What the Climate Change Levy is
CCL is a tax on energy supplied to businesses. Your supplier charges it on your bill and pays it to HMRC. GOV.UK says you pay the main rates if your business is in the industrial, commercial, agricultural or public services sectors, and that you do not pay them as a domestic user, a charity engaged in non-commercial activities or a business that uses small amounts of energy (GOV.UK).
There is a second part, the Carbon Price Support rate, paid by owners of power stations and combined heat and power plant on the fuel they burn; a business buying electricity doesn't pay it directly (HMRC rates).
Current rates
Climate Change Levy main rates, from HMRC (checked 2 November 2026)
| Commodity | From 1 April 2025 | From 1 April 2026 | From 1 April 2027 |
|---|---|---|---|
| Electricity (£ per kWh) | 0.00775 | 0.00801 | 0.00827 |
| Gas (£ per kWh) | 0.00775 | 0.00801 | 0.00827 |
| LPG (£ per kg) | 0.02175 | 0.02175 | 0.02175 |
| Other taxable commodities (£ per kg) | 0.06064 | 0.06264 | 0.06468 |
Source: HMRC, Climate Change Levy rates. Businesses with a Climate Change Agreement pay a reduced rate: HMRC's table gives a 92% discount on electricity and 89% on gas from April 2026.
Example: What the levy adds to a bill
A business buying 100,000 kWh of electricity a year from April 2026
100,000 × £0.00801 = £801 of Climate Change Levy
If solar supplies 30,000 kWh of that on site, the levy falls by 30,000 × £0.00801 = £240.30 a year
Example only. The levy is a small part of the saving: the bigger part is the price of the electricity you no longer buy.
Does self-generated solar avoid it?
Yes, for electricity you generate and use yourself. HMRC's Excise Notice CCL1/3 says: "Where you are an auto-generator or exempt unlicenced supplier, there is no requirement to account for CCL on self or direct supplies of renewable source electricity" (CCL1/3, 3.12). The same notice describes an auto-generator as someone who generates electricity primarily for their own use.
- Solar you use on site: Not bought from a supplier, so no levy on it
- Electricity you still buy: Your supplier charges CCL on it as before
- Direct PPA supplies: HMRC says direct supplies from a renewable generator to a customer, with no intermediary taking ownership of the electricity, are not liable
- Renewable electricity from a utility or third party: A taxable supply: a green tariff does not remove CCL
That last point matters when comparing options: buying a green tariff changes where your supplier sources power, not whether you pay the levy. See renewable energy for business and solar PPAs.
Climate Change Agreements
Energy-intensive businesses can enter a Climate Change Agreement with the Environment Agency through their sector association, commit to energy or carbon targets, and pay the reduced rate of CCL. The 2026 statutory guidance says the Administrator runs the new scheme through to 31 March 2033, with Target Period 7 covering 1 January to 31 December 2026 (GOV.UK). If you already have one, solar that cuts what you buy still reduces your bill and helps meet the targets. Your sector association can confirm how on-site generation is counted.
Note: General information from HMRC and GOV.UK, not tax advice.
Sources
HMRC's CCL rates page (last updated 27 November 2025), GOV.UK's CCL overview, Excise Notice CCL1/3 and the 2026 CCA statutory guidance were read on 2 November 2026.
Frequently asked questions
What is the Climate Change Levy?
A tax on energy supplied to businesses and the public sector, added to electricity, gas and other fuel bills by the supplier. GOV.UK says businesses in the industrial, commercial, agricultural and public services sectors pay the main rates. Domestic users, charities engaged in non-commercial activities and businesses using small amounts of energy do not.
What is the Climate Change Levy rate for electricity?
£0.00801 per kWh (0.801p) from 1 April 2026, and £0.00827 per kWh (0.827p) from 1 April 2027, according to HMRC's published rates. It was £0.00775 per kWh from 1 April 2023 to 31 March 2026. Gas is at the same rates from April 2026.
Do I pay Climate Change Levy on electricity from my own solar panels?
Not on the electricity you generate and use yourself. HMRC's Excise Notice CCL1/3 says that where you are an auto-generator, there is no requirement to account for CCL on self or direct supplies of renewable source electricity. The levy is charged by your supplier on what you buy, so every unit of solar you use on site is a unit you don't pay the levy on.
Is Climate Change Levy charged on electricity bought through a solar PPA?
HMRC says direct supplies of renewable electricity, made under a contract involving only the generator and the customer with no intermediary taking ownership of the electricity, are not liable either. Where renewable electricity is supplied by a utility or another third party, it is a taxable supply. Ask the PPA provider how their contract is structured.
What is a Climate Change Agreement?
A voluntary agreement between an energy-intensive business, through its sector association, and the Environment Agency to meet energy or carbon targets. In return the business pays a reduced rate of CCL: a 92% discount on electricity in HMRC's rate table. The current scheme runs to 31 March 2033.
Related pages
- Business electricity pricesPublished DESNZ figures show what businesses pay per kWh by size of user; your own unit rate is what solar replaces.
Solar paybackA worked payback example for a 100 kWp system, the factors that move the result most, the effect of tax relief, and a calculator to try your own figures.- ESOSESOS is a mandatory energy assessment for large UK undertakings every four years; solar is one of the measures an audit can lead to.
- FactoriesFactories with heavy daytime process loads can use nearly all the solar they generate. The survey focuses on the electrical system, roof condition and how to install without stopping production.