COMMERCIAL SOLAR FINANCE

Navigating the world of solar financing can be a little confusing. That’s why we have produced this Finance Toolkit to help you make sense of the differing options. This handy series of factsheets explains what each option is, what the pro’s and cons are, and explains some of the terminology you may come across. This factsheet provides an overview of how you can finance your solar installation of you don’t have or want to pay cash.

Whether you own your own premises, are leasing, or you are part of a strata scheme, there are ways in which you can become part of the growing solar revolution, saving money and helping the planet at the same time

Save Money + Reduce Emissions and Uncertainty

By installing a solar system for your commercial building or complex you can produce a portion of your own electricity requirements onsite. Generating electricity on site can save you money and remove some of the uncertainty around future grid-supplied-electricity prices.

In addition, the electricity you generate from a solar system produces no carbon emissions and with no transmission losses your solar installation can offset emissions from grid-supplied- electricity. As a business owner a solar installation can improve your bottom line.

DO YOU OWN, AND OPERATE FROM, A COMMERCIAL BUILDING?

If you own a commercial building, you can install a solar system which will include PV cells on the roof and some associated hardware to manage your connection to the grid. You can save money on your electricity costs and remove some of the uncertainty around future grid- supplied electricity prices.

DO YOU LEASE A COMMERCIAL PROPERTY?

If you are leasing a property, there are a number of options available to you. Your first step is to talk to your landlord about the benefits of a solar system and how those benefits can be shared between you.

For example, the landlord could pay to have the solar system installed and then sell the energy to you at a discounted rate. Or you could agree a fair increase in the property’s rent that achieves a better return for the landlord while ensuring that you save money on your combined rent plus energy expenses.

You may be able to negotiate with the landlord to allow you to install the system yourself with appropriate amendments to the lease to cater for what will happen when the lease ends or is terminated prematurely.

That way you can get the benefit of the reduced electricity cost over the term of the lease and have an agreement that at the end of the lease you remove the system or negotiate to leave it in place if the landlord or a new tenant wants to continue getting the benefits of the reduced electricity cost.

ARE YOU PART OF A BUSINESS PARK OR STRATA SCHEME?

If you are part of a business park or strata scheme, you too have options. You could consider installing a system just to cater for the electricity use in the common areas, or separately metered systems for each unit, or a larger system with an embedded network that can supply all of the scheme units.

In terms of funding, if all owners participate you might consider using money from the capital works fund (sinking fund), or a special levy. Alternatively, if only some want to participate the owner’s corporation (body corp) could enter into an agreement with a financier or energy retailer or set up a trust or special purpose vehicle to install, own, and maintain the equipment.

Owners will benefit from potentially lower strata levies, owner-occupiers will benefit from lower electricity costs, and owner-investors should be able to negotiate increased rent based upon the electricity cost savings to the tenant.

If you are thinking about financing your solar PV system ...

If you are considering going down the solar path and don’t want to shell out the ready cash, one of the key decisions you will need to make is how best to finance the installation.

Financing options are often marketed under different labels, however the options available to you fall under one of four general categories:

Traditional Finance - including green loans and chattel mortgages

Solar Operating Lease

Power Purchase Agreements (PPA)

Hybrid Financing Options

Before you make any final decisions ... about which type of financing option you choose, consider how it will impact you and your business. Each is suited to different commercial circumstances.

To help you understand the options Zero Emissions Noosa (ZEN) Inc. has produced a series of fact sheets to help you weigh up the pros and cons of the most common ways you can finance your solar installation.

Remember though if you have the cash, you may well benefit financially by paying upfront.

Disclaimer: This is not is not financial advice. You should consider seeking independent legal, financial, taxation or other advice to check how this information relates to your unique circumstances. ZEN is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this factsheet.