Commercial Solar Power Financing

Commercial Solar Power Financing

Commercial Solar Power Financing
An Aussie solar power system being installed.

Getting Commercial Solar Power Financing

There are a number of ways that commercial solar power financing may be done. The two best ways are:

  1. Using your bank to finance the project
  2. Using a lease agreement with a leasing company – available through most solar power installers

Solar power leasing works very well in the commercial solar sector due to how simple it is. The customer “leases” the solar power system from the leasing company (who own it) and pay some repayments. It’s just the same as if you borrowed the money. All lease repayments are tax deductible. In many cases the savings made through the solar power will be more than the repayments.

What Are The Benefits Of Commercial Solar Power Financing?

Commercial solar power financing has many good points for businesses who want to escape rising power costs. Some of these are:

  • No need for large outlays
  • Little to no cost due to the savings made by the solar power
  • Positive gearing can be a real thing when getting commercial solar power systems
  • Tax deductible repayments (talk to your accountant to confirm)

Will The Savings Of A Solar Power System Outweigh The Financing Costs?

The savings made through a commercial solar power system are hard to predict exactly. How much you save depends on your power billing and usage profile. If you are on a “bundled” bill then you can get great savings with solar power, but for many larger QLD customers who are on “unbundled” bills the returns are not quite as good. In general, the ROI on a solar power system for a business is between 3 years and 12 years.

A bundled bill is when there is just a single peak and off-peak charge for power in kWh. An unbundled bill is when there are many different rates for services related to their power use.

What About Power Purchase Agreements (PPAs)?

A solar PPA allows businesses to get some benefits from having solar power on their roof. With zero outlay and zero finance costs it seems quite a good deal. A PPA works by allowing a solar installer to put solar panels on your roof for free. In exchange you get a low rate for the use of the solar power. So the installer fronts the money to pay for the panels in return, they can charge you for the power. You get the benefit of a low rate for buying power which is made by the system.

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