Financing Options for Commercial Solar Projects
Installing commercial solar PV panels, energy storage, and EV charging are always a worthwhile investment for businesses across the UK as they provide a number of environmental and financial benefits. However, the installation often requires a form of upfront payment, which isn’t always viable. To make solar power more accessible, several funding options exist for commercial solar projects.
Grants, Power Purchase Agreements, and leases allow businesses to invest in solar power without worrying about finding the money to pay for it upfront.
At Excel Energy, we have worked in the solar industry for over 30 years, monitoring the various funding options available. This blog discusses the options currently available for commercial solar projects.
Upfront Payment
One of the most common payment methods for solar projects is an upfront payment. This is where the business pays for the system installation, without the support of grants or loans.
Upfront payment can be beneficial as it means they own the system outright, meaning they also own any energy generated by a PV system.
In owning the system completely, they are in control of it, working towards becoming independent from the grid and potentially being able to make money off the system as they can sell excess energy back to the grid for a price.
Power Purchase Agreement
To make solar power more accessible to businesses in the UK, many installation companies offer Power Purchase Agreements (PPA) as a funding option.
This is when the company lease your space for a solar system (usually a solar PV system) installation. You enter an agreement with the company to purchase the energy produced at a fixed, discounted rate. This agreement is for a fixed term, and once that comes to an end, you can choose to buy the solar system or arrange a new agreement.
This can be particularly advantageous for those interested in installing a solar power system to their business but don’t have the funds to buy one outright.
Unless you decide to buy the system at the end of the term, you don’t have to pay anything upfront. However, you benefit from a decreased energy rate that is fixed in place, meaning you also avoid the fluctuations of third-party energy providers.
Leasing
Leasing is similar to a PPA with a company. The difference is the amount you pay.
If you choose to lease a solar system, you are likely to pay a monthly fee at a set price for the use of the solar system.
However, with a PPA, you will be paying a fixed rate for the energy you consume. This means the amount you pay could change throughout the year as you might use more energy throughout winter to light and heat your commercial property and less in summer when there is more natural light and heat available.
When leasing a solar system, you get to enjoy the benefits of a solar power system without the upfront costs and the responsibility to maintain it, as the provider will do this.
The biggest benefit of this is that you will have a predictable outgoing for your energy, as you will pay a monthly fee (which may be subject to change annually depending on your contract). This allows you to budget for energy and your business more easily.
Grants
The UK Shared Prosperity Fund Low Carbon Project (UKSPF)
The UK Shared Prosperity Fund Low Carbon Project is a government initiative to help businesses reduce their energy consumption and carbon emissions. The grant will partly fund an initiative, needing the business to fund the rest.
This scheme is set to run until 2025 but is only available to businesses who:
- are a small or medium-sized enterprise (250 employees or fewer with a turnover of less than £36 million)
- have commercial premises in eligible areas
- not have received more than £315,000 Minimal Financial Assistance subsidy over the last three years
- be able to provide 12 months’ energy bills (if less than 12 months, you’ll need energy bills for those months)
Local Authority Grants
Depending on where you are, your local authority is likely to offer a grant to help you become greener and install solar panels.
These grants differ from location to location, so you should get in touch with your business’s local authority and enquire about any grants available through them.
Speak To Solar Power Experts
With funding options for commercial solar power constantly changing, it can be difficult to work out what schemes, grants, and incentives are available to you.
Our experts ensure we keep up to date with the changing funding landscape so that we can offer the best, most up-to-date advice to our customers.
If you are interested in installing a solar power system, be it solar PV or EV charging, but are unsure about funding the process, don’t hesitate to get in touch with us today.
We are always happy to take time to explain what is available, discussing the benefits and potential considerations of each option.
Call us on 020 3834 9440 or complete our online form to request a call back from our specialists.
