Commercial solar panels are a fantastic financial investment, providing an opportunity to benefit from long-term, double-digit returns for the next 25+ years. It’s no wonder more businesses are turning to commercial solar panels to power their operations as part of their journey towards Net Zero.
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However, as with all investment opportunities, there is risk associated. Therefore, we’ve outlined a few key considerations to help protect your solar investment. Ultimately, it is always advisable to work with a reputable solar partner who can guide you through the process.
Solar PV is the cheapest form of electricity in history according to the IEA, (1). Therefore, it makes sound financial sense to invest in solar. However, there are various ways to benefit from commercial solar panels which we have outlined below:
CapEx or self-funded solar investment is where a client will pay with their own money and take all the rewards of investing in a commercial solar panel system. Payback periods are typically from 2-5 years, with double-digit returns and an equivalent electricity rate of 3-5 p / kWh.
Cash flow positive Asset Finance can enable you to benefit from solar PV without the capital expenditure. We work alongside a select network of solar finance partners who will tailor finance solutions to meet your objectives. Typically, Asset Finance is repaid over a 5–10-year term providing financial & environmental savings from day one at an equivalent electricity rate of 5-7 p / kWh.
A Solar PPA is where a funder will own, operate & maintain a solar panel system on your roof and sell you back the power produced at a discounted rate. Typically a Solar PPA is a longer term agreement of 15-25 years that delivers economic & ecological savings from day one at the equivalent electricity rate of 7-10 p / kWh.
When investing in solar, it may be worth exploring whether there are any grants or tax reliefs (2) available, as these may significantly impact the business case.
Understanding your building’s electricity consumption, considering historic and potential future usage, is incredibly important when it comes to sizing your solar system. The most lucrative solar investments are designed to maximise the amount of solar generation used on site, which generates around a 25p / kWh saving compared to exporting back to the grid, with a benefit of around 5 p / kWh. Therefore, at present, it is 5 times more lucrative to use the energy generated on site than export to the grid.
When designing a solar panel system, your trusted solar partner must assess and evaluate several site-specific considerations of your building, such as the roof orientation, inclination, roof furniture and the horizon for shading purposes, to ensure the solar system harnesses the most amount of solar energy available. Striking the appropriate balance of quality and cost, as per your objectives, and ensuring compliance with various industry standards and guidelines such as the IET, BS and HSE to name a few.
As part of the technical design, consideration should also be given to the ongoing operation & maintenance of the system, its ability to be monitored and safely maintained is essential at the design stage to ensure the long-term success of any solar PV project.
All solar installations require permission to connect to the electricity grid, which is run by the Distribution Network Operator (DNO). The DNO must protect the network to ensure that the lights stay on, and are currently undergoing a transition towards a smarter, decarbonised, decentralised electricity network. At the time of writing, there are three types of grid connection applications:
These regulations govern how commercial solar panels can safely be connected to the grid. The application process is often the longest lead time within a solar project and can take anywhere from 3-12 months depending on the type of application and local grid constraints.
A common misconception is that because solar PV panels are deemed a ‘permitted development’(3), then a planning application isn’t required.
Condition J.4 (2) Class J (c) states that “the developer must apply to the local planning authority for a determination as to whether the prior approval of the authority will be required…”
In reality, most systems do not require prior approval, so long as it complies with the permitted development regulations, but it is a step in the process that can take several weeks and can have a significant impact on a commercial solar project programme.
The risk of structural failure is a rare but serious concern. Consideration must be given to the added weight, climate, and maintenance loads of solar PV systems for now and the future.
To mitigate this risk, we work with an independent structural engineering firm that has a team of qualified and competent structural engineers who assess all our projects. These professionals perform detailed site surveys assessing all the relevant factors and evaluating the impact of the proposed PV system with detailed calculations. This provides peace of mind and compliance with Building Regulations Part A, to determine that your roof is able to support the additional weight of solar panels and if not, the potential reinforcing work required to enable a project to proceed.
As all our systems are built to last, the roof condition and its longevity are of great importance. Our skilled team have decades of experience and is armed with the latest drone technology. Where it is not possible to access the roof, these drones can help to safely determine the roof condition, identify any problems and more importantly put forward solutions as swiftly as possible to ensure a successful project.
The insurance industry has been hit with some significant losses because of poorly installed and maintained solar PV systems. As the popularity of solar PV grows, insurers are bringing out their own technical requirements to mitigate these risks. At present, these may vary from each provider with some applying local requirements, on a global scale.
Ineco has a solid understanding of the insurance requirements contributing towards a joint code of practice between the Solar and Insurance industries in the RC62 guidelines(4). We are also fortunate enough to have delivered a solar PV system, for leading rural insurer NFU Mutual(5).
