Solar PV for your business – 5 good reasons to invest

Solar systems have never been more popular with businesses.  Why?  Well despite all the recent furore in the domestic sector around the cut in feed-in tariffs, our commercial customers are generally investing in Solar with a different set of motivations to the home owner.  So I thought it would be useful to outline why it makes sense for businesses and commercial property owners to invest in Solar PV and/or Solar Thermal.                    

  1. Energy prices – energy usage in commercial premises is fairly constant and whilst energy saving measures such as energy efficient lighting, voltage optimisation, etc. can help reduce energy bills, a business will get to the point where it can do no more because of its operational requirements.  But with the cost of energy set to rise again, many business are looking for other solutions to reduce their usage.  A Solar PV system on the roof of your business premises will give up to 10% return on investment whilst a Solar Thermal system could provide 60% of your hot water requirements.
  2. Additional Income – Both Solar PV and Solar Thermal on commercial buildings attract a tariff payment.  For PV systems producing electricity this will depend on the size of system but could be up to 21p/kWh of energy produced, currently guaranteed for 25 years.  With a Solar Thermal system the Renewable Heat Incentive (RHI) payment is 8.5p/kWh of energy produced guaranteed for 20 years. 
  3. Carbon Reduction Target – one of the primary reasons for installation of Solar PV or Solar Thermal on a new commercial property now is the fact that these systems contribute significantly towards achieving the required Carbon Emission target for the building under Building Regulations.  However, on an existing building, it usually driven by the company’s environmental policy and a desire to achieve certification demonstrating their commitment to reducing their carbon footprint e.g. the Carbon Trust Footprint scheme. 
  4. Capital Allowance – although capital allowances are not as good as they were before April 2012, every little helps in the current financial climate!  If you invest in a Solar PV system, you can still claim 8% Special Rate Expenditure allowance against the installation cost.  So let’s say you spent £10,000 on a PV system, you can claim £800 in the first year then 8% of the remaining balance each year thereafter.  This applies to both Solar PV and Solar Thermal systems where either the Feed-in Tariff or RHI are being claimed.  For a Solar Thermal system, if you don’t claim the RHI you would be eligible to claim 100% of the cost in year one under the Enhanced Capital Allowance scheme.
  5. Energy Performance Certificate (EPC) – a Solar system on any property will enhance the energy performance rating of the building.  If you are looking to sell or let your commercial property, the better the rating the more attractive your property is to potential buyers or tenants and could make the difference between the property being utilised or standing empty in what is a very competitive market.

 Here’s an example for a new build property I’ve just done a proposal for.  It’s a 3-storey office building with a flat roof.  It’s not a massive roof space so we’re looking at a 6kWp Solar PV system (24 panels) which is just a little bit bigger than a full size domestic system.  It’s going to generate 4766kWh of electricity per year and providing the building uses all of this it will save the owner £476 off their electricity bill.  This figure will only increase as energy prices continue to rise.  The system will also give them an income of £873 per year from the feed-in tariff, guaranteed for 25 years!  So that’s a total payback of £1349 a year and it’s also going to save 2707kg of CO² per year contributing to the building’s carbon reduction target. Hopefully this demonstrates that it doesn’t have to be a massive system to make a difference.  What are your business energy costs?

If you or anyone you know owns a commercial property with a good south-facing roof, call me on 01525 213103 for an informal chat about how a solar system could benefit your business.