Commercial solar systems are one of the greatest ways businesses of all sizes can have a positive impact on the environment and their operational expenses (OPEX). In this article, we are going to cover everything you need to know about commercial solar so you can make an informed decision and start saving sooner.
Firstly, before we dive into the details, if you have the money to pay your power bill, you have the money to pay for solar. Businesses in Australia are perfectly set up to get the most out of solar because they generally operate between 9-5pm. Guess who else works from 9 – 5pm? The sun!
Read the below and become familiar with everything you need to know about commercial solar and don’t forget to request a Teho free business feasibility study.
Commercial solar systems work exactly the same way as residential solar systems. The solar panels are hit by sunlight which excites the cells inside which generates DC power. That power is then sent down to your inverter (or inverters) and converted into AC power for your business to consume.
Anything in your business that is electric and plugged in somewhere will be able to use the clean green power you have created saving you money. It is that simple.
Savings from commercial solar is derived in two key streams. Self consumption of the power you generate and feed in tariffs.
Self consumption is the number one way businesses save money. For every kWh of energy your system generates, it is a kWh of energy you don’t need to buy from the grid. As you would know, businesses’ energy bills can be huge and they don’t stop coming. The reason self consumption is the most lucrative is because you will never get a feed in tariff that is anywhere near what you have to pay to buy energy. It is that simple.
Businesses are coincidently set up perfectly to get the most out of solar because of their operating rhythms.
If you think about a residential home, a lot of the time the sun is shining no one is home. This means less energy is being used and it can be a little harder to maximise your self consumption. When you are a business, that is flipped on its head. A lot of businesses in Australia operate while the sun is shining meaning self consumption is much easier to do.
Plus, if you operate into the evening and want to maximize the most out of your generation you can look at storage options, solar batteries, to store any excess solar generation during the day for you to use at night. We will cover that in more detail under the solar battery section.
Only a few years ago, renewable energy wasn’t on the agenda of the Government. Fast forward to 2021 and it is talked about every day.
This is mostly because of the pressure governments around the world have been under from their people to make much more aggressive goals around climate change.
But, how does that impact you?
There are two key takeaways from this.
First, people care about what you are doing in regards to climate change and sustainability. From the moment you engage into your journey to have solar installed you need to start telling your customers! Then, when it is installed, keep telling them!
Awareness around your green initiatives like solar will drive retention of current clients, further engagement with new opportunities and drive your brand ahead as people make more and more business decisions based on a company’s environmental impact.
The second impact, money! There are many lucrative government incentives to help businesses make the switch to renewable energy. From the very successful STC program to cheap financing to upgrade existing buildings, at any given time there are a myriad of options to help you reduce that cost of installing solar.
There are three key brackets to be aware of when installing solar in a commercial setting.
Less than 30kW
This band is the easiest band to be blunt. These systems are grouped into the same category as standard residential systems meaning they are very easy to install, have the same rules around connecting to the grid. These are generally perfect for small businesses and the savings can be fantastic if you are a high daytime energy user.
In this bracket you have full access to the STC scheme.
30kW – 100kW
When you start heading into this bracket you are starting to deal with a system that can generate some serious energy. The impact of that is you will need to get approval from whoever the electricity provider is in the area of DNSP (Distribution Network Service Provider).
This isn’t a big deal for the business, it just means you need to make sure you are speaking with an experienced commercial solar business to make sure that it is a smooth process.
In this bracket you have full access to the STC scheme. (Wooohooo!)
Systems of this size are pretty big! For a business to use a system over 100kW’s it means you are a fairly decent energy user. Think of small to medium manufacturing factories, hotels, office blocks etc.
Now, these aren’t eligible for the STC scheme but it isn’t a BIG deal (that is actually a great pun, what for it).
The STC scheme is designed to encourage smaller solar installations. Hence the name “small scale technology certificates. When you crack the 100kW mark, firstly, congratulations you are doing something right to use that much energy and secondly, you can now get access to LGC’s or Large-scale generation certificates! And voilà, the pun comes to life.
We cover off the difference in point 7.