It is important to consult with your insurance company prior to construction to ensure that you have met your insurance requirements and installed the right technical specifications.
Often overlooked is the cost of operating & maintaining a commercial solar system. To generate the expected returns on your commercial solar system it must be working to its optimum level, particularly during the peak generation window of spring – autumn. The cost of maintenance is often insignificant compared to the cost of lost earnings from system faults.
Solar PV systems are exposed to the elements, and like all electrical components, whilst generally reliable, they can fail over time. Ineco contributed to the publication of Solar Energy UK’s best practice guidelines (6) which outlined the monitoring and maintenance requirements of commercial solar PV systems in detail.
Monitoring your system’s performance actively, is important in ensuring you generate the estimated returns and can react to any issues. Coupled with regular maintenance visits that may proactively catch faults before they become bigger problems. Maintenance considerations at the design stage can pay dividends due to a safe working environment for engineers who install and maintain the system over its 25+ year lifetime.
Choosing a reputable commercial solar panel installer is perhaps the most important part of any commercial solar project. We have seen many solar companies enter and exit the market almost as quickly, burning their clients in return. But how do you select a trusted solar partner with the competence and capability to deliver your project?
The solar development journey often takes months due to the external approvals required (grid, planning etc.) Does your solar partner have the right experience to take you through that process? Do they have a track record of delivering similar projects to yours? Case studies and references from previous clients often provide the greatest insights.
Are you interested in learning more about Commercial Solar PV System? Contact us today to secure an expert consultation!
Understanding the financial credibility of your solar partner by looking at when it was established and how financially sound it is, may inform your decision. Alongside, checking they hold the qualifications and accreditations you would expect from a reputable and capable partner, such as:
In summary, selecting a trusted commercial solar partner is key in helping you on your journey towards cleaner, cheaper solar power.
The right partner is worth their weight in gold, enabling you to access the best funding options and engineer a bespoke solar system, whilst using their expertise to help you navigate on your solar journey, and provide solutions to any challenges that may occur along the way.
Solar systems are expected to last for generations, with the development and construction stages of a project just the start of a long-term relationship between yourself and your selected solar partner, we believe it is imperative to get it right, first time.
When you start considering something totally new and different for your business, like purchasing commercial solar systems and panels, you might not be sure where to start. What questions should you be asking? Who should you ask? How do you know if the answers you get are accurate, complete and unbiased? In other words, as with many new endeavors, it’s likely that you don’t know what you don’t know.
Once you start getting serious about going solar, it’s a good idea to hire an unbiased solar energy consultant to help you make decisions about your solar project—understanding and choosing solar technologies, deciding where your solar installation will go, exploring the different ways to pay for it, knowing how it’ll be maintained, and so on. But if you’re just in the initial discovery stages, here are 9 questions you can ask commercial solar panel installation companies (who might be commercial solar dealers, installers, distributors or manufacturers) to get an idea about whether solar is right for your business:
1. How much money can my organization expect to save with a commercial solar power system?
The key to getting a useful answer to this question is to specify that you want a long-term cost savings estimate—such as how much you’re likely to save over 20 years’ time. This is important because solar is meant to last for decades, and one of its main advantages is that it can protect your business from volatile and generally rising fossil-fuel-based energy price changes. If you purchase your solar system, it can take a few years to break even, but then you’ll really start to see the savings. If you lease a solar system or enter into a power purchase agreement (PPA), there’s usually no money required upfront, so you can start to see savings in your energy bills from day one. Also ask your NJ solar contractor to run estimates on different solar technologies. Higher-quality solar panels, which cost more and might mean a slightly more expensive lease or PPA, will yield better savings over time than lower-quality panels. When you evaluate commercial solar panels, things like efficiency, durability, useful life and performance levels can make a tremendous difference in the return you can expect to get on your investment.
2. How much upfront capital will my organization need to go solar?
You might think “How much do solar panels cost?” is the right question to ask, but it’s really not. Here’s why: The price of solar panels, as well as the amount of energy they produce, varies widely—and it depends on many variables. The more useful question for businesses is “How much upfront capital will my organization need to go solar?” The answer to that depends on how you decide to pay for your solar project. If you purchase the system outright, the amount of capital you’ll need may depend on how much you plan to finance and your lender’s requirements. But if you choose to lease a solar system or enter into a (PPA), you may be able to get solar with zero upfront. Ask about your options and explore them thoroughly with a solar financing expert to see which model is right for you.
