Installing solar panels for your business could be a real money-spinner. We take a look at how.
Installing solar panels is a great way to get cheap business energy. The unit rate of electricity generated by solar panels is significantly cheaper than electricity that comes from the National Grid. On average, solar power costs about 5p per kWh compared with a UK average of 11-15p per kWh for grid electricity.
In many cases, if you pay for your system in advance, you’ll often break even within a few years. That means that after a short while you’ll receive most of your energy for free. As a result, you don’t just save money: you make money, as once the costs have been recouped you can inject what was your sizeable energy budget into other areas of your business.
While the eventual savings are great, there is the (not so) small matter of installing your solar system in the first place, which can be a large upfront cost. Not to worry though, there are various forms of funding available to support you, which we’ll discuss later.
Installing commercial solar panels is a cost-effective way to reduce emissions, as any divergence from fossil fuels is good for the environment. It’s important to move with the tide: the future is renewable, so keep ahead of the curve. Plus, generating your own electricity reduces the need for huge influxes of energy sourced from finite resources to your business’ community.
And there’s PR to consider too. Public opinion is shifting and people respond positively to companies committed to reducing their carbon footprint. Promoting your business as green can give you an edge over competitors.
How much commercial solar panels cost completely depends on the size of your system. Usually, you’ll need to pay for the supply and installation of the panels, cables, isolators and inverters, as well as any necessary safety tests to get you hooked up. You’ll also have to pay for certification and registration fees with your electricity company and certain industry regulatory bodies.
As a benchmark though, let’s look at small solar photovoltaic (PV) system. On average, this’ll cost you between £5,000 and £10,000. Or, if you opted for solar thermal energy instead, it’ll cost you between £3,000 and £5,000.
Unfortunately, it’s much harder to put a price estimate on large-scale commercial solar as each system is so bespoke.
You should check whether you need planning permission to install a solar system. There are certain size and design regulations involved, so if your desired system exceeds these then you may need to obtain permission. Likewise, if your business premise is a listed building.
Still, don’t be deterred if you do need planning permission: investing in renewables still remains a long-term profit-turner.
One of the best funding options for renewable energy installation was the Feed-in-Tariff (FIT). You may have heard of it – it was where any surplus energy generated could be sold back to the National Grid. Unfortunately, the government closed this scheme in April 2019 and is only processing previously submitted applications. It was a considerable driving factor in increasing renewable energy projects across the UK by offering support, so what’s replaced it?
As of 1st January 2020, the Smart Export Guarantee came into effect. In a nutshell, it’s a government obligation for licensed electricity suppliers to offer a tariff – as well as making a payment – to small-scale and low-carbon generators for electricity exported to the National Grid, provided certain conditions are met.
Commercial solar panels may seem like a prohibitively expensive upfront cost. Fortunately, there is still funding available for businesses wanting to invest in renewable energy, despite losing the FIT.
Renewable Heat Incentives – this scheme offers financial support for businesses who are looking to install their own renewable heat system using any renewable energy technology.
Enhanced Capital Allowances – if the equipment you invest in is eligible, you can write off the cost against your taxable profit with a 100% first year Capital Allowance.
Power Purchase Agreement – this allows private funders to buy the energy you generate for a set price; they will own your renewable energy system.
Lease Purchase Agreement – you rent your renewable technology which you pay for instalments; once it’s paid, you own it.
Business Loan – you can take out a loan to cover the cost of installing your renewable energy system. It’s similar to a Lease Purchase Agreement except you tend to get better rates.
Salix Finance – if you’re a public sector organisation, you can be provided with an interest-free loan to carry out energy-efficiency improvements to your business.
The Green Deal – with this deal, essentially you pay with the savings you make by installing energy-saving technologies.
Installing commercial solar can be a great move for both your reputation and your company finances. But if you’re a little way off yet, can still cut back on your electricity and gas use.
If your contract’s coming to an end, you should look to switch tariffs to be sure you get the best electricity and gas rates. While business energy quotes are bespoke, here at Simply Switch we can give you a pretty good idea of what deals are available. Simply pop your postcode and a few details and we’ll run a business energy comparison to show you the best tariffs on the market.