If you think your system will be around this size, you 100% most definitely need to make sure you are speaking with the right organisation.
Speak to Teho and we can help you out.
Fortunately, thanks to the growth of solar and renewable energy, getting funding for solar projects is getting cheaper and cheap.
There are a few key options which we cover off in our article specifically about commercial solar finance however at a high level for this article we cover them off below.
A note here, if you aren’t sure, SPEAK TO YOUR ACCOUNTANT!
We won’t rave on about this one too much but you get the idea. If you have the cash to pay for it, go nuts and pay for it. Some businesses hate debt, some love it. You will see a lot of businesses use one of the finance options covered below due to the cost of funds being so low at the moment and they would rather hang onto their cash.
Loan (Chattel Mortgage)
A standard business asset loan or chattel mortgage is generally the cheapest way to access funds for solar. The rate you get will generally be based on the credit risk of your business and will be able to be financed over a period of up to around 10 years.
Leases are similar to a loan with the key differences generally being on paper. In the case of a lease, the goods, in this case the solar system are technically owned by the finance provider or lessor (E.G. the bank that gave you the money) and not you, the lessee. This has tax implications which we will cover off briefly below but important, SPEAK TO YOUR ACCOUNTANT.
A PPA is unique to energy. It is actually called a power purchasing agreement. A PPA is basically a lease agreement however you don’t agree to pay a fixed finance amount like a standard lease, you pay a discounted rate for energy generated from the system.
Picking which one suits you can be tough. The best thing to do is speak to Teho today. We can help you understand more so you can go to your accountant ready to rock n roll.
We can’t stress enough, we aren’t tax professionals. Speak to your accountant. However, a few high level details to think about while you are in your research phase.
Depending on how you pay for your system, you may be able to claim the government’s instant asset write off. This means you can claim in one lump sum all of the depreciation of the asset (for assets under $150K) in one go. Pretty cool hey! You need to own the asset on paper though. Link to the ATO’s page about it here.
Also, when looking at a chattel mortgage/loan vs a lease, the way you can claim GST tax input credits also changes. With a chattel because you own the asset, you can claim all of the GST in one go. With a lease because you don’t technically own it, you can only claim the input credits as you pay each lease payment.
For more information, speak to your accountant to make sure you get the most out of your new renewable investment.
First things first.
STC = Small-scale technology certificates
LGC = Large-scale generation certificates
Whether you get access to STC’s or LGC’s is simple. Systems under 100kw (99.9 and down) get STC’s and anything bigger get LGC’s.
There is one big difference between STC’s and LGC’s. STC’s are paid basically like a rebate and LGC’s are an ongoing payment scheme.
For STCs, there is a calculation based on when, where and the size of the system being installed. That will then dictate how many STC’s you get. Then the solar retailer doing the install can claim them on your behalf for their financial value with the amount coming off your invoice total. Simple!
LGC’s are a little more complex as they involve ongoing reporting. Firstly you need to register your business as an “accredited power station” with the Clean Energy Regulator. Unless you are Woolworths you should most definitely be getting help from your solar company with this. From there you need to report on an on-going basis to receive your LGC entitlements. LGC’s are a bit more complicated than this article dares to head into so if you are in the 100kW+ category, speak to a commercial solar expert straight away. Also, this is the link to the clean energy regulators page about LGCs if you are interested.
As we said though the big difference is really simple in that STC’s are paid up front and LGC’s aren’t
Either way, you are getting money for doing something great like installing solar so take it and run, we say.
Businesses who lease their premises often get solar. Most of the time landlords have no cares at all about solar being installed (assets getting installed on their building for free, not bad!).
The only other hurdle is when you are getting finance. A lot of the time, the finance company will just want to make sure your lease covers most or all of the term you are taking finance. They just want to know you will be there while you owe them money. Pretty simply.
We are starting to see landlords and tenants start to work better together on projects like this as they are starting to see the value it adds to the building in both short and long terms. Discounted rents for businesses paying for the whole install and even sharing the costs of installation isn’t as uncommon as it used to be.
