As many of us make a conscious effort to reduce our dependence on fossil fuels to generate the power we need, there are plenty of innovative, renewable energy sources that have started populating the market in recent years. One of the most widely used has been solar power, which harnesses the unlimited energy supplied by the sun to produce electricity for our homes and commercial spaces.
For businesses, making the switch to solar can be beneficial for several reasons. While the positive environmental impact of making such a choice is widely known, you might be surprised by how many ways solar energy can benefit your business. Cost savings through reduced energy bills could significantly improve your bottom line, while the panels themselves require little maintenance once installed and will last for 25 years if kept in good working order. All that being said, solar panels can act as a fantastic investment for any business.
However, there is a catch. Depending on the size of your business premises and the types of panels you want, installing commercial solar panels can cost anywhere from £16,000 to £70,000. Naturally, this is a sizable investment, particularly in the midst of a cost of living crisis. Fortunately, if you feel as though the start-up costs might be out of your budget, the good news is that there are an array of grants and funding options available that can help your business access solar technology. Keep reading to find out more.
Is Solar Energy Reliable Enough for My Business?
Solar power is considered to be one of the most reliable sources of renewable energy available to us. While this can depend on where you’re based and the amount of light your building typically receives, it’s still a fantastic, green option for businesses.
As you’d expect, solar panels are most effective in the summer when the days are longer and there tends to be a lot more sun available for electricity generation. However, this isn’t to say that you won’t still reap the benefits of solar energy during the winter months; it just simply means that your usage shall have to be adjusted accordingly. Battery storage can also be useful in this respect, as solar energy generated by your panels on brighter days can be stored up and used when you need it most.
Smart Export Guarantee
100% financed solar schemes are a popular choice for businesses of all sizes, and allows you to fund your solar upgrade with fixed monthly payments over an agreed period of time. The Smart Export Guarantee (SEG), for example, means that homes and businesses with renewable technologies installed can earn money back by selling surplus energy back to energy suppliers. It also reduces the amount of time it takes to breakeven on your investment, so rather than waiting 14 years, this figure could be significantly reduced.
Your business will be eligible for SEG provided that it has renewable technology, including solar pV panels, installed. You’ll also need to have a smart metre or half-hourly metre installed so that automatic readings can be sent back to suppliers.
The interest rates available to you will depend on your current business credit rating and on your supplier. All licensed energy suppliers with over 150,000 customers must offer an SEG tariff, so there’s plenty of choice on top of it being a budget-friendly solution.
To apply for the SEG check the Ofgem website for a list of energy suppliers that offer the scheme and fill out an application form.
Outright Purchase
Self financing is still the most popular option for solar PV or renewable energy system purchases. This option allows you to offset the cost of the system as capital expenditure (CAPEX), and thus offers the highest returns over the lifetime of a solar panel system. This will also help to reduce your payback period considerably.
Some of the other benefits of this option include:
● Achieve greatest ROI within around 3-5 years
● Typical IRR of between 30%-36%
● Full ownership of the whole system - the system as an asset is yours along with all the benefits it brings.
● Achieve renewable energy for less than 2.5p per unit the life of your system - truly future proof your business against ever increasing energy costs.
Power Purchase Agreement
A Power Purchase Agreement (PPA) allows your business to benefit from a fully funded solar panel system with no capital outlay. You’ll be able to purchase electricity from renewable source funders at a reduced rate compared to your current energy price. Because this solar scheme is linked to RPI as opposed to steeply rising energy costs, your business will be able to set its own level for purchasing energy for the next 25 years.
Here’s a rundown of how you can expect to benefit from a PPA:
● Free solar PV system: the system is fully funded by a reputable third party asset investor.
● Guaranteed savings on energy bills: electricity generated by your PV system is purchased back off the investor at a rate cheaper than your current energy provider. This is linked to inflation better than the energy market.
● No maintenance costs: as part of the agreement, your system will have an ongoing operation and maintenance contract at no cost to yourself.
● Long term budget control: the unit price you pay for electricity generated by the system will be fixed for the term of the agreement, allowing you to budget better for the future.
● Fully transferable: the PPA contract can be transferred to the new occupants should you move to new premises in the future.
● Zero cost ‘green’ credentials: a zero cost route to improving your company’s CSR, enhancing relations with eco-conscious suppliers and customers.
Need Help with Solar Funding for Your Business?
If you’ve decided that one of the above solar schemes is right for you and your business, Sol PV Group Ltd can help. Our aim is to connect you with funding solutions that react to the ever-changing renewable energy market. As part of our consultancy-led service, Sol PV Group Ltd will put you in contact with our many partners to help you explore all of the current grants and schemes available to fund your switch to solar.
We’re here to help you make greener business decisions with confidence, so get in touch with us today for more information.
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