3. What other financial options are available besides purchasing a system outright?
You can also lease a solar system or buy the energy from a solar installation owned by a third party through a PPA. Though the long-term payoff is usually greater when you purchase a solar system, leasing does make sense for many organizations. There’s usually an option to purchase the system at the end of the lease term, so the ability to enter into the lease with little or no money down—plus the option to purchase the system later—may be a win-win for your company. However, be wary of solar companies that only offer leases as an option and push them hard. That may mean that they make their money off of leases and may not be as concerned about finding the right solar solution for your business as they should be.With a PPA, you buy the energy, not the solar equipment. You get the benefit of a set electricity rate over an extended period of time (usually 20-30 years). And similar to leases, you usually have the option to purchase the system outright after some period of time has passed, or you can negotiate a new agreement when your term is over. Again, if you have little or no capital to put down on the purchase of a system, and you don’t want to operate and maintain a solar energy system yourself but want the benefits of renewable energy, entering into a PPA may make the most sense for you.
4. Is my building or site appropriate for solar?
A commercial solar project site expert or designer can probably give you a preliminary evaluation of your site’s suitability for solar over the , but will have to visit your site(s) to make a final determination. They’ll be looking at available roof and parking lot space, nearby land appropriate for a ground-mounted solar panel array, the angle of the sun and shading, building integrity, soil quality, permitting concerns, grid interconnection requirements, and more. They’ll also need to know or look into factors such as building ownership, historical structure status, local ordinances, etc.
5. What size and type of system should I choose for my business?
You can choose rooftop (the most common choice for commercial solar users), carport or ground arrays—or a combination of these. You can have the solar installation on your own site or offsite. You can build just enough solar to meet your energy needs or build more than you need and potentially get credited for any excess energy that you produce (depending on what public policy and utility company practices allow in your state’s energy market). This is a question a solar energy consultant or the manufacturer or dealer you choose to work with will answer for you. They’ll need to analyze your past and current energy needs and evaluate whether or not they can fit enough panels on your site to meet those needs. If your building or site can’t accommodate enough panels, you may need to consider higher-efficiency panels or an offsite solution. But there are many ways to take advantage of solar power, so it’s often just a matter of finding the right solar solution.
6. What types of products do you carry and how do they differ?
If you end up working directly with a solar panel manufacturer, as some companies prefer, they will of course tell you why their products are the best choice. If you start with a dealer or installer, they will make recommendations based on the brands they sell. Rooftop commercial solar power system. And while most solar companies will honestly try to find the right solution for your budget, values and energy needs—a third-party solar consultant can help you compare solar products (like panels, inverters, mounting hardware, monitoring software, and other system components) in an unbiased way. Depending on your priorities—saving money long-term, contributing to a cleaner environment, improving the value of your commercial property, etc.—you should explore qualities of solar technology like efficiency, reliability, performance, durability, scalability and warranties to determine which solar manufacturers’ products are your best choices. Then you can look for a dealer with a good reputation who provides that technology in your area.
7. Who will be responsible for ongoing operation and maintenance (O&M) of my commercial solar system?
As mentioned previously, solar is a long-term investment that is meant to last for decades. Though quality solar installations are generally very low-maintenance and trouble-free, they do require occasional cleaning, ongoing monitoring and possible repairs to continue performing optimally over time. It’s important to know who will maintain the system, monitor its performance and keep it operating at maximum efficiency. You can do that yourself or enter into a contract with another company. Your O&M needs will be highly contingent upon the size and complexity of your system, but most established solar O&M providers can offer robotic or human panel-cleaning services, performance monitoring and reporting, and as-needed repair and parts replacement so you don’t have to worry about your solar system at all.
8. What policies and incentives are available for my organization if we decide to go solar?
The biggest incentive currently available is the federal commercial renewable energy Investment Tax Credit (ITC), which might influence your decision to go solar sooner rather than later. It constitutes a significant tax credit of 30% of the value of projects completed through the end of , but that credit begins to decrease year by year after that: 26% in , 22% in , and just 10% thereafter. In addition to the federal ITC, there may be a variety of other state and local policies and incentives that reward businesses for going solar. Start with a search of the Database of State Incentives for Renewables & Efficiency ® (DSIRE®) to see what’s out there for you. Note that commercial solar systems take some time—typically nine months or more—to get installed after the project is initiated. So factor that into your decision-making regarding the ITC and other time-sensitive incentives.
9. Which panels would you (or did you) choose for your own business and why?
A solar dealer’s answer to this question can be the most revealing of all. If their answer is honest and straightforward, it will give you the best idea of what someone who lives and breathes solar all day, every day, really thinks of the panels on the market—including pricing, quality and long-term payoff potential.
There’s a lot to learn and understand about commercial solar power systems when you’re in the beginning stages of exploring solar as an option for your business. If you ask the right questions and push for unbiased answers, though, you’ll be able to go into the process armed with a strong understanding of what you need and who can provide it—the foundation of good business decision-making.