The big difference between commercial and residential solar panels is size. In a commercial setting size is very rarely an issue compared to residential. Residential panels need to be smaller to fit the most on a small roof space as possible where commercial panels can be much bigger given the roof space available.
Ground mounted systems are also more common in commercial settings, again, mostly driven by access to space. Meaning, if you don’t have the roof space, you might still be able to get solar!
There are really two keys to commercial solar and that’s the panels and inverter. When it comes to inverter choices there are a few things that impact what way you go.
Inverter manufacturers do make very large central string inverters. This is generally the easiest way for smaller installations. They are simple to install and help keep the cost of installation down.
Like any string inverter though, they have the same inherent sticking points being performance when there are panels impacted within a string.
Your other options are joining many smaller sterling inverters together to de-risk performance problems as it will break the system down into smaller arrays. Installation is harder but only due to more work and it can help with performance over the life of your system. It will cost more as inverters get cheap at scale in capacity not in number of inverters.
Last option is micro-inverters or optimisers. Micro inverters and optimisers are the most expensive option, however, will generally/nearly always yield the best performance over the life of your system. For more detail on inverters check out our solar inverters article and video.
Solar batteries are becoming more and more common across in both residential and commercial settings. There are two key positive impacts they can have on businesses.
Store excess energy. If your system over generates during the day, instead of sending it back into the grid a solar battery will store it for you to use when you need. This is especially important for businesses who operate outside of daylight hours.
Blackout protection. Lots of batteries on the market now either come with blackout protection or it can be added as an extra. There is nothing worse than a black out and it is compounded when it happens when you should be open and making money. A solar battery will help you keep the doors open when the power goes out.
There are lots of options available now and you can do anything from banking many smaller batteries together like a Tesla Powerwall or buy large commercial specific batteries.
Batteries can easily be retrofitted and even installed without solar.
For more information, request a call from Teho today and they can discuss battery options.
Every inverter will come with its own monitoring platform. They vary with some definitely being better than others. However you don’t get much of the important information which is required to really understand and get the most out of your system.
Options like Solar Analytics should always be considered with commercial solar. Solar Analytics is an Australian based company that has designed and runs a solar monitoring platform. It gives you better data and insights and is easily installed.
If you are considering Solar Analytics, always mention it upfront as some inverters work with it better than others from a cost perspective (they have pre-built in tech which makes them nearly plug and play). For more information, check out our article on solar analytics.
We would recommend you get solar analytics if it is in your budget.
Just like residential solar, panel cleaning is really depending on the specific situation. If they are dirty, clean them, if they aren’t, don’t.
If you get Solar Analytics you will get some very strong insight into your system performance which can help determine if you have an issue like too much dirt and grime built up.
If you are heart set on cleaning your panels anyway, it definitely can’t hurt.
As per requirements by the CEC, an installer must provide a maintenance schedule to their customers. Generally the bigger the system, the more maintenance may be involved but either way you should be told this upfront, before you sign your life away.
Companies will either look after it themselves with it either baked in upfront or on a pay as you go model. Or, they will give you the planned schedule which it is up to you to follow.
The Million Dollar Question (kind of, not really). Smaller systems won’t differ too much from residential rules of around $800-1200 per kW of installed solar. However, as systems grow, things can change.
Commercial installs can come with a few specific challenges which will impact the cost of installation. Things like roof access, administration for approvals, specialist knowledge for installations etc. all add up. Luckily, at scale the cost vs return is usually very very favorable.
If you want to know more, just speak to Teho! We can help you get an exact quote so you know what you are up for. Best thing is, it’s obligation free.
Short answer. Yes.
This is one for your electricity provider however 100% you should still negotiate a feed in tariff to ensure any excess power is monetized (unless you have a battery of course).
That is pretty much everything you need to know before you dive in and start the journey to getting commercial solar.
If you own, run or are responsible for a business that pays an energy bill and doesn’t have solar, you need to really ask yourself why not? The benefits are vast, accessibility is the best it’s ever been and what else saves you money and the environment?
Don’t wait and request a free consultation with Teho today.