Many companies who deploy commercial solar are after the power bill savings offered by the technology. However, did you know that photovoltaic systems offer more financial benefits than that? This article provides an overview of other ways in which solar panels leave cash in your pockets, beyond helping you pay less for electricity.
Australia has two main subsidy programs for owners of renewable generation systems, and the size of your installation determines which one applies. In the case of commercial solar power, installations up to 100 kW of capacity and below 250 MWh of annual generation get small-scale technology credits (STC), while systems above those thresholds get large-scale generation certificates (LGC).
Both types of credits are calculated based on the expected generation of your commercial solar power system. The main difference is that STCs are credited upfront based on how much electricity you are expected to generate before 2030, while LGCs are credited annually. Both types of credits can be sold for extra cash beyond your normal power bill savings.
Large rooftops can be a source of significant heat gain for buildings. If you install a commercial solar array, heat transfer is slowed down and a large part of it is converted to electricity you can use. This is great news if the building makes ample use of air conditioning, since the heat handled by space cooling equipment is reduced.
Although these are power bill savings as well, we mention them because they are less evident than the direct savings from generating our own electricity. When dealing with commercial solar we think about the value of energy generated, but the load reduction on space cooling systems can also be significant.
A basic rule of business is that capital is not worth only its nominal value: it also has an opportunity cost due to its profit-generating potential. If you purchase a commercial solar array upfront you are using capital, which means you must wait for a payback period before getting positive cash flow. However, if you decide to go for solar as a service through a Power Purchase Agreement, there is no upfront cast and you see positive cash flow immediately.
After getting a solar PPA, funds that would have been paid to your energy retailer are freed up, since the PPA price is below the retail kWh price. These savings can be reinvested in business operations to achieve higher profits.
A commercial or industrial building with an energy-generating system is more valuable than an identical building without it, which means your company owns a more valuable asset after deploying commercial solar. Keep in mind that banks and financiers normally take a look at the value of your company assets when deciding whether to provide investment capital, and on what terms. You can get financing at lower interest rates by demonstrating a solid financial position.
Commercial solar does not only reduce the power bills of a company: it also earns government subsidies and may reduce the running cost of air conditioning equipment. The property itself also gains a higher book value. In addition, if you opt for a solar PPA, there is an immediate cash flow that can be reinvested.
Cameron Quin has been heavily involved in business development from an early age. After founding and selling two online companies, Cameron found a strong passion for renewables and the opportunities it brings for the commercial and industrial sector. Sharing the possibilities of solar and the knowledge from the Solar Bay team is his favourite pastime.