Finance options for rooftop solar: businesses

Here’s how any business – big or small, and whether you lease or own – can access energy from the sun without it costing the earth.

The current economics of rooftop solar make it a smart choice for almost all businesses, but the upfront cost of installing panels can be daunting. Thankfully, there are finance options to suit businesses of all shapes and sizes.

Here’s a rundown – both for businesses that own their premises, and those that lease.

Purchasing panels

The simplest way to fund a rooftop-solar installation is to pay for it upfront with capital or out of your overall debt. But there are other options if you’re unable to do so:

• Bank loans. Rooftop solar makes good business sense and many financial institutions look favourably upon borrowers wishing to fund such a project. Some banks also offer green loans, which generally have lower interest rates than regular business loans (the funds can only be paid directly to your solar retailer).

• Grants. You may be able to offset the cost of rooftop solar by obtaining a grant. The NSW government offers grants through its Community Building Partnerships program for infrastructure projects such as rooftop solar.

Renting solar panels

If you can’t buy solar, there are other options:

• Some retailers offer standard solar panel rental and remove the panels at the end of the rental term. This can be a good option if you’re planning to move premises or want the option to upgrade to the latest panel technology as it becomes available.

• A rent-to-own agreement allows you to take advantage of solar-power generation without a significant upfront cost. If properly configured, a rent-to-own scheme should leave you cashflow positive immediately (that is, saving more on electricity bills than you are paying to rent the panels). At the end of the rental term, the panels are yours to keep.

Power Purchase Agreements (PPAs)

 A solar PPA is a long term contract to purchase electricity generated by a solar panel system installed at your premises. Advantages of a PPA include:

• no upfront expense

• a fixed electricity rate that’s lower than the grid tariff

• the provider takes care of repairs and maintenance.

Potential downsides include:

• some providers charge you the full amount even if you don’t use all the energy

• leases can be longer than other forms of solar financing.

A variation on PPAs is rooftop leasing, whereby the solar company rents the rooftop from the business, installs panels then sells the electricity it generates to the business or back to the grid. This low-cost option is good for businesses with ample roof space but low electricity needs.

What if you don’t own your roof?

If you have significant electricity needs, why not consider adding rooftop solar with your landlord’s permission? Renting panels can be a good option in these circumstances.

Alternatively, you could buy them – depending on the configuration of your system, you could recoup the cost within a few years and then operate the panels at a profit. At the end of your lease, you could take the panels with you, simply leave them behind or even sell them to your landlord. Another option is to grant your landlord ownership of the panels in exchange for reduced rent.