Going solar is an excellent way to cut costs, increase profit margins, upgrade your social and environmental credentials and make your own energy. And as the cost of retail electricity continues to skyrocket and the price or solar panels continues to drop, solar is making more commercial sense than ever before. However, there are things you need to be aware of before embarking on your solar journey.
First, it’s important to have the facts about the economics around your decision. Let’s start with subsidies and the overall attractiveness of solar. Despite a minor change in the subsidy system, solar has become even more financially attractive. This is due in large part to a historic drop in panel prices (90% since 2009). This drop has occurred while conventional energy prices have been on a steady march higher.
The bottom line is that for almost every business or organisation, solar will probably make financial sense. But don’t stop there, because what you do next, and more importantly, who you choose next, can make the difference between a system that delivers real benefits and one that doesn’t.
Why? Because solar isn’t just about the install and it certainly is never about one size fits all. You need to be certain that your system is appropriately designed for your needs, your budget and your environmental factors. So from the outset, you need to pick a team that hasn’t just jumped on the solar bandwagon looking for an easy sale. The team you want is the team that will prove they have the solar modelling skills to right-size your system. Ask them about the jobs they have done, their certifications, try to determine their ethics and standards, speak to other customers and, if possible, other people of substance in the industry. Are they quoted as energy experts in the media?
Next, it’s important to remember that when you buy solar, you are, in fact, buying a power generation system that has a life cycle well beyond the install. 80% of solar energy systems haemorrhage power over time costing their owners money —this doesn’t have to happen. The key is expertise and monitoring. Ask your would-be solar provider if they have a team of engineers. Circuit breakers are designed to break; fuses designed to blow and isolators to isolate. You need people who will stay on top of that through real-time monitoring and analysis —people who will keep your system up and running optimally not walk away the second the panels are on the roof. One way to test this in advance, ask them not only whether they have monitoring, but whether they have ever paid on a power generation guarantee. If they have paid, that’s actually an excellent sign of their integrity and technical ability (they need to have first-rate monitoring capabilities to detect this fact).
Finally, let’s talk money. You may or may not have free capital to invest on your roof so we make it easy and low risk with our 3 procurement options. The aim is to provide you with cash positive results immediately and even greater long term results. The only question is which option will suit you the best?
There are 3 main investment avenues.
- An outright purchase is great if you have the cash available to invest on to your own roof. Savings start immediately, with low running costs. Benefits include no ongoing payments, depreciable over 10 years, an average return greater than 18% and the system can be sold with the building as an asset.
- Often referred to as a Power Purchase Agreement or PPA. PAYG solar is an excellent way of procuring a solar system at no upfront expense. The provider installs the system, free of charge then simply bills for the energy generated. As the system generates energy, it pays itself off and you typically pay lower energy costs. At the end of the contract, you get the system free of charge. The best PAYG’s will let you own the system outright at the end. Avoid those who would lock you into a 15 to 20 year contract at all cost.
- This can be any number of mechanisms; Equipment Lease, Chattel Mortgage or Business Loan, depending on your businesses financial arrangements. In essence you are borrowing money at a fixed repayment rate over time. The chief benefit is that it avoids capital expense.
So, remember, solar is a great option but you need to be careful and choose wisely.
This article has been provided by our solar energy partner, Smart Commercial Solar.