Solar Power for Businesses
This guide explains the costs of business solar, what incentives are available and your finance options.
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It's not just individuals who can stick a few solar panels on their roof and save money on their power bill while feeling good about the environment. Businesses can get a lot out of solar power too, but have some special considerations to go through that residential customers don't.
In this guide, we cover most of what you need to know to get started on your journey to cleaner energy and cheaper electricity bills.
Why should I go solar if I own a business?
Apart from the environmental benefits, businesses have many incentives to go solar. Here are just a few:
- Business hours. Unlike houses, most businesses see their power use peak during daylight hours, generally between 9am and 5pm. This coincides with the peak energy production times of solar panels, meaning you can make greater use of the energy.
- Enhanced savings. Small solar systems can help residents save significant amounts of money on their power bills. Since your business consumes more power but will also have greater power production, you might see bigger returns.
- Public image. These days, public sentiment towards fossil fuels is low and dropping rapidly. Being able to assure customers that your business is solar-powered is great for your public image.
How much will it cost?
For a solid system between 30kW and 100kW, you'll be paying around $1,300 per kW, or about $700 per kW for a system smaller than 30kW. Adding micro-inverters for optimum efficiency and control may increase your total cost by around 20%.
Make sure you run a rigorous cost analysis for your solar system before going ahead with it, which a good commercial installer can assist you with. Many businesses pay several fees and charges on their electricity bill that aren't just from usage.
You'll not only need to check that these costs can be reduced by using solar, but also figure out what tariffs your power company will be providing you for the system in question and on what contract. Try to think less of the return on investment of solar and more of its impact on cash flow in your business. Once again, your installer can provide this, but check it over with your own accountant to ensure it makes sense.
What size solar system do I need?
Obviously, this will depend upon the size of your business and its power needs, and will be something to discuss with your solar installer. However, there are generally four size categories:
- Below 30kW (~100 panels). These systems are small enough to fall under the same legislation as residential installations. You won't need a specialist commercial installer with this kind of system.
- 30kW-100kW. Suits retail businesses, medium offices and clubs. These require special measures to protect the grid from the power they generate. You'll need permission from your local electricity distributor and a specialist commercial installer.
- Over 100kW. Suits hotels, large offices and small factories. This kind of system won't be eligible for STC rebates and instead will have to be registered and monitored to claim LGC rebates, which adds paperwork and overhead to your business.
- Over 250kW. For big shopping centres or solar farms. It's recommended you get a specialist installer who's used to dealing with a system of this magnitude.
Remember, you'll require official approval from your local electricity distributor before installing any system greater than 30kW in size. There may be requirements placed upon your approval, such as limiting how much power you can export to the grid, which may affect what equipment you need and any projected savings.
It's possible you may need approval from local councils or other authorities. A good commercial solar provider should be able to help you with this process.
What's the main difference between commercial and residential systems?
There are three main differences between commercial and residential set-ups. These are size, inverter type and rebate type.
Businesses will have not only a bigger solar system in general, but they also tend to use larger solar panels, too. Residential panels are usually 60 solar cells, while business installations use 72-cell panels. This results in lower installation costs because fewer panels are required.
Houses usually use micro-inverters, one for each individual solar panel, but this is a huge expense for a business, and one large, single inverter has its own problems. Instead, it's normal in the industry to use a string of regular residential inverters connected together for efficiency, ease of access and adjustment, and redundancy in case one burns out.
Solar systems smaller than 100kW (which includes all residential ones) are governed by STC rebates. These are paid at the time of installation and are based on how much energy your system is expected to produce over the next decade and a bit.
Commercial systems over 100kW have to deal instead with LGC rebates, where you essentially register your business as a power station with the Clean Energy Regulator. This requires you to track, report and claim for your production each year and is more involved. This means you won't really get an up-front rebate like a small residence would.
What should I expect during quotes and installation?
With a professional commercial installer, you should get a thorough energy profile analysis of your property. This will involve:
- Billing structure. Is your company on flat rates, time of use tariffs, or something else? Would another tariff structure be better under solar?
- Unavoidable charges. These are any of a number of extra fees businesses pay on their power bills, including service charges or ancillary charges.
- Energy consumption. You'll need to know your power consumption habits over the entire year, since solar panels generate less electricity in winter due to shorter daylight hours. This may also let you know if the solar system you can accommodate is even worth it.
- Site inspection. Surprisingly, you may not even need a roof to get a commercial system. While residences employ a lot of tilt-frame panels to maximise efficiency, flat-panel arrays are common for large business set-ups. This means you can place them on top of your building – or even out on the ground in front, in some special cases.
- Insurance/warranty. This includes whether your business insurance will cover anything that might happen with your solar panels, as well as factory warranty for the equipment itself and installation warranty from the installer. If your set-up costs more than $40,000, you won't be covered under Australian Consumer Law and may have to appeal to other legislation.
Financing my solar
Once you've made up your mind to get a solar set-up for your business, there are a couple of other things you should consider.
- Financing. Business solar systems can cost tens of thousands of dollars, depending on the size. If you can't afford to purchase the system outright, you can consider other financing options like:
- Power Purchasing Agreement (PPA). Under a PPA, your energy company agrees to pay the up-front cost of installing your solar system (meaning they legally own it). In exchange, you agree to buy a certain amount of power from them at a reduced rate over a period of time. The catch is you have to buy this power whether you'll use it or not.
- Loans. A business or green loan will allow you to deal with your installer the same as if you were just paying cash outright.
- Building upgrade finance. This is a relatively new option that helps businesses and building owners access loans to improve the water, energy or environmental efficiency of their building. Only available currently in SA, NSW and VIC.
What else do I need to know?
- Monitoring. If you install a solar system, it's very important that you monitor its power production and operation carefully to the point of charging someone with tracking it weekly. This will let you see how your investment goes.
- Maintenance. Any good installer will provide you with a maintenance schedule to ensure your solar panels stay in good working condition. A typical schedule might be an inspection every six months for the first two years.
- Batteries. Power storage is less attractive for businesses given their high rates of consumption, but if you particularly need power storage or a backup battery, consider them as an option.
Solar Run is a solar retailer who can help you install solar on your rooftop.
- Get quotes for solar panels and battery storage
- Clean Energy Council approved retailer
- NSW, VIC, SA, QLD and ACT
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