By the PPA Funding team Last updated
Solar PV panels generate electricity, which can power anything in your building and be stored or exported. Solar thermal collectors heat water directly for use in taps, processes or heating. PV is the flexible choice for most businesses; solar thermal suits sites with large, steady hot-water demand such as hotels or leisure centres.
Solar PV vs solar thermal at a glance
| Consideration | Solar PV | Solar thermal |
|---|---|---|
| What it produces | Electricity — for anything in the building | Hot water and heat only |
| Flexibility | High — powers machinery, lighting, EV charging, heat pumps | Limited to hot-water and heating demand |
| Storage | A battery stores surplus; you can also export | A hot-water cylinder stores the heat |
| Funding | Available via a PPA — £0 upfront | Usually bought outright |
| Best suited to | Almost any commercial site with daytime electricity use | Large, steady hot-water demand — hotels, leisure, laundries |
| Most common choice | The default for commercial projects | A strong niche where hot-water demand is high |
The fundamental difference
Both technologies capture the sun, but they produce different things. Solar photovoltaic (PV) panels convert light into electricity using semiconductor cells. Solar thermal collectors absorb heat and transfer it to water or another fluid, which is then used or stored hot. One gives you electrons; the other gives you hot water.
That distinction drives everything else. Electricity from PV can run lighting, machinery, refrigeration, EV chargers or a heat pump, and any surplus can be stored in a battery or exported. Heat from solar thermal can only meet hot-water or heating demand, so its usefulness depends entirely on how much hot water you need.
Where each one fits
Solar thermal earns its place where a business uses a lot of hot water consistently: hotels, care homes, gyms, leisure centres, laundries and some food production. In those settings a thermal system can cover a meaningful share of water heating. If hot-water demand is small or seasonal, collectors sit underused for much of the year.
Solar PV fits almost any commercial site with roof or ground space, because nearly every business uses electricity through the working day. Its output offsets the units you would otherwise buy, and pairing it with a battery or heat pump lets it cover heating too, indirectly doing what thermal does while staying flexible.
Why most commercial projects choose PV
For most commercial projects, PV is the default. It matches the broad, daytime electricity demand of offices, warehouses, factories and shops, and it works with storage, EV charging and funding models like a PPA. A heat pump run on PV electricity can deliver hot water and space heating efficiently, covering ground solar thermal would, without a separate system.
Solar thermal remains a strong niche choice where hot-water demand is genuinely large and constant. The two are not strictly rivals: a very hot-water-heavy site could use both. The starting question is simple: do you need electricity, heat, or a lot of both? Confirm the best mix with a survey of your actual energy use.
This guide is general information, not financial or tax advice. Your circumstances determine what applies — please confirm with your accountant or advisor. Get a tailored proposal →
Frequently asked questions
Can solar PV heat water like solar thermal?
Indirectly, yes. PV generates electricity that can run an immersion heater or, more efficiently, a heat pump to warm water. This is often more flexible than solar thermal because the same electricity can also power everything else in the building.
Which is cheaper to install for a business?
It depends on your demand, but PV is usually the more versatile investment because its electricity has many uses. Solar thermal can be cost-effective where hot-water use is high and steady. A survey comparing both against your consumption gives the clearest answer.
Related guides
- Does commercial solar affect business rates?
- Commercial solar for multi-site businesses
- What affects solar panel output?
See our funding options, commercial solar and solar by industry pages.