27 Nov 2017
Commercial solar in Australia is a no brainer for most businesses: here’s how to get a system on your roof without spending a cent of your own money.
Commercial solar is taking off across Australia due to skyrocketing energy prices forcing businesses to look for ways to reduce costs combined with the plummeting costs of solar panels and installation.
The great news for businesses is that there are now some innovative ways to finance commercial PV systems that don’t require the business owner to spend a cent, either up front (CapEx) or on loan repayments into the future.
The two models most commonly used in Australia currently are Power Purchase Agreements (PPA) and Solar Operating Leases.
Let’s look at the benefits of each and why your business might use one rather than the other.
Power Purchase Agreement
A Power Purchase Agreement is a financial arrangement whereby you as the business owner have a solar PV system installed on your roof at no cost and then pay a for the power produced by the system at a rate per KWh substantially less than what you would pay from the grid. After a period of time, typically 15 years, you’ll own the system outright.
The advantages of PPA’s include:
· Large savings on electricity expenses for the life of the solar system
· Nil capital outlay
· The electricity produced is an operational expense
· The system in maintained and managed by the solar provider for the PPA term
· Reduces uncertainty around electricity expenditure in the future
· Rates per unit are agreed prior to installation for the period of the PPA and can either be flat or linked to inflation.
Solar Operating lease
A solar operating lease is similar to a PPA in that there is nil capital outlay initially and the system is owned and maintained by the PPA provider. The difference is in the term on the agreement and the pricing model. With a leasing arrangement, you make set lease payments irrespective of the amount of electricity that the system produces. Most installers provide production guarantees, which removes the risk of the system not producing as forecast.
The characteristics of a Solar Operating Lease are:
· Fixed payments per month for the electricity produced which is substantially less than the rate per KWh from the grid
· Reduced reliance on the grid for electricity
· Reduced exposure to volatile grid prices
· The system is managed and maintained by the PPA provider
· System production will be guaranteed
So, as you can see, there are fewer excuses now to take advantage of the benefits of solar and start reducing your operating expenses.
Getting a commercial PV system on your roof involves a process of determining the benefits for your particular business taking into account your unique circumstances.
Solar Market can arrange for you to receive 3 proposals, from reputable commercial solar providers who service your area and can provide you with detailed financial modelling to help you reach an informed decision. To get started, complete the form below.