Why a Decentralised Energy System Makes Sense for the UK

And what level of support is actually needed to accelerate it and make it happen

As the UK electrifies heat, transport and industry, we are entering a period of major energy investment. Tens of billions of pounds will be spent upgrading the electricity system over the coming decade.

Most of the public debate focuses on large, centralised infrastructure: offshore wind, solar farms, grid-scale batteries and new transmission lines.

These assets are essential, but they are not the whole solution.

There is another part of the energy system that can significantly reduce costs, improve energy security and cut emissions at speed: decentralised energy — rooftop solar paired with batteries on homes and businesses, where electricity is generated and used locally.

However, if we are serious about deploying decentralised energy at scale, we also need to be honest about one thing:

Current support levels are not sufficient to reach high penetration — especially for households.

What do we mean by decentralised energy?

A decentralised energy system is one where:

Homes and businesses generate electricity on their own roofs
Batteries store surplus power locally
Most electricity is used on-site first, not exported
The grid acts as backup and balancing, rather than the primary supplier

This does not mean going off-grid.
It means using the grid more efficiently and at lower total system cost.

How much difference could this make?

Using conservative assumptions, I modelled scenarios where 20%, 40% or 60% of UK homes and commercial buildings install rooftop solar with batteries.

Local electricity used on-site (homes + commercial)

At scale, decentralised systems could supply approximately:

~47 TWh per year at 20% adoption
~95 TWh per year at 40% adoption
~142 TWh per year at 60% adoption

This electricity is generated and consumed locally, meaning it never needs to flow through the transmission grid.

For context, 140 TWh is close to half of current UK electricity demand.

Benefits for households and businesses

For both consumers and businesses, the benefits of rooftop solar paired with batteries are immediate and tangible:

Lower exposure to peak electricity prices, particularly during evening and winter demand spikes
Greater protection from wholesale market volatility, as a large share of energy is produced on site
More predictable energy costs over the lifetime of the system

Households

For a typical household system (around 5 kW of rooftop solar with a 10 kWh battery):

50–70% of annual electricity demand can be met on site
Average electricity bill savings are typically £500–£900 per year, depending on usage patterns, tariffs and self-consumption
Higher savings are possible for households with electric vehicles, heat pumps or higher-than-average electricity use

Businesses

For a typical commercial installation (around 100 kW of solar with a 100 kWh battery):

80–90% self-consumption is common due to strong daytime demand
Annual electricity cost reductions are often in the range of £12,000–£20,000 per site
Batteries typically deliver an additional 10–30 kW of peak-demand reduction, lowering network and capacity charges where applicable

This isn’t about energy independence. It’s about buying far less electricity when it is most expensive, while reducing exposure to volatile global energy markets.

The quieter benefit: reducing grid costs

A major driver of UK grid investment is the need to move large volumes of electricity across the country during peak periods.

Decentralised energy reduces this pressure.

When electricity is produced and consumed locally:

Local substations and feeders are less stressed
Evening and winter peaks are lower
Some grid reinforcement can be deferred or avoided

Even when batteries are charged from the grid in winter, they still shift demand away from peak hours, reducing system costs faced by operators such as National Grid ESO and distribution network operators.

Conservative modelled grid savings

Based only on avoided distribution reinforcement and balancing costs (excluding transmission deferral), the modelling shows avoided system costs of roughly:

~£5bn (10-year NPV) at 20% adoption
~£10bn (10-year NPV) at 40% adoption
~£16bn (10-year NPV) at 60% adoption

These figures are deliberately conservative.

Billions saved on imported gas — and lower emissions

Because gas still sets the marginal electricity price during many peak periods, decentralised electricity displaces gas-fired generation.

Across the scenarios modelled, decentralised energy could displace roughly:

~94–284 TWh of gas input per year

Depending on wholesale gas prices, that equates to avoided imports of approximately:

~£2–5bn per year at 20% adoption
~£5–9bn per year at 40% adoption
~£7–14bn per year at 60% adoption

At the same time, decentralised energy delivers substantial carbon reductions. Using the UK’s average 2024 grid carbon intensity as a conservative baseline, emissions avoided are approximately:

~6 MtCO₂ per year at 20% adoption
~12 MtCO₂ per year at 40% adoption
~18 MtCO₂ per year at 60% adoption

If decentralised generation displaces gas at the margin, which it often does, these savings would be higher.

The uncomfortable truth: current household support is not enough

A typical household system today:

5 kW rooftop solar
10 kWh battery
Installed cost: ~£12,000

Current support:

0% VAT → ~£2,400 saved
Household still faces ~£9,600 upfront

For many households, that upfront cost is simply too high, regardless of long-term savings.

If the UK is aiming for 20–60% household penetration, VAT relief alone will not deliver it.

What level of household support would actually work?

International experience is consistent:

Uptake accelerates sharply once net upfront cost falls below ~£5,000–£6,000.

A realistic household package would combine:

A £3,000 upfront grant (solar + battery together)
A £4,000–£6,000 zero-interest, government-backed loan, repaid over 10–15 years
Permanent 0% VAT for solar and batteries

That equates to ~£6,000–£6,500 of effective support per household, mostly through foregone tax and cheap finance rather than cash spending.

What about businesses? (And why they matter so much)

Households are only part of the decentralised energy story.
Commercial rooftops deliver some of the highest system value per pound of public support.

A typical commercial installation

~100 kW rooftop solar
~100 kWh battery
Installed cost: ~£165,000

These systems suit supermarkets, warehouses, offices, schools, hospitals and light industry.

How much public support do businesses receive?

Businesses do not receive direct grants.

Support comes via tax treatment:

Full expensing of capital investment (mainly a timing effect)
Business rates exemption for on-site renewables and storage

In net-present-value terms, this equates to roughly:

~£30,000 of public support per site

That support helps unlock ~£165,000 of private investment.

Why commercial rooftops punch above their weight

Commercial systems typically:

Self-consume 80–90% of their generation
Export little power
Deliver 10–30 kW of peak-demand reduction per site

In system terms, one commercial rooftop can deliver the peak-shaving value of 10–30 households.

This makes commercial solar + batteries:

Extremely cost-effective for the grid
Highly valuable for reducing balancing and constraint costs
One of the strongest investments from a public-value perspective

What does this cost government — in concrete terms?

Including enhanced household support:

20% adoption: ~£2bn per year (over a decade)
40% adoption: ~£4bn per year
60% adoption: ~£6–7bn per year

For context:

One year of the Energy Price Guarantee cost ~£40bn
Gas imports have cost £20–40bn per year in recent years

This is not extra spending: it is a different way of meeting unavoidable energy system costs, while delivering additional benefits.

The big takeaway

Rooftop solar and batteries are no longer a niche consumer technology.

At scale, they function as national infrastructure:

Lowering bills
Reducing grid costs
Cutting fossil fuel imports
Delivering large carbon reductions
Bringing households and businesses into the energy transition

But high adoption will not happen by accident.

If the UK wants 20–60% penetration, it must pair decentralised energy with serious, well-designed support, especially for households, while maintaining stable, predictable policy for businesses.

Key figures at a glance

~47 / 95 / 142 TWh per year of locally used electricity
~£5 / £10 / £16bn avoided grid and balancing costs (10-year NPV, conservative)
~£2–5 / £5–9 / £7–14bn per year avoided gas imports
~6 / 12 / 18 MtCO₂ per year emissions avoided
~£6,000–£6,500 effective support per household to unlock mass adoption
~£2 / £4 / £6–7bn per year in government support costs