How Can Your Business Benefit From Commercial Solar Panels?
Half of Britain’s electricity was generated from low-carbon sources for the first time from July – September 2016. The output from solar has increased by a massive 30% compared with 2015 and now 1 in 10 small businesses are generating their own electricity on site. With more and more businesses installing solar on their roofs we look at the huge benefits offered by solar PV.
The use of solar energy has not been opened up because the oil industry does not own the sun.
~ Ralph Nader
Let’s be honest, the biggest reason for directors making the decision to install solar is for financial gain and there are big gains to be had. Businesses who have high energy usage such as those in food production, logistics, distribution and agriculture can save the most but so can smaller business with standard energy consumption.
At current installation costs, a solar PV system delivers it’s output of electricity at a rate of around 5 pence per kWh. This compares with the current grid supplied rate of 11-15p per unit. So there is an immediate saving on energy costs which can often cover any financing costs of funding the capital costs of installation.
By the end of April 2017 all the major energy suppliers will have hiked their prices up by 5-10% and within the next 10 years energy prices are predicted to double. With solar PV you are in effect forward buying your electricity at a set price of around 5 pence per unit. This means your business will never be exposed to energy price rises again from the solar electricity and this makes financial forecasting a lot easier.
Income from solar
The government subsidy given to those businesses who install solar is known as the Feed in Tariff (FiT). Currently the FiT pays companies around 4 pence per unit of electricity generated and this rate is set for the next 20 years rising with inflation. This means you will always receive at least the same rate per unit as at the date you installed solar.
What’s more, any unused energy can be exported to the grid and you are paid accordingly for this. This is called an ‘export tariff’. You’ll get 4.9p per unit of electricity that you sell back to the grid. You’ll need an export meter if your installation is above 30kW.
A well designed solar PV system can help a business become energy independent. This means you can reduce your reliance on the national grid who are already taking measures to prevent blackouts. Solar offers energy security at a fixed rate.
Electricity at around 5p/kWh
Solar PV panels are warranted to last at least 25 years. They provide a return on investment of between 12-16% and an initial outlay payback of 6-8 years. You are also fixing the cost of your electricity produced from the PV at 5p, which is at least 50% lower than your supplier currently charges and those savings will grow as traditional electricity prices rise.
Our energy requirements are increasing
Demand for electricity is increasing. People are working longer hours than ever before as expectations from employers and customers increase. Simply put, the lights and computers stay on longer. 2016 saw a huge uptake of electric and hybrid vehicles. As the driving range of these cars increases and manufactures bring more affordable models to the market people are seeing the huge benefits and savings and electric car has to offer.
Obviously these cars require electricity to charge them which will push the demand for electricity up and therefore increase prices further. Smart forward thinking companies are investing in solar PV now so they are never exposed to escalating prices. Installing Solar PV on the roof of your business means you and employees will able to charge their cars straight from where the energy is produced and then drive away on completely clean power.
Solar PV hugely enhances any business’ green credentials. Many customers are asking their suppliers to prove they are actively reducing are carbon footprint. A 30 kW (115 panels) solar PV system will help your business reduce its CO2 emissions by a massive 16 tonnes per annum. You can also promote your environmental saving contributions in your marketing literature.
Monitoring solar PV
Solar installers are now providing monitoring software which gives you a live feed of exactly how much your solar PV system is generating for your business. Available on your desktop, phone or tablet you can track daily performance, output, savings and environmental benefits.
Solar power is classed as plant and machinery and can be eligible for capital allowances. i.e for the capital cost to be written off against profits in the first year. In the case of a partnership paying 40% tax they can often claim back from HMRC 40% of the cost of the solar installation in the next tax returns.
This can mean a £50,000 investment effectively costs the business just £30,000 making the first year return on capital significantly higher and the cost of production of the electricity significantly lower at around 2 to 3p / unit.
The sun is free and here for a long time!
The sun is always going to be shining… well in the UK it’s not always got its hat on but that doesn’t matter because even on overcast days and during the winter the solar panels still convert light to energy, its just not quite as much as on a sunny day.
Add value to your roof
Having solar panels on a business premises may also add value to the property asset. Future tenants or buyers will see value in having electricity generated at site and this will add to the desirability of the premises.
High reliability and low maintenance
Solar panels require very little maintenance. Their uncomplicated design means little can go wrong. Annual cleaning of the panels will help keep output to a maximum. A good quality solar PV system will have a guarantee backed output period of 25 years and will still produce 80% of the electricity they are producing today in 25 years’ time. However the lifetime solar panels are estimated to be much longer at around 40 years.
The perfect way to buy your inputs
Imagine telling the owner of a business that they can forward buy a significant proportion of one of their inputs at up to a third of the current price paid. They can fix this price now for the next 25 years and there are no storage costs. Furthermore, if they don’t want or don’t use any of the products at any point in the next 25 years they can get their money back. (The guaranteed market to export the electricity) They will think you are making it up or “snap your hand off”. That is genuinely what solar electricity provides!
The UK government have announced plans that would see Britain’s coal-fired power stations probably close by 2025. Generating your own electricity is the future. When choosing a solar installer make sure they are MCS (Microgeneration Certification Scheme) and NAPIT registered, trustworthy, open & honest and are able to provide a list of references. They should not be tied to any panel manufacturer and should always provide a breakdown of prediction figures. Look for a company with an in-house installation team who are fully qualified to work on roofs and state clearly what brands of equipment they will be supplying. There are a wide variety of products of varying quality and prices, look carefully and don’t be tempted to buy cheap as it doesn’t pay in the long run and as solar will last for 40 years, it is a long term investment.
Thanks to Mypower for this insight.