Commercial Solar Systems: Could they work for your business?
Solar power in Australia is abundant and one of the easiest ways for businesses to increase their green credentials. Installation of commercial solar systems is a growing trend, and over the long term often offers significant operational savings.
Unlike households, commercial properties tend to use the majority of their power between 9am-5pm. This makes most Australian businesses an ideal fit for commercial solar systems, with a tax-deductible initial investment followed by ongoing electrical cost reductions. In this article we break down the basics of commercial solar systems to give you the information you need to make the decision for your business.
When purchasing a commercial solar system there are four basic options:
- Capital expenditure. Paying cash for a solar system is the simplest method of financing. However, it requires a significant up-front investment which may have a negative cash flow impact on some businesses.
- Energy-efficiency loans. Certain lenders have government approval to offer “energy-efficiency loans”, which typically consist of a discount rate for investments into clean energy assets. A Lendfin solar finance specialist can help work out which loan products would be best for you across all the major banks.
- Operating lease. This is an asset finance agreement, whereby the lender purchases the asset on your behalf and leases it back to you for a set term. It usually involves a balloon payment at the end of the term, and ownership remains with the lender until the lease is finalised.
- Solar power purchasing agreement (PPA). A PPA allows organisations to benefit from lower solar power rates without having to purchase a system. Instead, a PPA provider finances and owns the system, then sells the energy that it produces at a pre-agreed rate that is lower than energy from the grid.
Lendfin employs a specialist team to help our customers with solar financing, and our experts can provide solutions for options 1, 2 and 3 above. The best solution for your business depends on your current financial situation and long term goals, so we recommend speaking with a professional before finalising any solar finance agreements.
Commercial solar systems in Australia are eligible for government rebates depending on the size and type of system. Systems up to 99kW in size are eligible for the STC (small-scale technology certificate), and the rebate is almost always applied at the point of sale. Systems of 100kW or more are only eligible for the LTC (large-scale technology certificate), which is more complex as the business is required to register as an accredited power station through the Clean Energy Regulator. LTC rebates must be claimed annually.
Almost all Australian businesses could benefit from some type of commercial solar system. However, it must be installed with the business’ long-term goals in mind. The solar finance specialists at Lendfin work with multiple lenders and have access to a huge range of finance products in order to find the best solar finance solution for your business.