the best returns.
Four main routes are open: the Industrial Energy Transformation Fund (IETF) for energy-intensive sites, the Public Sector Decarbonisation Scheme for councils and public bodies, Salix Finance interest-free loans for SMEs and the public sector, and full-expensing capital allowances for solar, heat pumps and battery storage. The old Feed-in Tariff and Renewable Heat Incentive both closed in 2019 and 2022 respectively ; their replacement is the SEG plus the Boiler Upgrade Scheme for ground- and air-source heat pumps.
Yes, on electricity, provided the tariff is backed by valid REGO certificates that match every kWh you consume one-for-one. The 2024 reform tightened the rules to close the gap where suppliers were selling "green" tariffs without buying actual renewable generation. In 2026 only matched-REGO tariffs qualify for the CCL exemption, which is worth about £80 to £400 a year depending on volume.
Yes, through the Smart Export Guarantee. Every licensed supplier with more than 150,000 customers must offer a SEG export tariff, with current rates ranging from 4 p/kWh to over 15 p/kWh depending on supplier. Time-of-export tariffs typically pay best at peak demand windows (4pm-7pm). A business with a 50 kWp array and 30% surplus export typically earns £600 to £2,200/year on SEG alone.
A PPA is a contract under which a developer installs and owns the renewable equipment on your site, and you buy the electricity it generates at an agreed rate, usually 10% to 30% below the grid retail price. You get green electricity with zero capital outlay, and the developer takes the asset risk. PPAs typically run 15 to 25 years and are most common for solar arrays above 100 kWp.